Carl agrees to buy a refrigerator from his local appliance store under an installment plan, with eight monthly payments of $100. The store immediately, and properly, assigns the deal to a finance company for $750 in cash. After the refrigerator is delivered it utterly fails to operate, and Carl refuses to make his payments to the finance company. The finance company demands continued payments and indicates that any issue of faulty goods must be taken up with the store as a separate matter. In this regard, it is in Carl's best interest to continue to make his payments lest he be successfully sued for being in breach of the agreement himself.

Question

Quizplus · Accepted Answer

Carl may have a valid defense against making payments due to the refrigerator's failure to operate, which could constitute a breach of contract by the store. The finance company, as the assignee, may be subject to the same defenses Carl has against the store.

Carl Agrees to Buy a Refrigerator from His Local Appliance