PUR 602–03: Installment Purchases
To define methods for purchasing equipment on an installment basis
Arizona Board of Regents Policy Manual - 3-803
Purchasing and Business Services
Capital equipment may be purchased on an installment contract over a period of time not to exceed five years.
Exceptions to this time limitation may be made by the chief financial officer.
Requisitions for installment purchases must include a description of the item to be purchased and the number and dates of annual payments. The requisitions must be approved by the vice president who has authority over the requisitioning agency.
Purchasing and Business Services will process requests for bids, including financing. Most financing will be done through the tri-university lease purchase financing agreement.
Contracts for installment purchases must contain a funding-out clause similar to the following:
Notwithstanding any contrary provision of this agreement, each payment obligation of the university created by this agreement is conditioned upon the availability of funds that are appropriated or allocated for the payment of the equipment or functionally similar equipment. If such funds are not allocated and available, this agreement may be terminated by the university at the end of the period for which funds are available. The university shall notify the vendor at the earliest possible time before such termination. No penalty shall accrue to the university in the event this provision is exercised, and the university shall not be obligated or liable for any future payments due or for any damages as a result of termination under this section. This provision shall not be construed so as to permit the university to terminate this agreement in order to purchase, lease, or rent similar equipment from another party.
If a possibility exists that a buy out of the equipment will occur before expiration of the installment contract, the agreement should contain a clause indicating the “buy out” terms and conditions and penalties to be assessed, if any, for early payment.
For related information, see PUR 602–01, “Lease vs. Buy Considerations.”