An installment contact is a particular type of contract in which the payments are made in a series (“installments”) rather than in one large lump payment. Alternatively, an installment contract can involve deliveries of goods or the provision of services that are done in a series rather than all at once.
Installment contracts are used because they can often benefit the consumer, who might not have sufficient funds to make an all-out one-time payment. They can also benefit the producers or sellers, whose sale of goods or distribution of services can only occur on a cyclical basis.
Installment contracts may be used when the buyer needs to spread out their payments. They can also be used in situations where the seller can only provide the goods or services in increments over time. Some common examples where installments contracts can be used may include:
- Contracts for the sale of a plot of land
- Vehicle sales
- Contracts where the goods are subject to seasonal cycles, such as produce or agricultural goods
- Computer or other technology services that need to be updated regularly
- Retail installment contracts, where the seller purchases “in-style” or “in-season” clothes from a wholesaler
Installment contracts may be used in many other different types of circumstances. The contract should be clearly written to include the specific details regarding how the installment payments or deliveries will work.
In most breach of contract cases, the non-breaching party will be entitled to damages for at least the current installment that was breached.
In other cases, it is also common for the non-breaching party to be paid a damages award that will cover the remaining installments or deliveries. This is most likely the case where the breach makes it appear that the other party will likely breach on the remaining installments.
In order to prevent confusion over contract terms, the parties may wish to include a section in the contract that deals with breaches of installment terms. For instance, the parties may choose to include a “grace” provision for a first-time breach, or a provision stating that any breach at all will result in a damages award for the remaining payments.
Installment contracts are useful legal tools for individuals and businesses that may have some specific preferences regarding the transaction. You may wish to hire a qualified contract lawyer in your area if you need help at all with the drafting, reviewing, or editing of an installment contract. Also, your lawyer can be on hand to represent you in court if you need to file a lawsuit over a breach of contract terms.