(a) Subject to subsection (b) and to Sections 2B-610 and 2B-611on installment contracts, if a tender of delivery of a copy constitutes a material breach as to the particular delivery, the party to which it is tendered may:

(1) refuse the tender;

(2) accept the tender; or

(3) accept any commercially reasonable units and refuse the rest; or

(4) permit an opportunity to cure the nonconformity.

(b) In a mass-market license, a licensee may refuse a tender of delivery of a copy in a contract that calls for delivery in a single lot or single tender that which constitutes the initial act enabling use licensor's sole required performance if the tender does not conform to the contract.

(c) Refusal is ineffective unless it is made before acceptance and within a reasonable time after tender or completion of any permitted effort to cure, and the refusing party seasonably notifies the tendering party.

(d) An aggrieved party that refuses tender of a copy may cancel the entire contract only if the breach is a material breach of the entire contract or the agreement so provides. Whether a party refusing tender may cancel the contract is determined by the agreement and Section 2B-610 or 2B-702. but where the contract provides for delivery of a single copy or single lot for payment of a fixed license fee for the copy or lot, refusal constitutes cancellation of the contract.

Selected Issue: Should the Committee adopt a conforming tender ("perfect tender") rule in reference to contexts analogous to those in which Article 2 currently uses the concept? This would involve deleting the introductory clause in (b) and deleting the associated right created in Section 2B-605(b).

1. Scope and Effect. This section deals with refusal of tendered copies; it is a specific application of the general rule in Section 2B-601. The word "refuse" is used in lieu of the Article 2 term "reject" to avoid confusion with situations where a party rejects an offer or particular contract terms in an offer. The right to refuse tendered performance hinges either on the substantial nonconformity of the particular performance or on the existence of an uncured, prior material breach by the tendering party.

As in existing Article 2, the right to refuse a copy is subject to the provisions on installment contracts in the next section. The installment contract rules require accdeptance of a defective tender in some cases in light of the over-riding importance of the on-going relationship.

2. Conforming Tender Rule. Subsection (b) implements the "conforming tender" or "perfect tender" rule for mass market transactions under standards that are consistent with Article 2 in the sale of goods. While often described as a "perfect tender" rule, this concept does not require the tender of a "perfect" copy or, under analogous Article 2 cases, a "perfect" product. It simply displaces the material breach standard with a requirement that the tender conform to the contract. In modern commerce3, very few contracts require perfection in an absolute sense. More ofrten, under applicable trade use stqandards, general product descriptions, and concepts of merchantability, what is required is a tender that is consistent with ordinary expectations under the contract description.

Subsection (b) adopts current Article 2 law in determining when a tender conforms to the contract in this type of mass market transaction.

3. Effective Refusal. Subsection (c) follows current Article 2 with respect to refusal of tenders of delivery of a copy. Refusal becomes inefefective if the refusing party does not timely notify the other party of its refusal of the tender.