Presentation on theme: "Teacher instructions: 1.Print the lesson, 2.Display slide 2 with Procedure steps 1 and 2 in the lesson. 3.Display slides 3 and 4 with Procedure step 3."— Presentation transcript:
Teacher instructions: 1.Print the lesson, 2.Display slide 2 with Procedure steps 1 and 2 in the lesson. 3.Display slides 3 and 4 with Procedure step 3. 4.Display slide 5 with Procedure step 5. 5.Display slide 6 with Procedure step 7. 6.Display slides 7 through 9 with Procedure step 9. 7.Display slide 10 with Procedure step Display slide 11 with Procedure step Display slides 12 through 14 with Procedure step 13. The Rent-to-Own or not to Rent-to-Own?
Contract a legally binding exchange or promise or agreement between parties that is enforced by law Key Elements of a Contract: Competent PartiesIndividuals involved in the contract must be able to understand the conditions of the contract. ConsiderationParties in the contract give up something in exchange for what they receive. Mutual AgreementAll parties to the contract must agree on the terms.
What consideration might a professional athlete give a team owner? his or her skills or abilities, performance for that team, not signing with any other team What consideration might a team owner give a professional athlete? salary, length of contract, performance bonuses
Describe some essential details of a contract you might have with your parents to mow the lawn every two weeks. how much you are going to be paid in addition to cutting the grass, what else must be done to complete the job What conditions might make a contract void? one of the parties is mentally impaired and does not understand the conditions of the contract one of the parties is a minor the contract involves an illegal act
Rent-to-Own Contract - a basic lease contract with an option to purchase immediate delivery no down-payment or credit check no penalty for returning items (with conditions) rental-purchase agreement rent by the week or month make all payments - it's yours miss a payment - it's theirs
Annual percentage rate (APR) is the percentage cost of credit on an annual basis.
How does the competent parties element factor into a rent-to-own agreement? The individuals involved must understand the conditions of the contract. The store may not initiate a contract with someone who is mentally impaired.
What considerations are given by each party in a rent-to- own contract? The renter agrees to make payments to the store. The store agrees to provide the good. The renter agrees that the good may be repossessed by the store if the renter fails to make payments. The store agrees that the renter may return the item without penalty after a specified amount of time.
How is mutual agreement illustrated in a rent-to-own contract? Often the store provides a written contract. It is the responsibility of the renter to read the contract carefully in order to understand the terms prior to signing the contract.
Item/DescriptionRent-to-Own Payments TotalRetail Cost Difference Hitachi 50" Plasma Television $ per month for 12 months $1,449.50$1, Nintendo Wii Bundle_____ per month for 12 months $1,170.00$250.00$ " Chrome Car Rims$ per month for 12 months $3,197.76$1, Intel Pentium Laptop Computer $ per month for 12 months $1,799.88$ cf Refrigerator$ per month for 12 months $ General Electric Free- Standing Smooth Top, Self-Cleaning Range $ per month for 12 months $1, $ Gibson SG Electric Guitar$60.75 per month for 12 months $405.00
Item/DescriptionRent-to-Own Payments TotalRetail Cost Difference Hitachi 50" Plasma Television $ per month for 12 months $3,359.88$1,449.50$1, Nintendo Wii Bundle$97.50 per month for 12 months $1,170.00$250.00$ " Chrome Car Rims$ per month for 12 months $3,197.76$1,776.50$1, Intel Pentium Laptop Computer $ per month for 12 months $1, $ $ cf Refrigerator$ per month for 12 months $1,679.88$799.99$ General Electric Free- Standing Smooth Top, Self-Cleaning Range $ per month for 12 months $1, $764.99$ Gibson SG Electric Guitar$60.75 per month for 12 months $729.00$405.00$324.00
Review What is a contract? a legally binding exchange of promises or agreements between parties enforceable by law What are the key elements of a contract? competent parties, consideration and mutual agreement What is a rent-to-own contract? a basic lease contract with an option to purchase
Review Why is purchasing a good with a rent-to-own contract more expensive that buying the item outright? Payments are spread out over a period of time – usually 12 months – and additional fees may be attached. RTO stores incur the risk of repossessing the merchandise and repairing or replacing the merchandise.
Review What are the disadvantages of such a contract? The cost is higher than outright purchase of the item. There may be additional fees attached. Financial disclosure laws do not always apply. Even after some payments you can lose the item if you dont continue payments. Consumers are often left paying twice as much, if not more, for owning the rented goods than they would have if they had bought them outright.