installment contract
Installment contract refers to a contract that contemplates performance in separate parts over time rather than in a single, complete exchange. The parties’ obligations, such as payment, delivery of goods, or performance of services, are divided into a series of installments.
In the sale of goods, installment contracts are addressed in Uniform Commercial Code § 2-612. Under that provision, a contract that requires or authorizes delivery of goods in separate lots to be separately accepted is considered an installment contract, even if the agreement states that each delivery is a separate contract. A buyer may reject a nonconforming installment if the nonconformity substantially impairs the value of that installment and cannot be cured. If a nonconformity substantially impairs the value of the entire contract, it may constitute a breach of the whole agreement.
Installment contracts also arise in real estate transactions. In some jurisdictions, a land installment contract allows a buyer to make periodic payments over time while taking possession of the property, with legal title transferring only after the final payment. Such arrangements differ from traditional mortgage financing because title remains with the seller until the purchase price is fully paid. See: Stillwater Lakes Civic Ass’n. Inc. v. Krawitz, 772 A.2d 118 (2001).
[Last reviewed in March of 2026 by the Wex Definitions Team]
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