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84-2-612. "Installment contract"; breach. (1) An "installment contract" is one which requires or authorizes the delivery of goods in separate lots to be separately accepted, even though the contract contains a clause "each delivery is a separate contract" or its equivalent.

(2) The buyer may reject any installment which is nonconforming if the nonconformity substantially impairs the value of that installment and cannot be cured or if the nonconformity is a defect in the required documents; but if the nonconformity does not fall within subsection (3) and the seller gives adequate assurance of its cure the buyer must accept that installment.

(3) Whenever nonconformity or default with respect to one or more installments substantially impairs the value of the whole contract there is a breach of the whole. But the aggrieved party reinstates the contract if he accepts a nonconforming installment without seasonably notifying of cancellation or if he brings an action with respect only to past installments or demands performance as to future installments.

History: L. 1965, ch. 564, § 92; January 1, 1966.


1. The section broadly defines what constitutes an installment contract and specifies the effect of a breach as to any installment. Under subsection (1), a contract is an "installment contract" if the goods are to be delivered in installments—i.e., in separate lots to be separately accepted. The typical consumer installment purchase, under which goods are delivered all at once and only the payments are made in installments, is not covered by this section.

2. Subsection (2) limits the buyer's right to reject a nonconforming installment to when the nonconformity substantially impairs the value of the installment and cannot be cured. This subsection imposes a significant limitation on the perfect tender rule of 84-2-601. See Official Comment 4 for discussion of what constitutes "substantial impairment"; see also Restatement (Second) of Contracts § 241 (factors for determining whether breach is material). If the nonconformity is not so substantial as to constitute a breach of the whole contract, and the seller gives adequate assurances of cure, the buyer cannot reject the installment.

3. Under subsection (3), a breach as to one or more installments justifies cancellation of the entire contract only when the nonconformity substantially impairs the value of the whole contract. From the seller's perspective, relevant factors include (1) whether non-payment for an installment makes it impossible or unreasonably burdensome for the seller to supply future installments and (2) whether the failure to pay for one installment results in the seller's "reasonable apprehension" that the buyer will not pay for future installments such that the seller should not have to take the risk of making future deliveries. See Plotnick v. Pennsylvania Smelting & Ref. Co., 194 F.2d 859 (3d Cir. 1952) (pre-Code case). Analogous factors apply from the buyer's perspective. See James J. White & Robert S. Summers, 1 Uniform Commercial Code § 8-3(b), at 444 (4th ed. Practitioner Treatise Series 1995). Subsection (3) also details the circumstances under which an aggrieved party reinstates the contract even after a breach of the whole contract.

Law Review and Bar Journal References:

"The Buyer's Right to Return Unsatisfactory Goods—The Uniform Commercial Code Remedies of Rejection and Revocation of Acceptance," George I. Wallach, 20 W.L.J. 20, 23, 24, 33 (1980).

Attorney General's Opinions:

Lease or installment-purchase agreements; contracts for services. 89-16.


1. Seller's acceptance of nonconforming performance cannot be equated to a buyer's acceptance of nonconforming goods. Bartlett & Co., Grain v. Curry, 1 Kan. App. 2d 247, 248, 249, 563 P.2d 1096.

2. Failure of company to provide either quantity or quality of goods called for entitled buyer to suspend performance. LNS Inv. Co., Inc. v. Phillips 66 Co., 731 F. Supp. 1484 (1990).

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