Is a contract on an installment loan voided after a certain period of time if the finance company fails to draft payments as agreed?

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Is a contract on an installment loan voided after a certain period of time if the finance company fails to draft payments as agreed?

I originally signed a contract to make 10 installments of $100 with a furniture store back in 09/09. The finance company that financed the loan was having financial issues shortly after so the furniture store was never payed and payments were not withdrawn from my bank account. Now we’re in late 10/10 and they are contacting me to collect payments. Wouldn’t the contract be voided since they failed to fulfill they’re side of the contract and withdraw the payments during the agreed time of the following 10 months?

Asked on October 25, 2010 under Bankruptcy Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Unfortunately, a failure by one party to take payments out earlier does not invalidate a contract. Generally speaking, the side negatively impacted by some failure or breach--in this case, the financing company, since they are  the ones who didn't get the money--has a  right to waive the breach; also, a party to a contract can generally enforce its terms in his/her/its favor at any time, and is not precluded from enforcing them because the party choose to not enforce them earlier. In short, the fact that you didn't have to pay earlier does not mean that you don't have to pay now.

As for not paying the store--if you did not get the furniture, or the furniture was taken back from you, that would likely be a material breach absolving you from paying. But if you have the furniture, then it's not--if it's simply the store's issue, in that the store didn't get the money coming to it, the store may have grounds to sue the financing company, but not you, since you were not injured and from your perspective, this is not a breach.


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