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22. Which of the following statements is correct?
On March 1, the fixtures company tendered 24 sets to the apartment complex and explained, «One of the 25 sets was damaged in transit from the manufacturer to us, but we will deliver a replacement within five days.»
A fixtures company, in a signed writing, contracted with an apartment complex for the sale to the apartment complex of 50 identical sets of specified bathroom fixtures, 25 sets to be delivered on March 1, and the remaining 25 sets on April 1. The agreement did not specify the place of delivery, or the time or place of payment.
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The Uniform Commercial Code (UCC) discourages the treatment of contracts for the sale of goods as being divisible. The UCC defines an installment contract as one that provides for the delivery of goods in separate lots to be separately accepted. UCC § 2-307 provides that unless the parties have agreed to permit delivery in installments, all goods called for by a contract for sale must be tendered in a single delivery. This means that if no installment deliveries are agreed upon, but the seller delivers only a partial shipment, he has breached the entire contract and may not recover on it for that installment, even though the price of that installment could be calculated by pro-rating the contract price.
When an installment under such a contract is non-conforming, the buyer must accept that installment if the seller gives adequate assurance of the defect's cure, unless the non-conformity substantially impairs the value of the installment and cannot be cured.
Even where the parties agree to allow installment deliveries, the UCC frequently penalizes the seller who delivers a defective installment or fails to deliver a particular installment at all. The buyer may reject a defective installment if the defect substantially impairs the value of that installment. The buyer may treat that defective installment or default in making the installment as a total breach if the defect or default substantially impairs the value of the contract.
D is correct. Because the contract between the fixtures company and the apartment complex was an installment contract and the fixtures company gave assurances that the defective shipment would be cured within five days, the apartment complex must accept the rest of the shipment and would not be justified in canceling the rest of the contract.
A is incorrect. The UCC's «perfect tender» rule (which entitles a buyer to reject a tender of delivery that fails in any respect to conform to the contract) does not apply to installment contracts.
B is incorrect. Again, the UCC perfect tender rule is inapplicable to an installment contract, such as the one in this case. Moreover, unless the parties to a contract have agreed to permit the delivery of goods in installments, all of those goods must be tendered in a single delivery.
C is incorrect. If the buyer has reasonable fears that the seller will not adequately perform on later installments, and the seller fails to give satisfactory assurances, this would substantially impair the contract.