Download presentation
Presentation is loading. Please wait.
Published byJob Matthews Modified over 9 years ago
1
CONSUMER & HOUSING LAW Unit VI – Individual & The Law
2
CONTRACTS Chapter 22
3
ELEMENTS OF A CONTRACT A contract is an agreement between two or more persons to exchange something of value A party who fails to live up to such a promise has breached (broken) the contract A legally binding contract must have certain elements: There must be and offer Then there must be an acceptance There must be an exchange of consideration – things of value have been ‘exchanged’ Persons entering into a contract have to be legally competent
4
MINORS AND CONTRACTS Minors may make contracts They cannot be forced to carry out their promises The can cancel or refuse to honor the contract but they must return the consideration still in their possession This is to keep minors from being taken advantage of due to Age Lack of experience Most places require an adult to cosign with a minor on the contract The adult is then responsible if the minor backs out of the contract Minors may be held to contracts that involve Food Clothing Shelter Medical aid Minors who make payments after reaching the age of majority are said to have ratified the contract; therefore, they may no longer back out of the contract
5
WRITTEN & ORAL CONTRACTS Contracts that MUST be in writing: Sale of land/real estate Sale of goods priced over $500 Agreements to pay another person’s debt Agreements that cannot be met within a year from the date of the agreement The law favors written contracts. They are much easier to enforce!
6
ILLEGAL CONTRACTS Unconscionable contracts are those that the court feels are too Unfair Harsh Oppressive Paying a very high price for something is not typically considered to be unconscionable
7
Requirements for a contract to be deemed unconscionable: The consumer is presented with a contract on a take-it-or-leave-it basis There is very uneven bargaining power between the parties Fraud and misrepresentation are grounds for invalidating a contract Salespeople cannot lie about a product Salespeople are not required to volunteer information unless they are asked to do so.
8
WARRANTIES Chapter 23
9
EXPRESS WARRANTIES A warranty is a promise or guarantee made by a seller concerning the quality or performance of goods offered for sale If the seller does not live up to the promises made in the warranty, the contract has been breached (broken) An express warranty is a statement (written or oral) concerning the quality or performance of goods offered for sale that becomes a part of the bargain between the parties
10
Express warranties are created by statements of fact Example: You only have to change the oil in this car every 10,000 miles If the seller’s statement is merely an opinion or exaggeration it is ‘puffing’ or sales talk and cannot be trusted Puffing doesn’t usually create an express warranty because it’s so exaggerated you should know better
11
Sellers DO NOT have to give written warranties Magnuson-Mass Warranty Act requires written warranties Disclose all essential terms and conditions in a single document Be in simple, easy-to-read language Be made available to the consumer before the sale The warranty DOES NOT apply to products $15 or less
12
The act labels warranties either full or limited Full Warranty A defective product will be fixed or replaced for free The consumer doesn’t have to do anything unreasonable to get the warranty service The product will be fixed within a reasonable time once the problem is reported by the consumer If the product repeatedly messes up, it will be replaced or the consumer will be refunded The warranty applies to anyone who owns the product during the warranty period
13
IMPLIED WARRANTIES An unwritten promise created by law, that a product will do what it is supposed to do Three types of implied warranties Warranty of merchantability An unwritten promise that the item sold is of at least average quality for that type of item Warranty of fitness for a particular purpose Exists when a consumer tells a seller before buying an item that it is needed for a specific purpose or will be used in a certain way Warranty of title A seller’s promise that he or she owns the item being offered for sale
14
Consumers who are harmed by products may be able to sue for damages because the manufacturer or seller has breached a warranty Consumers may also be able to recover damages based either on the negligence of the manufacturer or seller
15
DISCLAIMERS An attempt to limit the seller’s responsibilities should anything go wrong with a product Implied warranty disclaimers ‘with all faults’ ‘as is’
16
CREDIT Chapter 24
17
CREDIT CARDS AND CHARGE ACCOUNTS Credit means buying goods or services now in exchange for a promise to pay in the future Creditors lend money Debtors borrow the money Credit terms Finance Charges more money owed to the creditor to compensate them for ‘loaning’ you the money Interest is the money the creditor makes for loaning you money Annual Percentage Rate (APR) the percentage cost of credit on a yearly basis
18
Unsecured Credit – no collateral, just a promise to repay Secured Credit – has collateral worth the money you have borrowed Car payments, if you don’t pay the repo man takes the car away!
19
EFT Cards & Debit Cards Both allow for funds to be electronically transferred from your bank account to the place where you used the card If you lose your card or it’s stolen you have 2 days to report it Report within the two days, you are only responsible for $50 of unapproved withdrawals More than two days, you are responsible for up to $500 of unapproved withdrawals
20
WHEN SHOULD YOU USE CREDIT? Credit is best used only to purchase Homes – get a mortgage Cars – try to stay within 3 years of payments Education – college loans are good if the education/degree you receive helps you to better yourself and make more money
21
THE COST OF CREDIT Interest Rates Usury is charging above the legal interest rate – it’s illegal Loan Sharking – people who lend money at high, illegal rates of interest, then hurt or kill people when they can’t repay the money Costly Credit Arrangements Balloon Payments – you make payments for a few years then the balance of the loan has to be paid in full Acceleration clause this permits the creditor to accelerate the loan making all future payments due immediately in the event the debtor misses a payment. Bill Consolidation – combining all bills together for one payment
22
Truth in Lending Truth in Lending Act – law requiring creditors to give your certain basic information about the cost of buying credit The creditor must tell you IN WRITING and BEFORE YOU SIGN a contract what the Annual percentage rate is Finance charge is
23
WHAT LENDERS WANT TO KNOW BEFORE EXTENDING CREDIT Is the consumer a reliable person? Does the consumer have a steady income that is likely to continue into the future? Is the consumer’s income high enough to enable him or her to pay for the items to be purchased? Does the consumer have a good record (credit rating) in paying off other loans and bills?
24
WHAT TO DO IF YOU ARE DENIED CREDIT The Equal Credit Opportunity Act says creditors must tell consumers why they were turned down. The must be specific The Fair Credit Reporting Act requires creditors who deny credit based on information received from a credit bureau to tell you that fact.
25
DEFAULT AND COLLECTION PRACTICES What a Consumer Can Do in Case of Default Reassess your financial lifestyle to find where you went wrong Notify each creditor of the problem and ask to have the term of debt extended or the amount owed reduced Contact a consumer credit counseling service of family service agency that offers free or low-cost financial counseling Seek assistance from friends or relatives to reduce the debt to a manageable level
26
In worst case scenarios you can declare bankruptcy The debtor puts their assets under the control of a federal court in order to be relieved of debt Chapter 7 – the federal court takes control of most of the debtor’s assets, sells them, and pays off as much debt as possible Chapter 13 – the federal court takes control and allows the debtor to work and pay back all or a portion of their debt.
27
Creditor Collection Practices Fair Debt Collection Practices Act in 1978 Protects consumers from abusive and unfair collection practices by professional debt collectors Calls and Letters You can report collectors who are harassing you to the FTC You can send bill collectors a notice demanding that all collection contacts cease Repossession The creditor can usually take back the collateral if you default on the loan Court Action As a last resort, creditors may sue debtors in court for the exact amount owed on the debt Default Judgment – these are usually issued if the debtor DOES NOT show up in court Garnishment and Attachment Creditors use a court order that forces the debtor’s employer to withhold part of the debtor’s wages and pay it directly to the creditor Creditors can also get a court order, an attachment, that forces a bank to pay the creditor out of the consumer’s bank account or seize the consumer’s property to sell it to pay off the debt
Similar presentations
© 2025 SlidePlayer.com. Inc.
All rights reserved.