Practice question
A seller cancels a covered installment transaction and relies on a forfeiture clause for all installments paid. The buyer proves circumstances making retention unconscionable. The seller says Article 1486 makes every forfeiture clause absolutely valid without review. Which is correct?
- Every forfeiture is automatically valid
- Article 1486 validates retention only insofar as it is not unconscionable under the circumstances
- Every installment must always be refunded in full regardless of circumstances
- The clause automatically creates a criminal fine
- Only the seller determines unconscionability conclusively
Legal references
- Civil Code, Article 1486: https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/2/53360
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