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§8.03 Retail Installment Sales—Prohibited Terms and Acts

 
Lesson 8:
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Many terms are prohibited in a retail installment sales contract, including the following:

  • A waiver of the Act’s provisions. [CC §1801.1.]
  • An agreement by the buyer not to assert claims or defenses arising out of sale [CC §1804.1(a)], except that the buyer may waive the statute of limitations. [Mysel v Gross (1977) 70 CA3d Supp 10, 17.]
  • An acceleration of the debt absent default by the buyer. [CC §1804.1(b).]
  • A waiver of the right to sue for illegal acts done in collection or repossession. [CC §1804.1(e).]
  • Relief of the seller from liability for any legal remedies the buyer may have against the seller. [CC §1804.1(g).]
  • A grant to the seller to bring an action in an improper venue. [CC §1804.1(i).]
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  • A finance charge determined in part by the precomputed basis and in part by the simple interest basis, except as permitted by CC §1805.8. [CC §1805.9.]
  • An improper delinquency charge. [CC §1803.6.]
  • An annual fee or charge. [CC §1805.1.]


Any provision in a contract that is prohibited by the Act is void but it does not invalidate the whole contract. [CC §1804.4.]

Certain acts by the seller are prohibited, including the following:

  • Obtaining the buyer’s signature to a contract that contains blank spaces to be filled in after it has been signed. [CC §1803.4.]
  • Failing to deliver a legible copy of the contract and any other required documents to the buyer at the time of execution. [CC §1803.7.]
  • Imposing a delinquency charge for any default of payment on any purchase made before written disclosure of the delinquency charge. [CC §1810.12(b).]
  • Requiring the buyer to obtain financing from a particular source. [CC §1812.20.]
 
 
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