Ohio’s Retail Installment Sales Act versus the Uniform Commercial Code

Chapter 1317 of the Ohio Revised Code deals specifically with retail installment sales.  This statute defines retail installment sales as a contract to sell goods where the cash price may be paid in installments over time.  The statute further states that lease-purchase agreements and layaway arrangements do not qualify as retail installment sales.

Section 1317.16 of the Ohio Revised Code is part of the retail installment sales statute and discusses the disposition of collateral.  Section A of this statute gives the secured party permission to dispose of any collateral after default, and Section B goes into detail about how collateral should be disposed.  Section B specifically states that “[d]isposition of collateral shall be by public sale only.”  This chapter further states that notice of the sale should be published in a newspaper of common circulation in the county where the collateral will be sold at least ten days prior to the sale.

The Uniform Commercial Code, which can be found in the Ohio Revised Code starting at Chapter 1301 and continuing through Chapter 1353, also has requirements for the disposition of collateral. Section 1309.610 describes how a secured party may dispose of collateral by public or private sale as a whole, or in pieces, at any time and place, and on any terms as long as everything about the sale is commercially reasonable.  This section continues to detail how the secured party may purchase the collateral at a public sale, or even a private sale if the collateral is something that is normally sold on a recognized market, and how the secured party may change the terms of the warranties on the collateral being sold.

Part of the statute dealing with retail installment sales, specifically Section 1317.16 of the ORC, conflicts with part of the UCC requirements, specifically Section 1309.610 of the ORC.  The UCC statute allows secured parties to dispose of collateral by public or private sale, as long as the sale is under commercially reasonable circumstances.  However, the retail installment sales statute says that collateral must be disposed of by the secured party through public sale only and states specific requirements of how that sale should be advertised.

So, which law is the ruling law when dealing with retail installment sales?  The answer can be found in the retail installment sales statute.  Part C of Section 1317.16 of the ORC states that “[e]xcept as modified by this section, sections 1309.610, 1309.611, 1309.615, 1309.617, and 1309.624 of the Revised Code govern disposition of collateral by the secured party.”  This basically means that this section of the retail installment sales statute is the prevailing law; however, in the areas of law that this section doesn’t cover, one should look to the UCC statutes.

In the Tri-State area, these special requirements involving retail installment sales are unique to Ohio.  Kentucky and Indiana do not have anything comparable to the retail installment sales statutes with regard to the disposition of collateral, but instead look to the Uniform Commercial Code.  The codified UCC provisions can be found in the Indiana Code starting at IC 26-1-9.1-610 through IC 26-1-9.1-619 and in the Kentucky Revised Statutes starting at Section 355.9-610 through 355.9-619.

A Very Special thanks to Brittany Page for her contributions to this article.  Brittany is a paralegal with Slovin & Associates Co., L.P.A.