MBE Rules · Contracts
Installment Contracts
UCC §2-612
The rule
An installment may be rejected only if its nonconformity substantially impairs that installment's value and cannot be cured; the whole contract is breached only when the nonconformity substantially impairs the whole.
In plain English
An installment contract allows for delivery and payment in separate parts. A buyer can reject an installment only if it significantly reduces the value of that specific installment and cannot be fixed; otherwise, the entire contract is only breached if the overall value of the contract is significantly impaired.
Worked example
A buyer orders 100 custom chairs to be delivered in 10 installments of 10 chairs each. When the first installment arrives, 5 chairs are damaged and cannot be repaired. The buyer can reject this installment because the damage substantially impairs its value. However, if the remaining installments are delivered in good condition, the overall contract is not breached.
Memory hook
Reject an installment only if it’s a total flop, not just a small flaw!
The trap
Exams often present scenarios where students might confuse the rejection of an installment with a breach of the entire contract, leading to incorrect conclusions about the buyer's rights.
How examiners test it
Questions typically involve a scenario where an installment is delivered with defects, testing the candidate's understanding of whether the defects justify rejection or indicate a breach of the entire contract.
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