Installment Contract

### What is an installment contract? - [ ] A contract where payment is made as a lump sum. - [ ] A contract only applicable to real estate. - [x] A contract where obligations are divided into a series of successive performances. - [ ] A contract that requires daily payments. > **Explanation:** An installment contract involves obligations divided into periodic performances such as payments, delivery of goods, or services rather than being settled in a single completion of the obligation. ### Which of the following is a common example of an installment contract? - [ ] A one-time online purchase. - [ ] A verbal agreement to provide services. - [x] Automobile financing. - [ ] Stock market transactions. > **Explanation:** Automobile financing, where a buyer agrees to pay monthly installments, is a typical example of an installment contract. ### In an installment contract, what is a balloon payment? - [ ] The first payment in an installment contract. - [x] A large final payment after a series of smaller, regular payments. - [ ] Payment for breach of contract. - [ ] Payments made during festive seasons. > **Explanation:** A balloon payment is a sizeable final payment that concludes the remaining balance on a loan, following a series of smaller installments. ### What should parties consider if renegotiating the terms of an installment contract? - [ ] Only verbal agreements. - [ ] The color of the paper used. - [x] Putting the changes in writing. - [ ] The number of copies made. > **Explanation:** Renegotiated terms should be documented in writing to ensure they are enforceable and reflect the mutual agreement of both parties. ### What is the primary regulation governing installment contracts in consumer contexts? - [x] Consumer protection laws. - [ ] Zoning laws. - [ ] Real estate laws. - [ ] Intellectual property laws. > **Explanation:** Installment contracts in consumer contexts are typically governed by consumer protection laws, ensuring fair practices and rights for consumers. ### What happens if a party defaults on an installment contract? - [ ] Nothing can be done legally. - [ ] The contract automatically renews. - [x] The non-defaulting party may seek remedies or legal action. - [ ] The contract becomes null and void. > **Explanation:** If a party defaults, the non-defaulting party can often seek remedies such as suspension of further services, repossession, or legal action to recover owed amounts or damages. ### Which term best describes an arrangement where payment is delayed until a later date? - [x] Deferred payment. - [ ] Full payment. - [ ] Immediate payment. - [ ] Quarterly payment. > **Explanation:** A deferred payment arrangement delays the payment obligation to a future date beyond the delivery of goods or services. ### Which type of loan is typically secured by an asset? - [ ] Unsecured loan. - [x] Secured loan. - [ ] Personal loan. - [ ] Demand loan. > **Explanation:** A secured loan is backed by an asset which the lender can claim if the borrower defaults. ### Can installment contract terms be modified without both parties’ consent? - [ ] Yes, if agreed verbally by one party. - [x] No, modifications require mutual consent. - [ ] Yes, one party can unilaterally change terms. - [ ] Only during the first month. > **Explanation:** Modifications to an installment contract require mutual consent from both parties to be enforceable. ### How are obligations typically structured in an installment contract? - [ ] As a lump sum payment. - [x] As a series of successive performances. - [ ] Randomly. - [ ] Weekly. > **Explanation:** Installment contracts structure obligations in a series of successive performances, such as periodic payments or deliveries.