## Facts

- Scavenger, Inc. (Scavenger) developed computer games and entered into an agreement with GT Interactive Software, Inc. (GT), a distributor.
- The agreement covered four CD-ROM games and set out separate production schedules and separate payment schedules for each game, including guaranteed payments tied to each title.
- Scavenger delivered the first two games to GT.
- GT accepted the first two games and proceeded to market and sell them.
- Scavenger did not deliver the remaining two games.
- GT did not make the guaranteed payments associated with the delivered games, asserting that Scavenger’s alleged late delivery and other breaches excused GT’s payment obligations.
- Scavenger sued for the unpaid guaranteed amounts and moved for partial summary judgment limited to the payments attributable to the two delivered games.
- The trial court granted partial summary judgment to Scavenger on the payment issue, and GT appealed.

## Issues

1. Whether the parties’ four-game agreement was divisible so that Scavenger could recover guaranteed payments for the two delivered games even though it did not deliver the remaining two games.
2. Whether GT’s conduct in accepting, requesting changes to, and commercially exploiting the delivered games waived GT’s defense that Scavenger’s performance was untimely.
3. Whether partial summary judgment on Scavenger’s claim for guaranteed payments was proper based on the contract terms and the undisputed performance relating to the first two games.

## Decision

- The Appellate Division affirmed the grant of partial summary judgment in Scavenger’s favor.
- The court treated the agreement as divisible because it set out separate schedules and payment obligations for each game, reflecting separable units of performance.
- Because GT accepted and used the first two games, Scavenger’s non-delivery of the last two games did not bar recovery of the guaranteed payments tied to the delivered titles.
- The court concluded that GT could not avoid payment for the delivered games on a late-delivery theory where GT’s conduct—accepting the games, requesting substantial modifications, and selling them—was inconsistent with insisting on strict timeliness.
- With no material dispute as to delivery, acceptance, and the contract’s game-by-game payment structure, partial summary judgment on the guaranteed payments for the first two games was appropriate.

## Legal Principles

- A contract may be divisible when the parties structure performance and payment obligations in distinct units (such as separate deliverables with separate schedules and consideration), allowing recovery for completed and accepted units even if other units are not performed.
- A party that accepts performance and takes actions consistent with treating the contract as ongoing—such as requesting material changes and commercially exploiting the delivered work—may be found to have waived a defense based on late delivery as to that accepted performance.
- Summary judgment may be granted on a payment obligation where the contract terms and the undisputed facts show delivery and acceptance of the units for which payment is sought, and the asserted defenses do not raise a triable issue as to those units.

## Conclusion

The court held that the four-game agreement operated as a set of separable obligations with separate payment and production terms, permitting Scavenger to recover the guaranteed payments tied to the two games it delivered and GT accepted and sold; GT’s acceptance and conduct foreclosed its attempt to withhold payment based on alleged untimeliness, so partial summary judgment for Scavenger was affirmed.


Scavenger, Inc. v. GT Interactive Software, Inc., 708 N.Y.S.2d 405 (2000)