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S-317 Reg. W-43 INTERPRETATION OF LAW OR REGULATION (Copies to be sent to all Federal Reserve Banks) TELEGRAM Young - Boston Sproul - New York Williams - Philadelphia Fleming - Cleveland Leach McLarin Young Davis - Richmond - Atlanta Chicago St. Louis September 9, 1941 Peyton - Minneapolis Leedy - Kansas City Gilbert - Dallas Day - San Francisco Questions have been received regarding the application of Regulation W to extensions of instalment sale credit in cases in which there is delay in the delivery of the article sold, or in which time is required for the completion of a job of installation or construction. The general principle applicable to these cases is that if the delay in the delivery of the article or in the completion of the job is bona fide and is not for the purpose of evading any of the provisions of the regulation, the date of delivery or completion may be used as the base for applying the requirements of the regulation. Hence the down payment could be obtained in such cases at any time on or before such date of delivery or completion. Similarly, the 18-months maximum maturity in such cases could be calculated from such date of delivery or completion with, of course, the usual option under section 9(b) of making the 15-day adjustment permitted by that section for calculating the maximum maturity. For any such case in which any date later than the date of the contract between the seller and the purchaser is used as the base for applying the requirements of the regulation, it would be advisable for the Registrant's records to indicate clearly the facts justifying such use of a later date. A related question received by the Board deals with progress payments under a contract for the installation of a heating system, or under a contract for a similar construction job. Payment is to be made for the installation or construction as the job progresses. Each payment is to be made at the completion of a specified portion of the job/ and is to be approximately equal to the cost of that portion, the final payment being made at the completion of the job. If such an arrangement is a bona fide business practice which is followed for the convenience of the parties concerned and is not an effort to evade any of the provisions of Regulation W, the regulation does not require any change in the procedure. (Signed) Chester Morrill Morrill
@FedFRASER