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§8.04 Retail Installment Sales—Rights and Remedies

Lesson 8:
Credit Cards

The buyer need pay only the cash price until the seller delivers a copy of the contract and other signed documents [CC §1803.7], the memorandum required for add-on sales for subsequent purchases [CC §1808.4], or the statement on finance charges for a retail installment account [CC §1810.1]. The buyer need not pay any finance charge on a retail installment account if the seller fails to mail or deliver its periodic billing statement at least 14 days before the end of the period within which payment must be made to avoid additional finance charges. [CC §1810.3(b).]

The buyer also has the following rights:

  • Rescission of the purchase contract if the buyer is unable to obtain third-party financing and notifies the seller within three business days. [CC §1803.9.]
  • The right to pay the entire indebtedness before maturity without penalty, and with a refund of the unearned finance charges. [CC §1806.3(a).]
  • The right to a new payment schedule on default of a balloon payment. [CC §1807.3.]
  • Recovery of any finance, delinquency, collection, extension, deferral, or refinance charges paid and relief from any further charges if the seller fails to comply with the Act [CC §1812.7], unless the seller corrects nonwillful noncompliance within 30 days [CC §1812.8].
  • The right to redeem repossessed goods. [CC §1812.2.]
  • Protection against a deficiency judgment after repossession and resale. [CC §1812.5.]
  • Treble damages for the willful imposition of illegal charges on add-on sales. [CC §1812.9.]
  • Reasonable attorney fees and costs to the prevailing party in any action brought under the Act. [CC §1811.1.]

The seller’s relief includes:

  • The option on the buyer’s default to retake and resell the goods or sue for a judgment on the balance due. [CC §1812.2.]
  • The right to correct nonwillful violations within 30 days. [CC §1812.8.]
  • Reasonable attorney fees and costs if the seller is the prevailing party in any action brought under the Act. [CC §1811.1.]
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