Code Section Group

Civil Code - CIV

DIVISION 3. OBLIGATIONS [1427 - 3272.9]

  ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. )

PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273]

  ( Part 4 enacted 1872. )

TITLE 2. CREDIT SALES [1801 - 1812.35]

  ( Title 2 added by Stats. 1959, Ch. 201. )

CHAPTER 1. Retail Installment Sales [1801 - 1812.20]

  ( Chapter 1 added by Stats. 1959, Ch. 201. )

ARTICLE 8. Add-on Sales [1808.1 - 1808.5]
  ( Article 8 added by Stats. 1959, Ch. 201. )

1808.1.
  

A retail installment contract, which otherwise conforms to the requirements of this chapter, may contain the provision that the seller may at his option add subsequent purchases made by the buyer to the contract, and that the total price of the goods or services covered by the contract shall be increased by the price of such additional goods or services, and that all finance charges and installment payments may at the seller’s option be increased proportionately, and that all terms and conditions of the contract shall apply equally to such additional goods or services. The contract may also provide that the goods purchased under the previous contract or contracts shall be security for the goods purchased under the subsequent contract but only until such time as the total of payments under the previous contract or contracts is fully paid.

(Amended by Stats. 1970, Ch. 546.)

1808.2.
  

When a subsequent purchase is made, the entire amount of all payments made previous thereto shall be deemed to have been applied toward the payment of the previous deferred payment price or deferred payment prices. Each payment thereafter received shall be deemed to be allocated to all of the various deferred payment prices in the same proportion or ratio as the original cash sale prices of the various purchases bear to one another; where the amount of each installment payment is increased in connection with the subsequent purchase, the subsequent payments (at the seller’s election) may be deemed to be allocated as follows: an amount equal to the original payment to the previous deferred payment price, and an amount equal to the increase, to the subsequent deferred payment price. However, the amount of any initial or downpayment on the subsequent purchase shall be deemed to be allocated in its entirety to such purchase.

When a subsequent purchase under this section is made the seller shall deliver to the buyer, prior to the due date of the first installment, a memorandum which shall set forth the following:

(a) The names of the seller and the buyer, the place of business of the seller, the residence or place of business of the buyer as specified by the buyer and a description of the goods and services sufficient to identify them. Services or multiple items of goods may be described in general terms and may be described in detail in a separate writing.

(b) The cash price of the goods, services and accessories which are the subject matter of the new retail installment sale.

(c) The amount of the buyer’s downpayment, itemizing the amounts paid in money and in goods and containing a brief description of the goods, if any, traded in.

(d) The difference between item (b) and item (c) which is the unpaid balance of cash price.

(e) The amount of the existing outstanding balance to be consolidated, which consists of the unpaid time balance or balances of the prior contract or contracts to be consolidated.

(f) The amount of any unearned finance charge, determined by deducting from the amount of item (e) any then unearned finance charge in an amount not less than the refund credit provided for in Article 6 (commencing with Section 1806.1) of this chapter (computed, however, without the allowance of any minimum earned finance charge).

(g) The difference between items (e) and (f), which is the net outstanding balance to be consolidated.

(h) The amount, if any, included for insurance, specifying the coverages.

(i) The amount, if any, of official fees.

(j) The unpaid balance, which is the sum of items (d), (g), (h) and (i).

(k) The finance charge (1) expressed as the annual percentage rate as defined in Regulation Z and (2) expressed in dollars, and computed in conformity with Section 1808.5.

(l) The number, amount, and due dates or periods of payment scheduled to repay the indebtedness and the sum of such payments.

(m) Any “balloon payments” as described in Section 1807.3.

The items need not be stated in the sequence or order set forth above; additional items may be included to explain the computations made in determining the amount to be paid by the buyer. If the finance charge or any portion thereof is calculated on the 365-day basis, the amount of the finance charge shown pursuant to item (k) shall be that amount which will be incurred by the buyer if all payments are received by the seller on their respective due dates.

(Amended by Stats. 1979, Ch. 805.)

1808.3.
  

If a credit sale is one of a series of transactions made pursuant to an agreement providing for the addition of the amount financed plus the finance charge for the current sale to an existing outstanding balance, and the disclosures required under this article for the initial sale and each subsequent sale are delayed until some date prior to the date the first payment for that particular sale is due; and

(1) The customer has approved in writing both the annual percentage rate or rates and the method of treating any unearned finance charge on an existing outstanding balance in computing the finance charge or charges; and

(2) The seller retains no security interest in any property as to which he has received payments aggregating the amount of the sale price including any finance charges attributable thereto; then, for the purposes of this section, in the case of items purchased on different dates, the first purchased shall be deemed first paid for, and in the case of items purchased on the same date the lowest priced shall be deemed first paid for.

When a credit sale under this section is made, the seller shall deliver to the buyer, prior to the due date of the first installment, a memorandum which shall set forth the following:

(a) The names of the seller and the buyer, the place of business of the seller, the residence or place of business of the buyer as specified by the buyer and a description of the goods and services sufficient to identify them. Services or multiple items of goods may be described in general terms and may be described in detail in a separate writing.

(b) The cash price of the goods, services and accessories which are the subject matter of the new retail installment sale.

(c) The amount of the buyer’s downpayment, itemizing the amounts paid in money and in goods and containing a brief description of the goods, if any, traded in.

(d) The difference between item (b) and item (c), which is the unpaid balance of cash price.

(e) The amount, if any, included for insurance, specifying the coverages.

(f) The amount, if any, of official fees.

(g) The amount financed, which is the sum of items (d), (e) and (f).

(h) The amount of the finance charge (1) expressed as the annual percentage rate as defined in Regulation Z and (2) expressed in dollars, which is to be computed in accordance with this chapter.

(i) The deferred payment price, which is the sum of the amounts determined under items (b), (e), (f) and (h).

(j) The previous balance, which is the amount owing on prior purchases.

(k) The number, amount, and due dates or periods of payments scheduled to repay the indebtedness and the sum of such payments.

(l) Any “balloon payments,” as described in Section 1807.3.

The items need not be stated in the sequence or order set forth above; additional items may be included to explain the computations made in determining the amount to be paid by the buyer. If the finance charge or any portion thereof is calculated on the 365-day basis, the amount of the finance charge shown pursuant to item (h) shall be that amount which will be incurred by the buyer if all payments are received by the seller on their respective due dates.

(Amended by Stats. 1979, Ch. 805.)

1808.4.
  

Until the seller delivers to the buyer the memorandum as provided in Sections 1808.2 and 1808.3, the buyer shall be obligated to pay only the cash price of the subsequent purchase.

(Amended by Stats. 1970, Ch. 546.)

1808.5.
  

Subject to the other provisions of Article 5 (commencing with Section 1805.1), the finance charge to be included in a consolidated total of payments under subdivision (

l) of Section 1808.2 shall be determined by applying the finance charge at the applicable rate to the unpaid balance under subdivision (j) of Section 1808.2, for the period from the date of the consolidation to and including the date when the final installment of the consolidated total is payable.

(Amended (as amended by Stats. 1988, Ch. 479, Sec. 7) by Stats. 1991, Ch. 819, Sec. 11.)

CIVCivil Code - CIV8