Michigan Collections Manager License Practice Test

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Which of the following must not be included in an installment sales contract according to legal guidelines?

  1. Provisions about collateral

  2. Rules about product condition

  3. Clauses waiving better business practices

  4. Details on payment schedules

The correct answer is: Clauses waiving better business practices

In the context of an installment sales contract, clauses that waive better business practices are typically prohibited because they undermine consumer protection laws. The legal framework seeks to uphold ethical practices in sales, ensuring that consumers can rely on certain standards of conduct from sellers. By including a waiver of better business practices, a seller might attempt to avoid liability for issues such as misrepresentation, defects, or unfair treatment in the sales process, which goes against the spirit of consumer protection laws designed to promote fair dealing. On the other hand, the other elements mentioned, such as provisions about collateral, details on payment schedules, and rules about product condition, are essential components of an installment sales contract. These aspects provide transparency and protect both parties involved in the contract, ensuring that there is a clear understanding of the obligations and rights that are being established.

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