Legal Question?

[anb163]

Hi. I don't post much, but you guys have always answered my questions before. I have a question for any lawyers or people who just know the law. I had a contract with a certain company, and they were bought out by another company. If I did not sign a new contract, can the terms of the old contract change without me signing anything? I tried to look this up online, and I could not find anything. Thank you for any help.

 

[undercovermom]

you didn't give enough information for me to answer the question properly. what type of contract is it? what are the terms? is there a provision written into the contract that allows the company to unilaterally modify terms? is it a contract for ongoing services?

 

[undercovermom]

I'd also want to know who bought the company and if the new owner has agreed to be bound by the contracts the old owner entered into. does the contract address assignment of rights?

 

[anb163]

It was a loan company, and it was bought out by another company. They have been treating their customers and employees badly. The manager that has been there for twenty years even quit. My grandmother has a loan with them. Her contract says her payments are due on the first, but she has a ten day period before there is a late charge. She always pays her payments on the third when she gets her monthly check. The company is now trying to change the ten day period that is in the contract. The company says there is no grace period. I have the contract, and it does not say anything about them changing the terms if a new company buys it out. She is very upset because they called her today and talked really ugly to her. She has never been behind on a payment and has done business with them for almost twenty years herself.

 

[Praying Colonel]

Generally (very, very generally), the 2nd company would be bound by the terms of the 1st company's contract with the consumer.

However, I wouldn't be surprised if the original contract contains language that permits certain terms to be changed.

You'll need to get the original contract reviewed by an attorney to get a definite answer. Good luck.

 

[Cheshire Figment]

The terms of a contract cannot be changed unilaterally. It is an agreement between the signing parties and thier successors.

For example, I opened a checking account in 1969 with Virginia National Bank which stated as long as I maintained that account I would have no routine service charges and no minimum balance. Several years later they merged with someone else and became Sovran National Bank. They then merged with someone else and became C&S National Bank. After another merger it became NationsBank and I am now dealing with Bank of America. A couple of times, at or after mergers, they tried to add a service charge. I just told them to look at the original papers.

This rule does not generally apply to credit cards as their contracts state that they can changes the terms at any time as long as they give you adequate notice and allow you to close the account and pay off the balance on the current terms.

But normal contracts, and such things as mortgages, cannot be changed without your specific consent.

 

[undercovermom]

to repeat, you need to look at the original loan documents, specificially th eprovisions regarding assignment of the loan and whether the lender has authority to make changes to the terms and conditions of the loan.

I'd also look at the language concerning the "grace period" -- is it a term of the loan or is it just a matter of custom?

if it simply says the payment is due on the first but no penalty will attach for a late payment until the 15th...well, the lender can start "reminding" the borrower that the payment is due/overdue on the 3rd.

I think we're going to see more of that as credit markets tighten.

FYI on credit cards -- since those are revolving charge accounts with an expiration period, when the card expires you're likely to see new terms and conditions if you choose to renew the card. Cheshire Figment, the credit card companies wanted to keep your business, so they waived the fee and adopted the terms the original issuer gave you. but in the future, as you renew those cards...well, credit markets being what they are these days, you may have to accept less favorable terms on your acards in the future.