Sale by instalment – content, subject substance and pattern of the contract

If you want to know what is characterized by the sale of installments, what elements the contract should contain and how to retreat from it, delight read this article.

Sale of goods

Through the sales agreement, the seller undertakes to transfer the property to the buyer and to give him the item, and the buyer undertakes to collect the item and pay the seller the price [see 535 § 1 of the civilian Code].

The object of the sale can be not only any movable and immovable things, e.g. computer, car, single-family house, apartment, land property, but besides energy, rights and water benefits, animals or collections of things and rights.

Parties to the sale agreement are:

• the seller;
• Buyer.

To obligations of the seller must:

• the transfer of ownership of the subject of the contract to the buyer, which is usually concluded at the time of conclusion of the sale contract;
• issue the subject substance of the contract.

To obligations of the buyer must:

• receipt of the subject substance of the contract;
• payment of the price for the subject substance of the contract received.

It is worth remembering that the price can be determined by indicating the basis for its determination, and if it is apparent from the circumstances that the parties had respect to the price adopted in the relations of a given type, it shall be read in case of uncertainty that it was a price at the place and time at which the item is to be issued to the buyer.

From the sale contract there is simply a anticipation withdrawal, where a contract work is left in hold or where a defect in the goods sold is identified.

With respect to stay in detention, the provisions of the civilian Code state, inter alia, that if 1 of the parties is allowed to hold in the performance of the common agreement, the another organization may set an appropriate additional time limit for it to comply with the hazard that, in the event of the unsuccessful expiry of the prescribed time limit, it will be entitled to retreat from the contract. It may besides either without an additional deadline, or after it has been unsuccessfully terminated, request the performance of the undertaking and the compensation of harm resulting from the hold [see Article 491(1) of the civilian Code].

In turn on the basis of Article 492 of the civilian Code Where the right to retreat from the common agreement is reserved in the event of a default within a strictly specified period, the organization entitled to retreat from the agreement may, if the another organization has delay, without any additional deadline. The same applies to the case where the performance of an undertaking by 1 of the parties after the deadline would not be applicable to the another organization due to the characteristics of the undertaking or to its intended intent of the contract, known to the organization in delay.

This Regulation shall apply when:

• the right to retreat from the common agreement is reserved in the event of default within a strictly specified period;
• the performance of the undertaking by 1 of the parties after the deadline would not be applicable for the another party, either due to the nature of the undertaking or due to its intended intent of the contract, to a organization who is aware of it [yes A. Lutkiewicz-Rucińska [in:] Civil code. Updated comment, ed. M. Balwicka-Szrzyrba, A. Sylwestryk, LEX/el. 2023, Art. 492].

In turn, if the item sold has a defect, the buyer may make a message of price simplification or withdrawal unless the seller immediately and without undue inconvenience to the buyer replace the item defective with a defect free of defects or the defect is removed. This regulation shall not apply if the item has already been mentioned or repaired by the seller or the seller has not satisfied the work to exchange items for defects or to remove defects [cf. Article 560(1) of the civilian Code].

Declaration of withdrawal is simply a unilateral declaration of will and means that the organization waives the liability issues arising from the contract concluded – then specified an agreement is deemed not to have been concluded.

Rat sales

In accordance with Article 583 of the civilian Code:

• A sale on an instalment shall be made in respect of the business of the undertaking to sale movable goods to a natural individual at a price to be paid in specified instalments if, according to the contract, the item is to be issued to the buyer before the full payment of the price [cf. § 1];
• The issuing by the buyer of a voucher to cover or safe the acquisition price shall not preclude the application of the provisions of this Chapter [see § 2].

Not only any movable and immobile items, specified as a computer, a car, a single-family house, an apartment, a land property, but besides energy, rights and beneficial water, animals or collections of things and rights, can be the subject of installment.

The parties to the contract of installment shall be:

• the seller;
• Buyer.

The duties of the seller include:

• the transfer of ownership of the subject of the contract to the buyer, which is usually concluded at the time of conclusion of the sale contract; issue the subject substance of the contract.
• issue the subject substance of the contract.

The buyer's duties include:

• receipt of the subject substance of the contract;
• payment of the price for the object of the contract received in the instalment system.

Guarantee for installment

The provisions of the civilian Code supply that the liability of the seller for the defects of the item sold in instalments may be excluded or limited only in cases provided for in the peculiar provisions [see Article 584 of the civilian Code].

It is not permissible to usage clauses that could modify the government of liability of the seller to the detriment of the buyer by, for example, limiting or excluding the anticipation for the buyer to exercise his rights under the warranty provisions [yes K. Osajda (ed. series), W. Borisiak (ed. volume), civilian Code. Comment. Edition 31, Warsaw 2023).

It is worth pointing out at this point that Article 556 et seq. The civilian Code was regulated general issues related to the warranty. In accordance with Article 556 of the civilian Code, therefore, The seller is liable to the buyer if the item sold has a physical or legal defect (arm).

In turn, in accordance with Article 556(1) of the KC, in particular, the sale is incompatible with the contract if:

• there is no jurisdiction that specified a thing should have by reason of the intent in the contract identified either by circumstances or by destination;
• there are no characteristics the seller has provided to the buyer, including a example or a design;
• not suitable for the intent which the buyer informed the seller erstwhile the contract was concluded and the seller did not rise any objection as to its intended purpose;
• was issued to the buyer in an incomplete state.

Liability of the seller for the warranty includes 2 types of defects: physical and legal. The physical defect of things is regulated in Article 556(1) KC, while the legal defect is regulated in Article 556(3) KC. The legislator does not specify the concept of defect itself. The case-law emphasises that the defect cannot be a physical and legal defect at the same time [cf. ultimate Court judgement of 18 October 2018, No. IV CSK 323/17].

And if you want to know what a warrant is erstwhile you sell, Read this article.

Payment of the price — instalment payment

A characteristic feature of selling items per instalment is payment of the price in instalments. The sale price of the item in question is known in advance to the buyer, but it is paid in instalments and their dues are determined by the provisions of the sale contract. It is crucial to remember, however, that we should not always stick to the rigid agenda of repayment of the purchased item, for it is possible to pay the price before its date.

The buyer may pay instalments before the payment deadline. In case of early payment, the buyer may deduct the amount that corresponds to the interest rate applicable to the kind of loans of the National Bank of Poland [see Article 585 of the civilian Code].

The intent of this provision is to exclude the anticipation of a contractual ban on payment of the instalment before the payment date, which means that it is possible for the buyer to repay the work in advance (prices). In the literature, which is peculiarly important, it is pointed out that the right to pay instalments before the payment date and the benefits associated with this on the buyer's side do not entail a full overpayment. It is adequate to overpayment only part of the next instalment, deducting at the same time the corresponding part of the saved interest [yes. M. Gutowski (ed.), civilian code. Tom II. Comment. Articles 353–626. Edition 3, Warsaw 2022).

Retention and withdrawal

In accordance with regulation 586 of the civilian Code:

• The reservation of the immediate maturity of the unpaid price in the event of failure to meet the deadlines of the individual instalments shall be effective only if it has been made in writing at the conclusion of the contract and the buyer is in hold with payment of at least 2 instalments and the full amount of outstanding instalments exceeds 1 5th of the agreed price [cf. §1];
• The seller may retreat from the contract due to a failure to pay the price only if the buyer is in hold with payment of at least 2 instalments and the full amount of outstanding instalments exceeds 1 5th of the agreed price. In specified a case, the seller should set an appropriate additional time limit for the buyer to pay the backlog with the hazard that, in the event of an unsuccessful expiry of the prescribed time limit, he will be entitled to retreat from the contract [see §2];
• Contractual provisions little favourable to the buyer are invalid. The provisions of this Article shall apply alternatively [see §3].

When there is simply a hold on the buyer's part with payment of the price in the event of the conclusion of a sale contract for instalments, the above provision regulated 2 issues relating to protection of the seller, that is:

• the anticipation of a contractual reservation of the immediate maturity of the unpaid price in the event of failure of individual instalments;
• the anticipation of withdrawal from the contract due to the fact that the buyer fails to comply with the work to pay the price.

The provision of Article 586(2) of the civilian Code gives emergence to the right to retreat from the contract which has ex tunc effects, i.e. the legal act is considered to be non-existent from the very beginning. However, it is crucial to remember erstwhile the seller can retreat from the contract – due to the fact that this is only possible if the buyer is paid at least 2 instalments and the full amount of outstanding instalments exceeds 1/5 of the full selling price. WHAT is peculiarly crucial does not should be successive instalments, it is crucial that this is at least 2 instalments. In specified a situation, the provision requires the seller to set an appropriate additional time limit for the buyer to pay back with the hazard that, in the event of an unsuccessful expiry of specified a time limit, he will be entitled to retreat from the contract. delight note that failure to meet these conditions prevents the seller from effectively withdrawing from the contract.

If an effective withdrawal from the contract occurs, as in the case of sales, the parties are obliged to return to each another what they have received from each another on the basis of a contract already concluded and the outgoing organization may besides claim compensation for the harm resulting from default.

In turn, the buyer as a consumer has 14 days to submit a possible withdrawal declaration. The time limit for withdrawal from a distance or off-premises contract shall run:

• from the consumer taking possession of the goods, or
• from the date of conclusion of the contract.

The first solution applies to contracts which oblige the trader to transfer and issue the goods to the consumer, while the second applies to all another contracts.

Sale on loan

Article 588 of the civilian Code provides that:

• The provisions of this Chapter shall apply mutatis mutandis in cases where a movable item is sold to a natural individual utilizing a debt granted for this intent by the bank, if the debt is to be paid in instalments and the item was issued to the buyer before the full repayment of the debt [see §1];
• To safe claims of the bank which lends the credit, it shall have a statutory right of lien on the goods sold as long as the item is with the buyer [cf. §2];
• The liability of the warranty for defects of things is solely borne by the seller [see §3].

It follows from the above that:

• the bank provides credit to finance the acquisition of movable property by a natural person;
• the credit granted to the buyer is repaid in the instalment system;
• the item is issued to the buyer by the seller before the full repayment of the loan.
• the statutory collateral for claims under the credit agreement is the statutory right of the lien that the bank is entitled to for goods sold.

Model of contract of sale for instalments

You can model your contract of sale in instalments download here.

Summary

The sale in instalments is undoubtedly an attractive form of sale where the buyer is not able to acquisition and pay the acquisition item once. However, it is worth remembering that it is the Buyer's work to pay the instalments according to the agenda adopted in the agreement, due to the fact that the default in the form of already 2 instalments gives the seller the chance to retreat from the contract.

If you want to know what the distance withdrawal process is, read this article.