This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Contracts are often made which require delivery, or payment, or both, in instalments. Whether such contracts are entire and whether a breach as to one instalment is a discharge as to the remaining instalments is a question upon which there is hopeless divergence of judicial authority, since different courts act on two distinct theories which sometimes produce the same results, but more often different ones.1 One theory is that such contracts are entire, and that a breach by one party as to one instalment is the breach of "a condition precedent upon the failure or non-performance of which the party aggrieved may repudiate the whole contract."2 The other theory is that such breach does' not of itself amount to a discharge, but that it is only when the party who breaks the contract shows that he repudiates his contractual obligation, that it is to be treated as a breach by renunciation,3 and hence a discharge.4 In applying this last theory some courts have treated such contracts as entire on one side and apportionable on the other.5
1 "A question has been much debuted between counsel as to whether this contract is one deemed an entire or a severable contract, in the language of the courts and law books. Is it such a contract, an entire contract, as would authorize the purchaser of the hay, at any point during the process of delivery, to cancel the contract for the delivery of some bad hay, without liability to damages for breach? Or is it a severable contract denying such power of cancellation, and compelling the purchaser to execute it and look to the seller for compensation in damages for bad hay delivered? I remark that each contract must stand upon its nature and circumstances. Upon this question there is a wilderness of authority through many, many years, and conflicting." Ellison v. Flat Top Grocery Co., 69 W. Va. 380, 38 L. R. A. (N.8.) 539, 71 S. E. 391.
2 Norrington v. Wright, 115 U. S. 188, 203, 29 L. ed. 366 [quoted m Cleveland Rolling Mill v. Rhodes, 121 U. 8. 254, 261, 30 L ed. 9201.
See, on this question:
Georgia. Savannah Ice Delivery Co. v. American Refrigerator Transit Co., 110 Ga. 142, 35 S. E. 280.
Iowa. Quarton v. American Law Book Co., 143 la. 517, 32 L. R. A. (N. S.) 1, 121 N. W. 1009.
Maryland. McGrath v. Gegner, 77 Md. 331, 39 Am. St. Rep. 415, 26 Atl. 502
Minnesota. Mason v. Edward Thompson Co., 94 Minn. 472, 103 N. W. 507.
Nebraska. Howard County v. Pesha, - Neb. - 172 N. W. 55.
Tennessee. Alpha Portland Cement Co. v. Oliver, 125 Tenn 135, 38 L. R. A. (N.S.) 416, 140 S. W. 595.
3 See Sec. 2908 et seq.
4 See Sec. 3013.
5 "The contract in this case is clearly an illustration of a contract of sale which is entire on one side and apportionable on the other." Johnson Forge Co. v Leonard, 3 Penne (Del.) 342, 347, 94 Am St. Rep 86, 57 L. R. A. 225, 51 Atl 305
It may be observed in advance that the courts which have adopted the theory that the contract is entire, at least for the purpose of authorizing the party who is not in default to treat a material breach as to one instalment as a breach of the entire contract and as a discharge thereof at his election, have been fairly consistent in the application of this theory;6 while the courts which have attempted to apply the theory that such a contract is so far severable that a material breach as to one instalment does not authorize the party who is not in default to treat the entire contract as discharged, have not applied the principle logically, but have reserved its application, for the most part, to contracts for the sale of personal property,7 leaving the other theory to operate in contracts for work and labor, in building and construction contracts and the like.8
It may also be noted in advance that this problem is not, properly speaking, presented where the breach as to one instalment is of so trifling a character that, if the contract had consisted entirely of the covenant for such instalment, together with the covenant in consideration thereof, such breach would not have operated as a discharge.9 If a contract requires for delivery about five thousand tons, delivery of forty-six hundred tons is not a discharge of the contract, either as performance or breach; and the seller may deliver the remainder of the entire quantity within a reasonable time thereafter.10
Neither does the question arise in cases in which the covenant in question is evidently intended by the parties to be an independent covenant;11 and that intention appears in some way other than by the performance of one or more of the instalments of the contract before the breach occurs.12
At the other extreme, the question is not, properly speaking, presented where the breach is of such a character that it shows renunciation or repudiation of the entire contract on the part of the party who is in default.13 Where such renunciation or repudiation occurs, the party who is not in default may treat such conduct on the part of the adversary party as a discharge of the entire contract.14 The question of the effect of breach as to one instalment, as a discharge of the entire contract, arises therefore where the breach is material; where the covenant is not intended by the parties, when the contract is made, as an independent covenant; and where the party who is in default has not renounced the contract or repudiated his liability under it.
6See Sec. 3011, 3017 and 3020 et acq. 7 See Sec. 3012, 3017 and 3020 et seq.
8 See Sec. 3020 et seq.
9 Moore v. United States, 196 U. S. 157, 49 L. ed. 428.
See Sec. 2778 et seq.
10 Moore v. United States, 196 U. S. 157, 49 L. ed. 428.
11 See Sec. 2071 et seq.
12 See Sec. 2971 et seq.
13 See Sec. 2882 et seq.
14 See Sec. 2882 et seq.
The fact that a contract is performed by one of the parties by delivery in instalments is not of itself sufficient to show that the adversary party is required to pay in instalments.15 On the contrary, in the absence of some provision in the contract showing a contrary intention, payment is not to be made in instalments because of the fact that the property is to be delivered in instalments; but the entire payment is to be made concurrently with delivery of the last instalment.16