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  • Installment Sale

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    renuka03
    180 tayangan16 halaman
    The document discusses installment sale, which is a credit sale where a buyer makes a down payment and pays the balance in installments over time. Under an installment sale, ownership and possession of the goods transfers to the buyer immediately upon signing the agreement. If the buyer defaults, the seller cannot repossess the goods but must sue to recover the balance. Key features include immediate ownership and possession for the buyer, risk transfer to the buyer, and no right of return for the buyer.

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    The document discusses installment sale, which is a credit sale where a buyer makes a down payment and pays the balance in installments over time. Under an installment sale, ownership and possession of the goods transfers to the buyer immediately upon signing the agreement. If the buyer defaults, the seller cannot repossess the goods but must sue to recover the balance. Key features include immediate ownership and possession for the buyer, risk transfer to the buyer, and no right of return for the buyer.

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    Attribution Non-Commercial (BY-NC)
    Unduh sebagai PPTX, PDF, TXT atau baca online dari Scribd
    Tandai sebagai konten tidak pantas
    180 tayangan16 halaman

    Installment Sale

    Diunggah oleh

    renuka03
    The document discusses installment sale, which is a credit sale where a buyer makes a down payment and pays the balance in installments over time. Under an installment sale, ownership and possession of the goods transfers to the buyer immediately upon signing the agreement. If the buyer defaults, the seller cannot repossess the goods but must sue to recover the balance. Key features include immediate ownership and possession for the buyer, risk transfer to the buyer, and no right of return for the buyer.

    Hak Cipta:

    Attribution Non-Commercial (BY-NC)
    Unduh sebagai PPTX, PDF, TXT atau baca online dari Scribd
    Tandai sebagai konten tidak pantas
    dari 16

    INSTALLMENT SALE

    In installment system an agreement is made between buyer and seller to purchase and sell of goods. The buyer makes certain down payment at the time of signing agreement and The balance is paid in installment over a period of time.

    Meaning of installment system


    An installment system is a credit sale in which payments are made in installments over a period of time. In this system, the buyer gets the possession as well as ownership of the goods right at the time of signing the agreement. During the course of paying the installment, if the buyer makes default in paying the installment, the vendor cannot take back the goods. In that case, the vendor can sue the buyer for recovery of dues.

    Features Of Installment Purchase System

    The following are the features of installment purchase system: 1. Installment purchase system is just like an outright credit sale of goods.
    2. The buyer makes the payment in different installment over a period of time as agreed upon in the agreement. 3. Under installment purchase system, the buyer gets the immediate possession as well as the ownership of goods. 4. The seller can not take back the goods if the buyer made default in the payment of installment but he/she can sue against the buyer for the recovery of amount due

    Features of Installment Sale


    In case of default in the payment of installment, the total amount of installments already paid by the buyer can not be forfeited. 6. Under installment system, the buyer can sell or mortgage the goods even before clearing all the installments. 7. Risk of goods/assets are to be borne by the buyer just after signing the agreement. 8. The buyer of the goods under installment purchase system has no right to return the goods to the seller.

    Nature of agreement
    The buyer and the seller enter into an agreement whereby the price, the number and the amount of installments is determined in advance. The ownership of the product is transferred as soon as the first installment is paid by the buyer.

    No right to recovery of goods


    As the ownership of goods is transferred to the buyer, immediately after the first installment, the seller does not have the right to take back the article even if the buyer fails to pay the installments. The only option the seller has, is to sue the buyer and recover the amount through the legal action.

    Installment as a part of purchase consideration


    As the buyer already becomes the owner of the product, the seller has to recover the full amount from the buyer. There is no question of any forfeiture of installments. The installments are consideration as part-payment of the price of goods.

    Greater Risk
    The possession as well as the ownership is transferred to the buyer after the payment of first installment. In case of default in the payment of an installment, the seller cannot recover back the article from the buyer. He can recover only the price of the article from the buyer through the court of law.

    Possibility of bad debts


    In case of installment sale the possibility of bad debt is high. Therefore the prices are higher in case of installment sale. The prices charged by the seller in this case are much more higher than prices in case of hire purchase.

    Suitability of Product
    Only the costly articles are suitable for selling on installment sale. Generally those products which cannot be purchased by the customer on their own are purchased by installment sale.

    Advantages to the buyer


    Easy to purchase costly item The buyer gets both the ownership and possession of product. The insurable interest is in the hands of the owner of the goods. Opportunity for self-employment Inculcate the habit of saving

    Advantage to the Seller


    Large turnover Better than credit sale The risk attached to the product are transferred to the buyer. Higher margin of profit to seller

    Disadvantages of Installment System


    Disadvantages to buyer Inclination towards purchase of luxuries Transfer of risk Difficulty in returning the product Higher prices

    Disadvantages to Seller
    Loss of ownership of the product The risk of bad debts is more due to immediate transfer of ownership The amount remains locked up Large amount is spent on administration No benefit of price rise Only costly durable, standardized quality be items can be sold under installment system

    Distinguish between Hire purchase and installment sale


    BASIS NATURE HIRE PURCHASE It is not a contract of sale. The customer is given an option either to purchase the product or return it back. INSTALLMENT SALE This is a contract of sale and the customer has to pay the full price.

    OWNERSHIP

    The ownership of the product is The ownership of the product is transferred to the buyer only after the transferred payment of the final installment. In case of default in payment of installment the seller can recover back the article. In case of default in payment the seller can sue the buyer for the recovery of price, but he cannot take back the articles.

    SELLERS RIGHT

    RIGHT TO SELL OR MORTGAGE

    the buyer cannot sell or mortgage the The buyer can sell or mortgage product till the payment of last the product as he becomes the installment. owner on paying the first installment

    Distinguish between Hire Purchase and Installment Sale


    BASIS HIRE PURCHASE INSTALLMENT SALE

    BAD DEBTS

    Risk of bad debt is lesser as articles can be recovered back and resold.

    Risk of bad debt is more due to transfer of ownership to the buyer.

    STATUS

    The buyer remains the hirer till he pays the last installment.

    The buyer becomes the owner immediately after paying the initial installment.

    NATURE OF INSTALLMENT

    Till the last installment is paid, the installment are treated as hire charges.

    The installments are considered as part of purchase consideration.

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