An installment contract involves a person or company fulfilling the terms of the contract agreed upon with another party with a series of installments. This is in contrast to a contract wherein an individual or company is required to immediately fulfill the terms and conditions in full after signing the agreement.
This type of contract is common in business deals. It can involve the purchase of a certain product or it can also involve services. For instance, a burger chain reaches an agreement or installment contract with a bakeshop for the latter to supply the burger buns within a period of six months. Depending on the frequency agreed upon, the bakeshop may deliver the buns based on a certain volume required by the burger chain on a weekly basis or three times a week as part of their installment contract.
An installment contract is also often involved in a car loan. In this case, the buyer of the car may not have enough cash to pay for the vehicle in full upon purchase so he decides to secure a car loan. The buyer and the lending company execute an installment contract which requires the borrower to pay his loan on installment. A set amount is determined by the lender that should be paid by the borrower every month.
Should one party fails to fulfill his obligation, the other party involved can file a case. In the case of a car loan, if the borrower eventually fails to complete his payments, the lender can sue him for the remaining balance that was not paid.