Also known as: installment contracts · instalment contract · instalment contracts
Written by attorneys · grounded in primary & secondary sources — see below
A contract for the sale of goods that requires or authorizes delivery in separate lots to be separately accepted. The buyer may reject a nonconforming installment only if the nonconformity substantially impairs the value of that installment and cannot be cured. A material delay or allocation in an installment contract permits the buyer to terminate the unexecuted portion or modify the contract by written notice.
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Insight Consulting ordered custom circuit boards from a manufacturer under an agreement calling for monthly shipments over six months. The third shipment arrived with boards that failed conductivity tests. Insight Consulting rejected that shipment and withheld payment for it while accepting the prior conforming deliveries.
Infinity Bank contracted with a chip supplier for quarterly deliveries of processors over two years. The supplier notified Infinity Bank of a production shortage requiring allocation of reduced quantities for the next two quarters. Infinity Bank responded in writing that it would terminate the remaining contract because the reduced deliveries substantially impaired the value of the whole agreement.
An installment contract requires or authorizes delivery of goods in separate lots to be separately accepted. Payment is due at the time of each delivery rather than upon completion of a single tender. The perfect tender rule does not apply, so the buyer may reject only if a nonconformity substantially impairs the value of that installment.
Supporting sources
The buyer may reject only if the nonconformity substantially impairs the value of that installment and cannot be cured. The buyer must accept the installment if the seller gives adequate assurance of cure. Nonconformity that does not substantially impair the installment does not justify rejection.
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The buyer may terminate and discharge any unexecuted portion of the contract by written notification. Alternatively the buyer may modify the contract by agreeing to accept the available quota. These options apply when the prospective deficiency substantially impairs the value of the whole contract.
…assignment of accounts receivable, promissory notes, trade acceptances, conditional sales contracts, chattel mortgages, leases, installment contracts, or other forms of agreement evidencing liens.” Subject to conditions set out in the agreement, Unico agreed to lend Universal up to 35% of the total amount of the balances of customers’…
…as to the question of liability: The Schlemeyers concede that, shortly after they purchased the property from a Mr. Ayars on an installment contract
…documents.... ” N.J. Stat. Ann. § 12A:2-612(2). Although Defendants argue that the parties' transactions constituted a series of
Supporting sources
No. The UCC definition expressly provides that an installment contract remains one even if the agreement contains a clause that each delivery is a separate contract or its equivalent.
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