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Have You Accidently Given Your Customer the Right to Pay You Late or Not the Full Amount?

There are numerous rights and privileges granted in a contract between a dealer and customer, but the real essence of the contract is the right of the purchaser to possess the vehicle and the right of the dealer to receive payment in the form and manner stated in the contract. Yet, under certain circumstances, a court may view the dealer as having waived the right to payment in the form and manner stated in the contract. 

Notice to Cure

For example, a court may find a dealer has waived his right to strict compliance with the terms of the contract by accepting either partial or late payments from a customer who is unable to make timely and full payments. This is especially true when the dealer previously accepting partial or untimely payments from the customer on numerous occasions because some courts view this the same as the dealer telling the customer it is acceptable to make late or partial payments. Some courts have even found this to be true when the contract states that a dealer does not waive their right to strict compliance by accepting partial or late payments. 
 

Therefore, if you have accepted late or partial payments, the safest practice is to send out a “notice to cure.” A typical notice to cure will demand full payment of the past due amount, timely full payment of the next installment due under the contract, and a clear notice that the dealer will not accept any late or partial payments in the future. After sending the notice to cure, courts will view the dealer as having reset the expectation of the customer. 

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