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3. Cancelling an Installment Contract Altogether There is a breach of the entire installment contract if (1) one or more installments somehow fail to conform to the contract and (2) the nonconformity substantially impairs the whole contract’s value. In this case, the buyer may generally cancel the entire contract as a remedy for the breach. But even here, the buyer reinstates the contract (and therefore cannot cancel it) if she: accepts a nonconforming installment, having not seasonably notified the seller of the cancellation; sues on the contract, but only concerning past installments; or demands performance on future installments.
[U.C.C. § 2-612 (1951); 2 Hawkland UCC Series § 2-612:3, Westlaw (database updated June 2021).]
Note : These rules govern not only the buyer’s right to cancel an installment contract, but also the seller’s. Even so, in most cases, the buyer will be the one seeking to cancel the contract. Thus, this section of the outline speaks primarily in terms of the buyer’s right to cancel. With respect to the buyer, a nonconformity may consist of failing to pay for or wrongfully rejecting one or more installments. Concerning the seller, the nonconformity usually involves the quality of the goods, the timeliness of delivery, and so on. [ See U.C.C. § 2-612, cmt. 6 (1951); 2 Hawkland UCC Series § 2-612:3, Westlaw (database updated June 2021).] a. Substantially Impairing the Value of the Whole Contract Whether any nonconformities substantially impair the whole contract should be assessed in terms of the goods’ quantity, quality, and assortment, as well as the contractual time frame and the contract’s normal or specifically known purposes. Some courts have opined that whether a nonconformity in one or more installments substantially impairs the whole contract’s value is coextensive with the material-breach concept at common law. That is, a nonconformity substantially impairs the whole contract’s value if it deprives the nonbreaching party of the substantial benefit of her bargain as to the whole contract. Further, if multiple installments are nonconforming, their cumulative effect may be to substantially impair the whole contract’s value, even if one of the nonconforming installments, standing alone, would not suffice. [ See U.C.C. § 2-612, cmt. 6 (1951); 2 Hawkland UCC Series § 2-612:3, Westlaw (database updated June 2021).] Example : A furniture manufacturer contracted to deliver nine display tables to a furniture store in three installments of three tables each. The tables in the first two installments came late.
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