What is a contract? A contract is any agreement between two or more people from which each receives some benefit.
Can I make a contract before turning 18? Yes, but as a minor you could have terminated most contracts. Once you reach the age of 18, you can affirm a contract made as a minor either expressly or by failure to disaffirm it. Adults cannot usually enforce contracts against minors. That is why your parents, or some adult, probably had to co-sign any contract you made as a minor. You may be liable for the fair market value of necessary items purchased as a minor.
What are some likely contracts that I may soon be part of? Some of these contracts are:
- loan for education, to buy a car, or to make another large purchase
- installment purchase of some product
- apartment rental
- insurance
- marriage
- medical care.
Do all contracts have to be in writing? No. Many contracts (employment, some apartment leases, a promise to pay for medical care) are rarely in writing. But some contracts must be in writing. For example:
- any purchase of an item costing more than $500
- any contract to buy or sell land
- any contract that cannot be performed according to its terms within one year from the date that it is made.
What are some of the advantages of written contracts?
- Protection against misunderstanding–A written contract helps ensure that both parties understand what they have agreed to do.
- Protection against dishonesty–A written contract helps prevent dishonesty by the other person as to what you had agreed.
- Protection against poor memories–After a time people will usually have different recollections of their agreement even if there is no dishonesty.
What are some of the disadvantages of written contracts? Consumers are often forced to sign printed form contracts that are written to favor the seller. For example, a contract might attempt to limit warranties or say that the consumer must pay the business’s legal fees if there is a lawsuit to enforce the contracts. Some words contained in written contracts have technical legal meanings that are unknown to most people
What are some general rules to follow when I am asked to sign a contract?
- Do not sign anything until you are sure you understand the agreement.
- Read the entire contract (including language on the back of a form) before signing it.
- Ask questions about anything in the contract that you do not understand.
- Cross out parts of the contract that conflict with your agreement. If you do this, initial the cancellations and have the other party do so as well.
- Write in parts of your agreement that are not in the contract and have the other party initial the additions.
- Do not sign a contract if it contains any blank spaces; either fill them in or cross them out if they do not apply.
- Be concerned if someone asks you to sign a contract without reading it.
- Do not be intimidated by sales people.
- Do not be taken in by friendly sales people.
- Never sign anything unless you understand why you are being asked to sign and what you are agreeing to do.
- Be sure that you get a complete, accurate, signed copy of the contract.
What can happen if I do not perform a contract, e.g., miss payments or fail to perform other obligations? You can be sued. You as a “defendant” can be required to appear in court against the other person’s (plaintiff’s) claim against you. The judge or jury decides what the facts are, and the judge decides who wins. If you do not defend, you will lose by default. If you lose, a “judgment” will exist against you. Garnishment proceedings may be filed against you. If a garnishment is ordered against your wages, your employer will be ordered to pay up to 25% of your salary into the court for the benefit of your creditor. But if you are a Missouri resident and the head of a family, you may file an affidavit that has the effect of limiting the garnishment, in most cases up to 10% of your wages. Also, if you earn less than 30 times the minimum hourly wage per week, your wages are not subject to garnishment. The judgment can last until it is paid. Interest is added to the amount of judgment.
What can I do if I owe more money than I can pay? Some options include working out agreements to pay your debts back over a period of time, taking out a new loan to pay back existing debts, and bankruptcy.
Also, there are some consumer credit counseling agencies that may be able to help you.
What are some of the consequences of bankruptcy? Bankruptcy is a formal court proceeding. It is quite complicated. The result is that most debts are cancelled. Debts that are not cancelled include:
- debts obtained by fraud
- taxes
- debts that were not reported to the bankruptcy court
- debts for intentional and malicious injury to people or property
- education loans.
Bankruptcy can have a bad effect on your credit rating making it harder for you to obtain a loan in the future.
What is a credit rating? A credit rating is the sum of information compiled by a credit bureau from the various people to whom you owe or have owed money. It is intended to measure your ability to repay a debt. A good credit rating will be one that reflects prompt payment in all records. Please note that a “no credit” rating may be nearly as bad as “bad credit.”
How do I get a good credit rating? There are a number of ways, including: maintaining a savings account, buying low-priced items on time, getting a job, and using credit cards.
How long does it take to clear up a bad credit report? It depends on the seriousness of the past problems and the amount and purpose for a new loan. Generally, credit reporting agencies want references on loans and employment for the past five to seven years. A past bad credit rating can sometimes be avoided if the collateral for the present loan is sufficient. Under federal law, negative credit information is stale after seven years except in bankruptcy, which should be removed after ten years.
What is collateral? Collateral is anything that has value that can be given as security for a loan. The lender wants to identify property that has a value at least equal to the amount of the loan so that the property can be used to pay back the debt if you are unable to repay the loan.
What if I buy a TV or stereo on installments and have problems getting it fixed? If the store refuses to fix the set, can I refuse to make payments? It most cases, it is not wise to discontinue payments, because the seller will claim that you are in default on your obligations. In general, you may stop making payments IF the selling merchant financed your purchase himself AND IF you validly revoke your acceptance by notifying the seller of the reason for revocation. To use this remedy, however, the nonconformity of the goods (i.e., broken TV set) must be such that its value to you is substantially impaired and the nonconformity complained of was not caused by you. On the other hand, if someone other than the seller financed your purchase (i.e., a finance company or a bank) or the seller sold your promissory note to another party, your payments would most likely have to continue although the holder of your consumer note may also be subject to revocation, repair, or replace the set if defective under consumer warranties. In such cases, you may not revoke your acceptance and discontinue making payments. Under both state and federal law, a consumer does have the right to assert any defenses he or she has against the supplier of goods or services against the person holding the consumer contract under certain circumstances.
If I buy something with a high interest rate loan and later have money to pay off the loan, must I pay the entire amount of interest that would have been due over the term of the original contract? No. A consumer has a right to prepay a loan at any time without penalty. But beware of the Rule of 78 percent, which is a commonly used means of refunding on consumer contracts that loads the greatest portion of the interest at the beginning of the contract.
What are important considerations before buying on time? Make sure you understand how you will be paying interest on your purchase. For example, are you paying most of the interest or finance charge early on in the contract?
Rely on what is in the written contract and not on sales talk. If it is not written into the contract, it is not a part of the agreement.
Read every paper carefully before signing; do not sign anything you do not fully understand and never sign a form with blank spaces. If you have any questions, see an attorney before you sign. Legal advice obtained in advance is much cheaper than a lawsuit resulting from a contract dispute. Co-signing or guaranteeing a debt makes the co-signer equally responsible with the original signer for full payment of the debt.
A debtor is entitled to a notice of default and right to cure. This means a lender must tell you that you are in default on a loan and give you a chance to make things right. But an uncured default or repeated defaults can result in repossession or suit.
If a seller/holder repossesses the collateral, he or she may also be able to sue for an additional amount (called a deficiency) if the sale price when the seller sells it does not cover the entire debt.
Figure out how much it is costing you to buy on time. Compare the installment sale contract price with the cash price.
The disclosure laws give you an opportunity to compare the cost of credit. The federal disclosure laws require that there be four key disclosures: the amount of the loan or other credit, the finance charge (which is the dollar amount the credit is costing you), the annual percentage rate (which is the uniform measure of all finance charges), and the total of payments (which is the finance charge and the principal combined). The lender generally must provide this information to you on paper. If you compare these figures from contract to contract, it is very simple to tell which is the best deal.
It is absolutely essential to shop carefully for your credit. For major purchases, you should seek rates and terms from at least one bank, one savings and loan, one finance company, and one credit union (if you are eligible).
Pay off your credit cards before making the decision. The difference in finance charges can be very significant in the overall cost of the merchandise that you receive on time.
You are responsible for making each payment when it is due. If you have a legitimate reason for being late in making a payment, discuss this with the creditor before the payment is overdue. The creditor may be willing to work out arrangements by which you can meet the payments rather than taking legal action for collection.
What are some consumer protection laws and what do they do? Federal and state regulations have been adopted in many areas including: term paper sales; motor vehicle sales and repairs; home solicitation selling; and home improvement contracts.
- Truth in lending. This requires disclosure of credit costs and contract provisions. It also gives you a three-day right to cancel any credit sale that takes place at your residence.
- F.T.C. Door-to-Door Rule. This regulation creates a three-day rescission right for any contract on credit and cash sales of $25 or more that take place away from the seller’s regular place of business. Door-todoor contracts are required to contain a bold-faced notice of the cancellation right.
- Unsolicited credit cards. This law prohibits issuance of unsolicited credit cards.
- Fair Credit Reporting Act. Credit reporting agencies must obtain certifications from people who use credit reports, provide consumers access to credit records, provide consumers with the right to dispute information contained in the records, and reinvestigate any disputed information upon the consumer’s request. Credit-granting organizations are required to disclose the reasons for denial of credit.
- Equal Credit Opportunity Act. This prohibits discrimination in the granting of credit on the basis of sex or marital status. Credit-granting organizations are prohibited from requiring the signature of a spouse on a credit application except when needed to create a valid lien.
What is the difference between a “full” and a “limited” warranty? All warranties must be labeled as either “full” or “limited.” Under a “full” warranty, the dealer/manufacturer is given a reasonable number of chances to fix defects but then must allow you to choose a full refund or a replace25 ment without charge. A “full” warranty applies to anyone who owns the product during the warranty period. Few “full” warranties are given. The refund or replacement rights do not exist under “limited” warranties. Most warranties are “limited.”
Are warranties important? Yes, they establish your right to have defects fixed at no charge. You should always ask for a copy of the warranty. A dealer is required to give you a copy. Missouri has an Unfair Practices Act that gives you additional rights for breach of warranty or for other deceptive trade practices. This act offers consumers strong protection against defective products.
Do I have any protection after the stated warranty period ends? Maybe. There is usually an implied (unwritten) warranty created by statute that, for a reasonable time, an item purchased from a dealer will be fit for the purpose for which it was sold.
Do these warranties apply to used items? After the stated warranty period there are no warranties.
Do I have to pay for unauthorized work done by a repair shop? It depends on what you told the shop when you asked them to do the repairs.
The law protects all consumers on repair contracts, requiring written estimates under certain circumstances.
What if I bought a “lemon” motor vehicle? If you bought a new vehicle, you might be able to cancel the purchase if you bought it from a dealer. If a defect substantially impairs the value of the item, you must notify the dealer and give the dealer a reasonable number of chances to fix it. Within a reasonable time, you must notify the dealer that you are canceling the purchase and must return the item without substantial change to it. Missouri has a “lemon law” that allows you to cancel the purchase of a “lemon” motor vehicle in some circumstances.
Whom should I contact if I have consumer questions? The Consumer Protection Hotline of the Office of the Attorney General of Missouri 1-800- 392-8222.
At what age can a person enlist in the armed forces? At 17, with parental consent, or between 18 and 35.
Who is required to register for military service? All males upon reaching their 18th birthday must register. Females may also register.
How do I register? After his 18th birthday, each male is required to go to a local post office and fill out a form giving his name, address, birthdate, and social security number. Physical examinations will not be conducted and classification will not be issued at the time of the registration.
Will draft cards be issued when I register? No. If a draft occurs, you will be notified by Western Union mailgram. The mailgram will order you to report for physical examination and processing. It will also provide information on possible exemptions and deferments.
Consumer Protection Attorney General of Missouri P.O. Box 899 Jefferson City, MO 65102 (573) 751-3321 HOTLINE: 1-800-392-8222
Drivers License Missouri Department of Revenue 301 West High Street Jefferson City, MO 65102 (573) 751-2487
Unemployment Compensation Division of Employment Security Missouri Department of Labor & Industrial Relations 421 E. Dunklin St. Jefferson City, MO 65104 (573) 751-3215
Child Abuse Division of Family Services Missouri Department of Social Services P.O. Box 88 Jefferson City, MO 65103 (573) 751-3221 HOTLINE: 1-800-392-3738
Workers’ Compensation 3315 W. Truman Blvd. Jefferson City, MO 65102 (573) 751-4231
Child Support Enforcement Missouri Department of Social Services 221 West High Street Jefferson City, MO 65102 (573) 751-4301
MISSOURI LEGAL SERVICES PROGRAM (LEGAL AID) Southeast Missouri Legal Services, Inc. 116 North Main Street P.O. Box 349 Charleston, MO 63834 (573) 683-3783 or (800) 748-7456
Meramec Area Legal Aid Corp. P.O. Box 135 Rolla, MO 65401 (573) 341-3655 or (800) 999-0249
Legal Aid of Western Missouri 1005 Grand Avenue Kansas City, MO 64106 (816) 474-6750
Legal Services of Northeast Missouri, Inc. 801 Broadway P.O. Box 1276 Hannibal, MO 63401 (573) 248-1111
Legal Services of Eastern Missouri, Inc. 4232 Forest Park Blvd. St. Louis, MO 63108 (314) 534-4200 or (800) 444-0514
Mid-Missouri Legal Services. Corp. 205 E. Forest Ave. Columbia, MO 65203 (573) 442-0116 or (800) 568-4931
Legal Aid of Southwest Missouri Woodruff Bldg, Suite 426 333 Park Central East Springfield, MO 65806 (417) 862-1100 or (800) 444-4863
Public Defender Office of the State Public Defender 231 East Capitol Avenue Jefferson City, MO 65101 (573) 526-5210
Missouri Individual Income Tax Missouri Department of Revenue P.O. Box 200 Jefferson City, MO 65105 (573) 751-3505
Property Taxes State Tax Commission 621 E. Capitol Ave. Jefferson City, MO 65101 (573) 751-2414
Higher Education Department of Higher Education 3515 Amazonas Jefferson City, MO 65109 (573) 751-2361
NEED A LAWYER? Out-State Missouri Missouri Bar Lawyer Referral Serv. P.O. Box 119 Jefferson City, MO 65102 (573) 636-3635 (hours: 9:00-12:00 and 1:00-3:00 p.m.) In St. Louis (314) 621-6681 In Kansas City (816) 221-9472 In Springfield (417) 831-2783