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§8.02 Retail Installment Sales—Contract Requirements

Lesson 8:
Credit Cards

The Act contains detailed contract requirements. Among other terms, the contract must contain the following:

  • The entire agreement concerning the cost and the terms of payment. [CC §1803.2(a).]
  • Identification of the nature of the contract, i.e., whether it is a retail installment contract or a security agreement, and notice to the buyer of the consequences of granting a security interest in the event of default in any contract that provides for such a security interest. [CC §1803.2(b).]
  • Notice to the buyer (1) not to sign the agreement before reading it or, if it contains any blank spaces to be filled in, that the buyer is entitled to a completely filled-in copy of the agreement; (2) of the right to prepay the full amount due and receive a partial refund of the finance charge; (3) of the method to be used to figure the amount of the refund; and (4) of the right to be furnished on request the amount of the refund. [CC §1803.2(c)–(e).]
  • A complete disclosure of the information required to be disclosed by Regulation Z, the cash price, taxes, downpayment, insurance and official fees, administrative finance charge, finance charge, deferred payment price, any balloon payments, and the method to be used to compute the unearned finance charges if prepayment in full is made. [CC §1803.3(b)–(g).]

All sellers must provide buyers with certain information, including the following:

  • Full disclosures of finance charges, payment requirements, and the conditions under which the seller may retain or acquire a security interest. [CC §1810.1.]
  • Periodic statements, which must be mailed or delivered at least 14 days before the end of the period within which payment must be made. [CC §1810.3(a)–(c).]
  • Notice of the buyer’s right to a refund when a credit balance exists in the account. [CC §1810.3(e)–(f).]
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