Installment contracts vs. single delivery contracts: Key legal differences

One shipment or 12 may sound like a logistical detail. Legally, it makes a meaningful difference.  For buyers and sellers of goods, it is critical to determine whether a purchase contract calls for a single delivery or delivery in installments. That distinction can have significant consequences if a problem arises with the quality of the goods. In short, the buyer’s right to reject goods that do not conform to the contract’s specifications is far more limited under an installment contract than it is under a single-delivery contract.

So, what is an installment contract? Simply put, an installment contract requires or authorizes the delivery of goods in separate lots to be separately accepted. By way of a basic example, a contract where a manufacturer agrees to sell a distributer 12,000 apples, with deliveries to be made in 12 monthly installments of 1,000 apples each generally constitutes an installment contract.

Now that you know what distinguishes an installment contract from a single-delivery contract, let’s turn to the question that matters most: How does that distinction affect a seller’s potential exposure or a buyer’s ability to reject the product when something goes wrong?

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