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Zorluk: ZorForms and Instruments of Credit

A customer acquires a commercial generator under a credit sale agreement, taking immediate delivery and agreeing to pay in six equal monthly instalments. After paying the second instalment, the customer sells the generator to an innocent third party and defaults on all subsequent payments to the original vendor. What legal remedy is available to the original vendor?

  1. Sue the customer for the recovery of the unpaid balance of the purchase price.Cevap
  2. B
    Repossess the generator immediately from the third party without court intervention.
  3. C
    Void the transaction with the third party under hire purchase statutory regulations.
  4. D
    Issue a credit note to the third party to demand the return of the equipment.

Cevap

The original vendor can only sue the defaulting customer for the recovery of the unpaid balance of the purchase price, as title to the goods passed to the buyer immediately upon contract formation.
Under a Credit Sale agreement (deferred payment), legal ownership of the goods passes to the buyer immediately upon delivery. Consequently, the buyer becomes the lawful owner and can validly pass good title to an innocent third party. If the buyer defaults on remaining payments, the original vendor cannot seize the asset but retains the right to sue the defaulting buyer in court for the debt owed.

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1
Identify the credit arrangement type.
The transaction is a Credit Sale (deferred payment) scheme rather than a Hire Purchase contract.
Credit sale agreements transfer full legal ownership of goods to the buyer at the point of agreement or delivery, even though payment is deferred.
2
Determine ownership status at the time of resale.
The customer was the legal owner when selling to the third party.
Since title passed upon initial delivery, the customer had full legal rights to sell the property to a third party.
3
Evaluate the vendor's legal rights upon default.
The vendor has no right of repossession against the third party and must seek monetary recovery from the debtor.
Because the vendor no longer holds title to the goods, the remedy is restricted to an action for breach of contract to recover the outstanding balance.

Anahtar Kavram

Distinction between legal title transfer under Credit Sale and Hire Purchase contracts
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Konular

Forms and Instruments of Credit

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