OK, who is daring enough to take a shot at explaining the differences between the common law standard of material breach or substantial performance versus the UCC Article 2 concept of perfect tender. Go!
Under the UCC, the perfect tender rule applies, which applies to contracts for a single delivery and provides that if the goods tendered fail to conform to the contract in any respect, the buyer has three choices: (1) reject the whole, (2) accept the whole, or (3) accept any commercial unit, and reject the rest. In simplest terms, the perfect tender rule provides that if the goods delivered are non-conforming as expressed in the contract, the receiving party can reject or seek another remedy. Under the Common Law, things are a little different. When a party fails to substantially perform under the K, a material breach occurs. However, when a party acts in good faith to complete the work yet still does not fully complete/perform, that party would have substantially performed. This means that they are still entitled to payment as decided in the contract. However, once the contract price is paid, there will be a deduction for any damages for defects, omissions, or incomplete performance. The main takeaway between UCC and Common Law is that under the UCC, if there are any nonconforming goods, there is a breach. However, under Common Law, if a party substantially performed, yet did not complete the work, they are still entitled to payment of the contracted price. Deductions will follow accordingly.