Installment Contract Law and Legal Definition
An installment contract is an agreement in which payments of money, delivery of goods or performance of services are to be made in a series of payments, deliveries or performances, usually on specific dates or upon certain events. If there is a failure to timely pay an installment when due, it is a breach in which damages can be collected based on the portion which has not been paid, and is an excuse for the other party not to perform further. The seller in an installment contract often reserves the right to repossess the item upon a failure to make a payment.
Courts will sometimes scrutinize a retail installment contract to determine if it is an adhesion contract. Retail installment contracts involve a credit sale of goods or a furnishing or rendering of services by a retail seller to a retail buyer for a deferred payment price payable in one or more installments. An adhesion contract is a contract balanced in favor of one party over the other that one can assume it was not entered into on equal bargaining grounds. Adhesion contracts are usually formed when one person is in a superior bargaining position and pressures the other party into a contract with unfair or oppressive terms. An adhesion contract can give the person in the unfavorable bargaining position an excuse for invalidating the contract.