Let's say that you go to a car dealer, select a car, and sign a contract with a down payment and monthly installment payments. Under ordinary circumstances, you would sign a check for the down payment, drive the car off the lot, and make the monthly payments.

But suppose there is a minor glitch in the car. The dealer offers to fix it at no additional charge and deliver the car to your home at no additional charge "within a week." A week goes by, then a month, and no car delivery. When you offer to pick up the car, the dealer says it is "not ready."

But a month has gone by and the dealer asks for the first monthly payment. Your response is, "no car, no payment." In fact, it's stronger than that. You want a refund of the down payment, and the dealer can keep the car. (In effect, you want to cancel the transaction.)

What are your rights and obligations in the above scenario? Please answer under two conditions: 1) What is true under "standard" contract language and commercial dealings? (My understanding is that the delivery of the car is "implied" before the dealer can receive any further payments.) 2) Can any scenario be constructed where either the contract language or the set of facts is such that would allow the dealer to demand the monthly payment without having delivered the car?

Edit: The above wasn't the real situation (I had used an example to simplify matters).In the real situation, buyer wanted to buy an LLC, but the seller had earlier created an "Inc.," and had agreed to reincorporate it as an LLC as a condition of sale, and failed to do so. So the glitch wasn't so "minor."

  • Where on Earth do you live that still uses checks?
    – Dale M
    Nov 25, 2021 at 1:10
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    @DaleM - welcome to the USA .... banking in the stone age still.
    – brhans
    Nov 25, 2021 at 2:29
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    The answers are found mostly in Article 2 (Sales) of the Uniform Commercial Code which is separately enacted in every U.S. jurisdiction. Also, the "real" situation and the example situation are very different and governed by different bodies of law.
    – ohwilleke
    Dec 27, 2021 at 20:20

1 Answer 1


Conditions can be implied in some circumstances

In general, the terms of a contract are those that were agreed by the parties. If these are sufficient to give effect to the contract then there is no need to imply others.

Terms implied by statute

Terms can be implied into a contract by statute. For example, many jurisdictions have statutorily implied terms that goods will be of merchantable quality and fit for purpose. Sometimes these are not terms of the contract but statutory guarantees that exist outside the contract.

Some of these allow for "contracting out" - that is, if the parties agree they don't apply, then they don't. Others don't allow this.

Terms implied by necessity

If the agreed terms are insufficient to allow either party to discharge their obligations or enjoy their rights under the contract then the court may imply terms into the contract. Or they may decide the contract is void for uncertainty.

A contract will be void for uncertainty if the missing term is one that is essential to the performance of the contract. For example, if the parties failed to actually agree on the make and model of the car to be delivered. However, if the term is incidental to the primary purpose, for example, where or when the vehicle is to be delivered. the court will usually imply a term.

The specific example

The primary purpose of the contract is that the dealer will supply the specified car and the customer will make monthly payments on it. It would be highly unusual for there to be any ambiguity in this in the contract documents from a dealership.

An incidental purpose is that the dealer will repair the "minor glitch" and do this "within a week". It appears that the dealer has not done this and is in breach of their contract.

There appears to be no ambiguity in any of this that would require a term to be implied.

The customer's remedy is to seek damages for the loss they have suffered by not having the car. That might include the hire of another car etc. However, they must give the dealer the opportunity to remedy the breach.

Their remedy does not extend to terminating the contract or withholding payment of monies they are obliged to pay. Breach of the contract by one party does not justify breach by the other.

  • In this specific example is there 1 contract or 2? Given the dealer apparently didn't have an obligation to do this for free, but is doing so anyway, is that separate from the purchase? Is it even a contract at all? What consideration is the dealer getting in return?
    – user541686
    Nov 25, 2021 at 3:40
  • @user541686 I would;f think it has become a part of the contract of sale, adn the sale was conditioned on the dealer's offer. Nov 25, 2021 at 3:47
  • @DavidSiegel: It would certainly be nice if that was the case, but that would imply that the dealer would have placed themselves in a worse position on an already-signed contract by offering to fix it for free -- after all, if they hadn't offered it at all, then it wouldn't have been part of the contract of sale, right? It seems like a non-obvious implication, which makes me wonder if that's actually something that could be justified in court. What would the basis for that assumption be? And would it matter if the original contract required changes to be signed & in writing?
    – user541686
    Nov 25, 2021 at 6:55
  • My question is, if the customer says "no car, no installment payment," isn't the delivery of the car (and the customer's possession of it essential to the performance of the contract?
    – Libra
    Nov 25, 2021 at 12:07
  • Actually, this wasn't the real situation (I had used an example). In the real situation, buyer wanted to buy an LLC, but the seller had earlier created an "Inc.," and had agreed to reincorporate as an LLC as a condition of sale, and failed to do so. So the glitch wasn't so "minor."
    – Libra
    Nov 25, 2021 at 12:09

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