I. Instalment Sale Dispute – Case Overview
TB Legal provided legal assistance to a client in a dispute arising from an instalment sale agreement after the buyer failed to comply with the agreed payment obligations.
Under the agreement, the client transferred an asset to the buyer, while the purchase price was to be paid progressively according to an agreed payment schedule.
The buyer failed to make the required payments. As the outstanding amount accumulated, it became necessary to protect the client’s proprietary and contractual interests, including recovery of the transferred asset and assessment of the monetary claims arising from the contractual breach.
TB Legal reviewed the agreement, the parties’ performance and the remedies available to the client and developed the appropriate legal position.
As a result of the legal steps taken, the asset transferred under the instalment sale agreement was returned to the client. The client’s legal claims also included interest and a contractual penalty arising from the buyer’s breach.
II. Non-Payment and the Legal Basis for Return of the Asset
Under an instalment sale arrangement, the seller transfers the asset to the buyer before the purchase price has been paid in full, while the buyer pays the agreed price in periodic instalments.
Articles 505–508 of the Civil Code of Georgia specifically regulate instalment sales.
Article 508 addresses a situation in which the seller has retained the right to repudiate the agreement because of the buyer’s default. Upon such repudiation, the parties are required to return to each other what they received under the agreement.
In this matter, following the buyer’s failure to make the agreed payments, it became necessary to assess and exercise the client’s rights on the basis of the specific contractual terms and factual circumstances.
The legal steps taken in the case resulted in the return of the transferred asset to the client.
For a broader overview of payment obligations, withdrawal from contract and remedies arising from breach of a sale agreement, see our article Sale and Purchase Agreement in Georgia – Defective Goods, Payment of Price and Withdrawal from Contract.
III. Monetary Claim Relating to Interest
The matter was not limited to recovery of the asset.
Payment terms and interest may form an important part of the financial structure of an instalment sale agreement. Whether a particular monetary claim exists, and in what amount, depends on the wording of the agreement and the legal rules applicable to the specific relationship.
In this matter, TB Legal assessed the monetary consequences arising from the buyer’s failure to comply with the payment obligations in addition to the recovery of the asset.
The client’s legal position therefore also included an interest-related monetary claim, assessed in light of the agreement and the specific circumstances of the breach.
IV. Contractual Penalty for Breach of the Payment Obligation
Another component of the client’s legal position concerned the contractual penalty agreed between the parties.
Under Article 417 of the Civil Code of Georgia, a contractual penalty is a monetary amount agreed by the parties that becomes payable in the event of non-performance or improper performance of an obligation.
In this matter, the client’s claims arising from the buyer’s failure to perform the payment obligations also included a contractual penalty.
The availability and amount of such a claim depend on the relevant contractual clause, the nature of the breach and other applicable legal requirements.
For further analysis of contractual penalties, default interest and the possibility of judicial reduction, see our article Contractual Penalty in Georgia – Penalty, Default Interest and Court Reduction.
V. Outcome – Return of the Asset and Protection of the Client’s Financial Interests
TB Legal’s involvement resulted in the successful protection of the client’s proprietary interests.
Following the buyer’s failure to perform the agreed payment obligations, the asset transferred under the instalment sale agreement was returned to the client.
The legal position also addressed additional monetary claims arising from the breach, including interest and the contractual penalty.
The matter required an integrated assessment of:
- the instalment sale agreement and payment schedule;
- payments made and outstanding;
- the legal consequences of the buyer’s non-performance;
- the legal basis for recovery of the transferred asset;
- interest-related claims; and
- the contractual penalty.
The matter demonstrates that where a buyer stops making payments under an instalment sale agreement, the seller’s legal remedies may extend beyond a claim for the outstanding purchase price. Depending on the contractual terms and circumstances, recovery of the transferred asset and additional monetary claims may also form part of the available legal strategy.
VI. Legal Support in Instalment Sale and Contract Disputes in Georgia
TB Legal is a law firm in Georgia assisting businesses and individuals with sale and purchase disputes, non-payment claims and other contractual matters governed by Georgian law.
Our Contract Lawyer in Georgia practice includes legal assessment of contractual breaches, claims relating to return of assets and unpaid amounts, contractual penalties, termination and withdrawal issues, and representation in contract-related disputes.
If a buyer or other contractual counterparty has stopped making agreed payments and you need to assess the remedies available under the agreement and Georgian law, you can contact TB Legal for legal assistance.