## Facts

- A Canadian seller and a Pennsylvania buyer entered an installment contract for 200 tons of battery lead to be delivered in carload shipments.
- Payment terms required at least 63% of the price shortly after shipment and the balance within four weeks after delivery.
- The parties’ prior course of dealing included recurring late payments by the buyer and delayed shipments by the seller.
- Under the final contract, early installments were shipped; some arrived after the contract’s outside delivery date.
- The buyer paid reasonably promptly for the first two installments, but did not promptly pay for the third installment that arrived in March 1948.
- The buyer warned that it needed additional lead and would buy on the open market if further installments were not shipped.
- The seller responded that no further shipments would be made until the third installment was paid.
- The seller had available inventory and could have shipped another installment with little economic risk; the market price of lead was rising and the seller sold to others at higher prices.
- The buyer counterclaimed for damages after the seller failed to deliver the remaining installments.

## Issues

1. Under Pennsylvania law governing installment sales, did the buyer’s late payment for one installment constitute a repudiation permitting the seller to rescind and stop further deliveries?
2. If not, was the seller liable for damages for failing to deliver the remaining installments?

## Decision

- The Third Circuit affirmed the judgment for the buyer on its counterclaim.
- The buyer’s delay in paying for the third carload was not a material breach amounting to repudiation of the whole installment contract.
- The seller was not justified in refusing to deliver further installments; the buyer was entitled to damages for nondelivery.

## Legal Principles

- In an installment sales contract, a default as to one installment does not automatically permit cancellation of the entire contract.
- A party may treat an installment contract as repudiated only when the other party’s default is sufficiently serious, in context, to justify a reasonable belief that future performance will not occur or when continued performance would impose unreasonable hardship.
- Whether a late or defective installment justifies stopping performance depends on the parties’ course of dealing, the degree of risk or hardship to the aggrieved party, and whether the conduct reasonably signals abandonment of the contract.
- Under Pennsylvania conflict-of-laws rules, excuse for nonperformance is governed by the law of the place of performance; where performance is in Pennsylvania, Pennsylvania’s Uniform Sales Act applies.

## Conclusion

The court held that a buyer’s late payment on a single installment, viewed against the parties’ history and the seller’s minimal risk in continuing shipments, did not amount to repudiation; the seller’s refusal to deliver remaining installments was a breach supporting the buyer’s damages.


Plotnick v. Pennsylvania Smelting & Refining Co., 194 F.2d 859 (3d Cir. 1952)