Michigan Collections Manager License Practice Test

What is prohibited regarding liability relief in an installment sales contract?

1. Relieving seller from liability for breaches

2. Limiting application of state laws

3. Backing out of agreements due to buyer fault

4. Ignoring privacy considerations

The correct answer is: Relieving seller from liability for breaches

In an installment sales contract, it is prohibited to relieve the seller from liability for breaches. This means that a seller cannot completely absolve themselves of responsibility for failing to meet the terms of the contract. Such provisions would undermine the fundamental principle of accountability in contractual agreements. Buyers have the right to seek remedies if the seller fails to fulfill their obligations, and allowing a seller to bypass this liability could lead to unfair business practices and lack of protection for the buyer. The integrity of legal contracts relies on both parties being held accountable for their commitments. Allowing a seller to avoid responsibility when they breach a contract would not only be unjust but could also diminish trust in commercial transactions. A contract is intended to establish rights and responsibilities clearly, and the prohibition on relieving sellers from liability ensures that both parties have a fair legal framework to rely on. Regarding the other options, they relate to different concepts. Limiting application of state laws or ignoring privacy considerations could undermine consumer protections, while backing out of agreements due to buyer fault often involves a more nuanced examination of the reasons behind contract termination. However, the primary concern in installment sales contracts is the seller's accountability for their obligations, thereby making the prohibition on relieving seller liability particularly critical.