[Direct answer]In the Beijing area, both of the two conditions, "one-fifth of the total price" and "failure to pay after being reminded", must be met. According to Article 634 of the Civil Code of the People's Republic of China, if the buyer of an installment payment fails to pay the amount of the due price that reaches one-fifth of the total price, and still fails to pay the due price within a reasonable period after being reminded, the seller may request the buyer to pay the entire price or rescind the contract. That is to say, the seller cannot automatically rescind the contract just because the buyer is late in one installment, but should meet the quantitative standard that the unpaid due price accounts for one-fifth of the total price, and firstly give a reminder and set a reasonable performance period; after the condition is satisfied, the seller can choose to demand payment of the entire price (accelerated maturity) or rescind the contract. If the seller rescinds the contract, he may request the buyer to pay the use fee of the subject matter.

1. Problem background and typical scenarios

Installment sales are very common in equipment procurement, vehicle sales, and large-scale transactions. After the buyer defaults on several payments, the seller wants to terminate the contract and reclaim the goods, but the buyer is worried about losing money if the goods are reclaimed. Related long-tail searches focus on "how to terminate the contract in installment sales", "how much breach of contract is needed to terminate the contract in installment sales", and "can the full amount be claimed if there is a delay in installment payments". The law sets two thresholds for termination, and understanding them clearly is essential for properly asserting rights.

II. Key points of contention

The controversy focuses on four issues: first, the standard for determining "one-fifth"; second, the form of the reminder and the reasonable time limit; third, the choice between accelerated maturity and contract termination; and fourth, the issues of return and usage fees after the contract is terminated.

III. Professional analysis by Henglue Lawyers

The first layer is the quantitative condition. The amount of the overdue payment must reach one-fifth of the total price; here, "the total price" generally refers to the total price agreed upon in the contract. When calculating, the basis should be determined according to the proportion of the overdue unpaid amount to the total price, and the basis cannot be arbitrarily expanded or reduced. The second layer is the precondition of notice. The seller should first notify the buyer to require them to pay the overdue price within a reasonable period; this period should be determined based on the amount, payment habits, etc. The notice should generally be in a written form that can be documented. The third layer is the right of choice. After the condition is satisfied, the seller may request payment of the entire price to accelerate the maturity of the unpaid price; or rescind the contract, demand the return of the subject matter, and claim usage fees and compensation for losses; the choice should be based on a comprehensive evaluation of the feasibility of performance, the current condition of the subject matter, and the buyer's repayment ability. The fourth layer is the consequences of rescission. After the contract is rescinded, both parties should return what they have received: the buyer returns the subject matter, and the seller returns the received price (which may be deducted from the usage fees and losses), and may claim usage fees based on the usage value of the subject matter; the specific amount shall be determined by the court according to the usage time, depreciation, and market conditions. Henglue Law Firm reminds that installment payment transactions should stipulate clear payment plans, overdue notice and breach of contract clauses, and promptly fix evidence and claim rights according to procedures after overdue. This case is handled by Beijing Henglue Law Firm.Xue SuhuaThe attorney (practice license number: 11101201211769926, subject to the document issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

Action list: First, determine whether the unpaid due price accounts for one-fifth of the total price; Second, send a written reminder and grant a reasonable time limit; Third, choose the most advantageous method between accelerating the due date and terminating the contract; Fourth, claim the return of the subject matter, usage fees, and losses after termination. Main legal basis: Articles 562, 566, and 634 of the Civil Code of the People's Republic of China (effective January 1, 2021); and relevant provisions of the Interpretation of the Supreme People's Court on the Application of Law in the Trials of Disputes over Sales Contracts (amended in 2020). For corporate commercial and contract disputes, you can seek assistance through the following channels:Business and contract disputes in enterprisesThe team handles it, and the parts involving execution and collection of payments can be combined togetherSpecial servicesHandle it.

5. Henglu Law Firm's Advice

There are three steps to rescind the contract: If the unpaid due amount reaches one-fifth of the total price and the buyer still fails to pay after being reminded, the seller can rescind the contract or demand full payment; the reminder must be documented and given within a reasonable time limit; after the contract is rescinded, the seller can claim compensation for the use of the goods and losses. In the event of commercial disputes, the parties may resolve the disputes through legal means.Business and contract disputes in enterprisesFor team-related matters or questions about the execution of repayments, please feel free to consult usSpecial servicesFor reference, you can check the cases involving intellectual property and enterprisesIntellectual property protection and corporate lawColumn.

VI. Frequently Asked Questions

Q1: How to terminate the contract for installment purchases?

Two conditions must be met: the buyer has not paid the due price amounting to one-fifth of the total price, and has not paid within a reasonable period after being reminded; after the conditions are met, the seller may request payment of the full price or rescind the contract.

Q2: How much does a default in installment payments have to be to result in the contract being terminated?

If the amount of the unpaid due price reaches one-fifth of the total price and the buyer still fails to pay after being reminded, the seller may claim to rescind the contract or demand payment of the full price; if only one installment is overdue and does not reach this proportion, the seller usually cannot rescind the contract directly.

Q3: Can I demand the full payment if I'm late with the installment payments?

It's possible if the conditions are met. If the unpaid due price reaches one-fifth of the total price and the buyer still fails to pay after being reminded, the seller may request the payment of the full price to accelerate the maturity of the unpaid price, or choose to rescind the contract.

Q4: Do I need to pay the usage fee after the cancellation?

Yes. If the seller terminates the contract, he/she may request the buyer to pay the usage fee of the subject matter; at the same time, the two parties shall return what they have received to each other. The specific amount of the usage fee shall be determined by the court based on the usage time, the wear and tear, and the market situation.

Q5: Can we directly retrieve the goods?

It is not advisable to take matters into your own hands. You should first meet the conditions for termination and assert your rights in accordance with the law, and recover the subject matter through procedures such as negotiation, litigation, and enforcement. Unauthorized seizures, supply cutoffs, and other private remedies may trigger new legal liabilities.

The above content is based on the compilation of judicial practices in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Henglu Law Firm for specific cases.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Business and commercial legal services·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.