Conditional Sale in United States

Practical Information

Note: Some of this information was last updated in 1982

An installment sale. The buyer usually gives the seller a promissory note secured by a conditional sale contract or a chattel mortgage. A conditional sale contract is a contract for the sale of goods under which the goods are delivered to the buyer but the title remains in the seller until the goods are paid for in full, or until the conditions of the contract are fulfilled. When a chattel mortgage is used, the seller transfers the goods to the buyer who, in turn, executes a chattel mortgage in favor of the seller. This instrument gives the seller a lien on the goods.

The seller’s choice of security instrument depends upon the laws in the seller’s state. The seller studies the laws and selects the type of instrument that provides the most protection with the least inconvenience. The instrument usually includes a provision that if an installment is not paid for when due, the entire debt becomes payable at once. This clause, called the acceleration clause (in U.S. law), is essential in any installment contract. Otherwise the seller would have to sue for the amount of each installment as it became due, or would have to wait until the debt matured. See also contract (in U.S. law) ; recording (in U.S. law) (of Real Estate Instruments).

(Revised by Ann De Vries)

What is Conditional Sale?

For a meaning of it, read Conditional Sale in the Legal Dictionary here. Browse and search more U.S. and international free legal definitions and legal terms related to Conditional Sale.

Conditional Sale of Real Property in the context of Real Estate

Resurces

See Also

• Land Contract