Buyer Changes Payment Due Date By Repeatedly Sending Late Payments
Tuesday, February 7th, 2017
The Tennessee Court of Appeals recently ruled that a buyer in an installment sale contract had changed the due date for his payments by repeatedly sending late payments. Buyer signed a contract to purchase a gas station. He agreed to pay for the gas station in installments, with payment due on the first of each month. Like many mortgages, payments were late after the fifteenth of the month. Buyer made his payments between the thirteenth and eighteenth of the month for at least eight months. Finally, the Seller had enough of his late payments and cancelled the contract. Seller sued to evict the Buyer from the gas station.
Buyer defended the case by claiming that he believed that payments were due on the fifteenth of the month. The evidence showed that Buyer made his payments on the fifteenth each month by wire transfer. Payments were often delayed by a few days due to intervening weekends. The appeals court sided with the Buyer due to the Buyer and Seller’s actions. In Tennessee, written contracts can be modified by a “course of conduct.” A course of conduct will modify a written contract where the conduct evidences consent to a new arrangement. Since the Seller accepted Buyer’s late payments for so long, the Seller had consented to the Buyer’s conduct of making payments on the fifteenth instead of the first.
Sellers must be ware of accepting repeatedly late payments. If you accept late payments for too long, you may have agreed to change the contract.