## Facts

- A seller and a buyer formed an oral installment contract for the sale of feed products, with shipments made per the buyer’s weekly instructions and payment due within ten days after delivery.
- The buyer repeatedly fell behind on payments, creating substantial arrearages, while the seller continued deliveries.
- As market prices rose above the contract price, the buyer feared the seller might discontinue performance.
- The seller expressly stated it would continue deliveries if the buyer paid its arrearages; the buyer then sent a check for $9,825.60 intended to bring the account current for prior accepted shipments.
- After a truck driver suggested a delivery might be the “last load,” the buyer stopped payment on the check and demanded adequate assurances of future performance.
- The seller demanded payment; after learning of the stop-payment, the seller ceased further deliveries and later closed its plant.
- The trial court found the buyer lacked a valid basis for stopping payment, held the buyer in breach, awarded the seller $21,013.60 for accepted but unpaid goods, and permitted cancellation of remaining deliveries.

## Issues

1. Whether the buyer’s nonpayment and stop-payment substantially impaired the value of the whole installment contract under UCC § 2-612, constituting a breach of the entire contract.
2. Whether the seller, upon such a breach, could cancel the undelivered balance under UCC § 2-703(f).
3. Whether the buyer had reasonable grounds for insecurity under UCC § 2-609 so as to justify demanding adequate assurances and suspending payment.

## Decision

- The Supreme Court of Connecticut affirmed the judgment for the seller.
- The buyer’s persistent arrearages and stop-payment on a check for accepted goods supported a finding that the value of the whole contract was substantially impaired under UCC § 2-612.
- Because the breach was of the whole contract, the seller was entitled under UCC § 2-703(f) to cancel as to the undelivered balance and to withhold further deliveries.
- The buyer’s claimed insecurity was not reasonable on the facts; the seller had performed to date and had given express assurance conditioned on curing arrearages, so UCC § 2-609 did not justify stopping payment or suspending performance.
- The seller was entitled to recover the unpaid price for goods the buyer had accepted.

## Legal Principles

- Under UCC § 2-612, a default in an installment contract that substantially impairs the value of the whole contract allows the aggrieved party to treat the breach as a breach of the entire contract.
- Persistent nonpayment, including stopping payment on a check covering accepted goods, can constitute substantial impairment of the whole contract.
- Under UCC § 2-703(f), when the buyer’s breach is of the whole contract, the seller may cancel the contract as to the undelivered balance and withhold further delivery.
- The right to demand adequate assurance under UCC § 2-609 requires reasonable grounds for insecurity; whether such grounds exist is a factual question.
- A buyer may not suspend payment for goods already accepted based on insecurity about future performance; payment remains due for past performance already received.

## Conclusion

The court held that the buyer’s repeated delinquencies and stop-payment for accepted goods substantially impaired the installment contract, allowing the seller to cancel remaining deliveries and recover the unpaid contract price, and rejected the buyer’s attempt to justify nonpayment through an unfounded demand for adequate assurances.


Cherwell-Ralli, Inc. v. Rytman Grain Co., 180 Conn. 714, 433 A.2d 984 (Conn. 1980)