Michigan Collections Manager License Practice Test

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Prepare for the Michigan Collections Manager License Test with flashcards and multiple choice questions. Each question is equipped with hints and detailed explanations to enhance your understanding and readiness.

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What happens if a buyer violates the terms of an installment sales contract?

They must pay a flat fee
The contract may be terminated
They are subject to legal action
They can renegotiate the contract

The correct answer is: They are subject to legal action

When a buyer violates the terms of an installment sales contract, one possible outcome is that they are subject to legal action. This is because such a violation constitutes a breach of contract, which gives the seller legal grounds to enforce their rights under the agreement. The seller may choose to pursue various remedies, including seeking damages for any losses incurred due to the buyer's failure to comply with the contract terms. This can involve filing a lawsuit or taking other legal steps to recover amounts due or to reclaim the sold goods, depending on the specifics of the contract and the nature of the violation. While terminating the contract can also be a potential course of action, the option to pursue legal action highlights the emphasis on enforcing the contract and ensuring compliance. In some cases, simply renegotiating or paying a flat fee to resolve the matter might not adequately protect the seller's interests or rights in the situation. Thus, understanding the implications of a breach is crucial for both buyers and sellers involved in an installment sales contract.