First establish whether instalments were agreed
Section 38(1) of the Sale of Goods Act, 1930 says a buyer is not bound to accept delivery by instalments unless otherwise agreed. A supplier's dispatch convenience does not itself prove the buyer agreed to split delivery. Preserve the contract, accepted purchase order and relevant variations. Distinguish an agreed staged contract from an unsolicited partial tender under a single-delivery bargain. Government-hosted Sale of Goods Act: section 38.
Identify the separately payable instalment structure
Subsection (2) addresses stated instalments to be separately paid for. It covers the seller's non-delivery or defective delivery and the buyer's refusal or neglect to take delivery or pay for one or more instalments. Build the agreed quantity, date, specification and payment record for each instalment. Do not assume any series of invoices necessarily establishes the particular contractual structure. Government-hosted Sale of Goods Act: section 38.
Assess whole-contract repudiation rather than declaring it automatically
Under subsection (2), the contract terms and circumstances determine whether the breach repudiates the whole contract or is severable, giving rise to compensation without a right to treat the whole contract as repudiated. A missed instalment, a low defect percentage or a large unpaid amount is not a statutory automatic decision rule. Review the breach's nature, contractual obligations and actual effect with the relevant evidence. Government-hosted Sale of Goods Act: section 38.
Separate accepted performance from disputed performance
Maintain distinct lines for quantities delivered, accepted, rejected, short, paid and unpaid. A full future-order balance is not automatically the present price debt, and it is not automatically the recoverable damages amount. The models below use stipulated accepted quantities and agreed prices only for reconciliation. They do not determine legal acceptance, a right of rejection or the measure of compensation. Government-hosted Sale of Goods Act: section 38.
Control correspondence and subsequent conduct
Keep delivery complaints, quality reports, cure proposals, payment explanations and any termination communication in sequence. Describe what each party actually said and did, avoiding retrospective labels that the documents do not support. A negotiated credit or payment plan should state what it resolves and should not silently be treated as a statutory finding that the whole contract has ended. Government-hosted Sale of Goods Act: section 38.
Preserve separate remedy and amount analyses
This article concerns ordinary commercial goods contracts under section 38, not an automatic right to cancel every remaining instalment. Once the legal consequence is assessed, compute any supported price, credit, repayment or compensation on its own basis and avoid double recovery. Review forum, limitation and any dispute-resolution agreement separately; the quantity working supplies evidence, not a universal litigation route. Government-hosted Sale of Goods Act: section 38.
Applicable primary references
Government-hosted Sale of Goods Act: section 38
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: One missed instalment in a stated schedule
Assume ten agreed separately payable instalments of 100 units each. One 100-unit instalment is missed: 100 out of 1,000 contracted units is 10%. That ratio describes magnitude but does not automatically decide whole-contract repudiation under section 38(2).
Illustrative example 2: Defects in a delivered instalment
Assume a 300-unit instalment contains 30 units established as defective. The defect ratio is 10%, leaving 270 units without that recorded defect. The legal effect still depends on the terms and circumstances; the numbers do not themselves establish acceptance or the remedy.
Illustrative example 3: Accepted price and receipts
Assume an instalment's valid accepted price is ₹5 lakh and ₹3 lakh has been paid against it. The unpaid accepted-price working is ₹2 lakh. This balance does not automatically establish a right to cancel all future instalments.
Illustrative example 4: Future schedule is not present debt by arithmetic alone
Assume four future instalments priced at ₹2 lakh each remain unperformed, alongside an established ₹1 lakh overdue price for an earlier accepted instalment. The future schedule totals ₹8 lakh; adding it to produce a ₹9 lakh present price claim needs an independent contractual and legal basis, which this model does not assume.
Illustrative example 5: Agreed credit for a resolved issue
Assume an accepted instalment price ₹6 lakh, a valid agreed credit ₹0.5 lakh and payments ₹4 lakh. Remaining adjusted price is ₹1.5 lakh. The credit documents should identify the issue resolved rather than silently releasing every future obligation.
Illustrative example 6: Repeated failures
Assume six separately payable instalments were scheduled by the review date and two have established non-delivery. The failure proportion is two-sixths, or approximately 33.33%, with four delivered. Repetition is factual evidence to assess; the Act does not prescribe a 33.33% automatic cancellation threshold.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Preserve the agreed delivery basis | Establish single delivery or agreed instalments. |
| 2 | Identify stated instalments | Record dates, quantities and specifications. |
| 3 | Confirm separate payment terms | Locate the actual contractual structure. |
| 4 | Document performance | Keep dispatch, receipt and examination records. |
| 5 | Classify the alleged breach | Separate non-delivery, defects, refusal and non-payment. |
| 6 | Quantify facts | Reconcile quantities and amounts without inventing legal thresholds. |
| 7 | Assess terms and circumstances | Prepare the supported whole-contract or severable-breach analysis. |
| 8 | Preserve communications | Retain complaints, cure proposals and actual termination records. |
| 9 | Reconcile supported remedies | Separate price, credits and compensation and avoid duplication. |
| 10 | Review dispute procedure | Check the agreement, forum and applicable filing requirements separately. |
Sixteen practitioner FAQs
1. Must a buyer accept instalment delivery by default?
Section 38(1) says not unless otherwise agreed.
2. Does a supplier's split dispatch alone prove agreement?
No. Examine the actual bargain and evidence.
3. What structure does subsection (2) address?
Stated instalments that are to be separately paid for.
4. Does it address seller non-delivery?
Yes, on its stated conditions.
5. Does it also address defective delivery?
Yes.
6. Does it address buyer non-payment or refusal to take delivery?
Yes, within the provision's scope.
7. Does one failed instalment automatically end the whole contract?
No. Apply the terms-and-circumstances assessment.
8. Can the breach instead be severable?
Yes. The provision expressly identifies that possibility.
9. Does a severable breach necessarily permit whole-contract repudiation?
The specified alternative is compensation without a right to treat the whole contract as repudiated.
10. Is there a statutory defect-percentage cancellation threshold here?
Section 38 supplies no such numerical shortcut.
11. Does a quantity ratio prove legal acceptance?
No. Acceptance needs its own evidence and legal assessment.
12. Is the future order value automatically a presently due price?
No. Establish the relevant contractual and legal basis.
13. Is future order value automatically damages?
No. Determine liability and measure separately.
14. Should agreed credits be documented issue by issue?
Yes. Keep their scope and effect clear.
15. Can repeated failures matter?
They are circumstances to assess, without an invented automatic percentage rule.
16. What should the reviewer reproduce?
The agreed structure, performance, breach evidence, legal consequence and separate amount working.
Conclusion
One failed instalment does not automatically repudiate the whole goods contract. Section 38 directs attention to the agreed terms and circumstances; quantities and unpaid balances inform, but do not replace, that assessment.