Also known as:money allowances · monetary allowance
Written by attorneys · grounded in primary & secondary sources — see below
A price reduction or discount that a seller offers a buyer to make a nonconforming tender of goods acceptable. The allowance operates as one basis for the seller's reasonable belief that the buyer will accept the tender rather than reject it outright.
Sources & Authorities
How it applies
Common Examples
2
Seller Offers Discount on Color Variation
Apex Apparel shipped winter jackets in a shade close to but not exactly matching the Pantone color Nordline Boutique had ordered. Apex believed Nordline would accept the jackets with a price rebate based on their prior course of dealing. After Nordline rejected the shipment, Apex promptly notified Nordline that it would deliver exact-color jackets within a short additional period. The offered rebate supplied the reasonable grounds that preserved Apex's right to cure.
Seller Proposes Allowance for Truck Equipment
Gindy Manufacturing delivered trucks to Cardinale Trucking that deviated slightly from the contract specifications. Gindy had reasonable grounds to believe Cardinale would accept the trucks with a money allowance because of their ongoing business relationship. After Cardinale rejected the delivery, Gindy seasonably notified Cardinale of its intent to substitute conforming trucks within a further reasonable time. The proposed allowance kept the cure opportunity open under the governing rule.
Put it into practice
Test Yourself
9
Practice Questions5
· 2 primary sources
Select any source to read its text and confirm it supports the definition.
What role does a money allowance play in a seller's right to cure under UCC § 2-508(2)?+
A money allowance supplies one factual basis for the seller's reasonable belief that the buyer would accept a nonconforming tender. When the seller holds that belief and seasonably notifies the buyer after rejection, the seller gains a further reasonable time to substitute conforming goods.
Supporting sources
Must the seller actually pay the allowance for the cure right to arise?+
No. The statute requires only that the seller had reasonable grounds to believe the tender would be acceptable with or without an allowance. The allowance need not be paid if the buyer ultimately accepts a conforming substitute.
Supporting sources
How does prior course of dealing affect whether a money allowance supports a reasonable belief?+
Prior dealings in which the buyer accepted minor nonconformities with a rebate or discount can establish objective reasonable grounds. Courts examine those dealings to determine whether the seller's belief was commercially justified at the time of tender.
Supporting sources
Does an explicit contract specification prevent reliance on a money allowance?+
Yes, when the specification is clear and the buyer immediately rejects on that precise ground, the seller's belief that an allowance would suffice is often deemed objectively unreasonable. The absence of any course of dealing supporting flexibility strengthens that conclusion.
Supporting sources
ContractsPerformance · Performance under the UCCNEXTGENFoundational