Sales and Leases - A Problem-based Approach, 2016a

uyer can reject the entire contract, including any remaining installments.
Where the non-conformity relates to documents, the buyer can reject an installment for
any non-conformity, subject to the seller’s right to cure if appropriate documents are readily
procurable. Comment 4 gives as examples of non-conforming documents the absence of
insurance documents under a C.I.F. contract, falsity of a bill of lading, or a bill of lading failing
to show shipment within the contract period or to the contract destination.
12.6.1. Section 2-612(2) sets forth the general rule that a buyer may reject a single
installment only if (i) the non-conformity substantially impairs the value of that
installment and (ii) the non-conformity cannot be cured.
12.6.1.1. If a single installment is non-conforming, and the non-conformity does
not substantially impair the value of that installment, the buyer must accept it,
regardless of whether the seller offers to cure the non-conformity. The buyer has a
remedy for damages for the breach.
12.6.1.2. If there is a substantial impairment to a single shipment, there is an
obligation on the part of the seller to give adequate assurance of a cure. If
adequate assurance of a cure is not forthcoming, the buyer can reject the
installment (but not necessarily the entire contract, which we’ll discuss in a bit).
Comment 5 notes that adequate cures may consist of an “allowance against the
price” or of “a further delivery.” If the seller gives adequate assurance of a cure,
then the buyer must accept that installment, even though its value is substantially
impaired, unless the non-conformity is so great that it substantially impairs the
value of the whole contract.
12.6.2. Section 2-612(3) allows the buyer to reject the entire contract, including future
installments, when a non-conformity with respect to one or more installments
substantially impairs the value of the whole contract. Comment 6 notes that “defects in
prior installments are cumulative in effect.” The buyer must seasonably notify the seller
of the cancellation.
12.6.3. What is “substantial impairment?” This is UCC parlance for “material breach.”
Comment 4 indicates that factors to consider include “the quality of the goods . . . , time,
quantity, assortment, and the like. It must be judged in terms of the normal or specifically
known purposes of the contract.”
12.6.3.1. Can the norm “substantial impairment” be determined by the agreement
of the parties? Yes: Comment 4 indicates that the agreement “may require
accurate conformity,” but “must have some basis in reason, must avoid imposing
hardship by surprise and is subject to waiver or to displacement by practical
construction.” For example, you could define “substantial impairment” in the
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