substantial impairment

Substantial impairment is a legal standard used under UCC § 2-612 to decide whether a buyer may reject goods in an installment contract. A buyer can reject an installment if a defect substantially impairs its value and cannot be cured. If the defect affects the entire contract, the buyer may reject the entire contract. 

In another context, substantial impairment can refer to a person’s inability to make rational decisions or give informed consent, often due to mental or cognitive limitations.

[Last reviewed in June of 2025 by the Wex Definitions Team]

Keywords

• contract law

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