Ag Law Class

1
Ag Law -- Class 7

• Recitation
• Cases Student
• Kimball, p. 303 -- Lance Mathies
• Pillsbury, p.307 -- Aaron Patten
• Ralston, p. 309 -- Andrew Peter
• Meyers (p. 405) -- (action, facts, issue) Kent
  Schroeder
• (law holding) Holly Smith

2
Key Problem 2, p. 13

• The parties in this problem agreed by contract to
  arbitrate in case a dispute arose.
• Arbitration is different from Mediation!
• In the first place, mediation need not be
  entered into and the mediator has no power to
  issue a binding award or decision.
• Arbitrations are binding if nothing to the
  contrary is stated or agreed to.
• The Award and Opinion cannot be reviewed by a
  court, and there is no appeal!
• Arbitration is a substitute for a trial and
  review of a trial courts decision by appellate
  courts.
• However, a court will enforce the arbitration
  award.

3
Uniform Commercial Code (UCC)

• UCC is a uniform body of law governing major
• commercial transactions including sales and
• secured transaction of special interest to
  agriculture.
• Also, covered by the UCC are bank deposits and
  collections, commercial paper(checks and notes)
• and warehouse receipts and other documents of
• title.
• All states, but Louisiana, have adopted the UCC
• with some small variations.

4
Scope of Article 2

• All things that are movable
• Timber and minerals, if to be removed by the
• seller,
• Growing crops buildings that can be moved
  without materially harming the real estate,
• Animal products while on or in the animal,
• Unborn young of animals,
• Contracts involving both goods and services if
  the goods are a predominant factor.

5
UCC - Article 2

• 2-201- 1. a writing signed by the party being
  charged is required for sales of goods for a
  price of 500 or more.
• 2. merchants exception -- between merchants if
  within a reasonable time a writing in
  confirmation of the contract, sufficient against
  the sender, is received, and
• the party receiving it has reason to know its
  contents, it satisfies
• the requirements of subsection (1) against such
  party unless written notice of objection to its
  contents is given within 10 days after it is
  received.
• There are other exceptions. E.g., estoppel,
  partial performance

6
Kimball County Grain Coop. V. YungS.Ct. of NE,
78, 263 N.W. 2d 818

• Lance Mathies
• Action
• Facts
• Law
• Holding
• Rule

7
Kimball

• Action To enforce a contract.
• Issue Is the farmer a merchant? And was the memo
  delivered in a reasonable time?
• Facts Yung telephoned Kimball Grain on July 26,
  73 and to deliver 15,000 bu. of wheat in Jan.
  74
• for 3.10, no contract was signed despite pl
  efforts
• to reach Yung.
• Jan. 30, 74 Kimball sent Yung a signed contract
• that Kimball ignored and never delivered the
  wheat.
• Yung had been raising wheat for 30 years.

8
Kimball

• Law A timely delivered memo signed by a merchant
  A will bind merchant B who does not object to its
  contents in 10 days.
• Holding The notice was not delivered within in
  reasonable time after the oral conversation.
• Justice Broadkey opines that the Court should
  deal with is the farmer(Yung) a merchant? He
  argues that Yung is a merchant.
• Justice Spencer opines the usual farmer who
  deals only for himself is not ...
• Rule Six months is not a reasonable time to wait
  to deliver
• a memo and for attempting to apply the
  merchants
• exception -- whether a farmer is a UCC
  merchant depends on the facts.

9
Pillsbury Co. v. Buchanan, App. Ct. of IL, 4th
D.76,346 N.E. 2d 386

• Aaron Patten
• Action
• Issue
• Facts
• Law
• Holding
• Rule 9

10
Pillsbury Co.

• Action Breach of contract, and for damages.
• Issue Can Buchanan be charged with receipt of a
  timely memo?
• Facts Parties do not dispute that they agreed on
  
• 1-17-73 to buy and sell soybeans for 4.55
• Buchanan, a farmer, delivered 2,057 bu.
• Pillsbury said the amount was to be 3,150.
• Pillsbury claimed they had mailed a memo on
• Jan. 17. They had the wrong address on the
• memo however, it was not returned, despite the
  
• return address to Pillsbury.

11
Pillsbury Co.

• Law Merchants exception may make a contract and
  blocks the defense of the Statue of Frauds.
• Holding Breach.
• Buchanan was judged to have received the memo
  despite the address error.
• Therefore under the merchants exception since
  he did to reject the contents of the memo, he
  owes the damages.
• Rule ?

12
Sellers Remedies

• 1. Keep the goods and sue for difference between
  contract and market price with adjustments for
  incidental expenses, and for savings due to
  buyers breach.
• 2. Resale
• Sue for difference in contract price and the sale
  price plus or minus incidental expense.
• Type of resale may be public or private
• Standard of saleCommercially reasonable

13
Sellers Remedies

• 3. Loss of profits This additional recovery may
  be requested if damages from above
• are inadequate.

14
Buyers Remedies

• What recourse if the buyer who does not get the
  goods or the goods delivered are nonconforming?
• Cover or replace the goods and collect
• for any extra cost of covering with
  adjustment
• for incidental costs and savings.
• Accept nonconforming goods and sue for damages
  related to the nonconformity.

15
Ralston Purina Co. v. McNabb U.S. D. Ct, W.D.
TN, 74, 381 F. Supp. 181

• Andrew Peter
• Action
• Issue
• Facts
• Law
• Holding
• Rule

16
Ralston Purina Co. v. McNabb

• Action Breach of contract
• Issue What date should be used to measure the
  damages?
• Facts They executed two soybean contracts, 5,000
  bu. for 3.33/bu. and 3,000 bu. for 3.29
• McNabb delivered all but 771.47 bu on the first
  contract and none on the second.

17
Ralston Purina Co. v. McNabb

• McNabb made a last delivery in Feb. 73
• Ralston wanted 11,131.32 based on Mar. 8 cover
  date.
• Mc Nabb pleads bad weather and Nov. 30, 72 as
• the correct cover date.
• McNabb had received several delivery extensions
  beyond the original fall 72 delivery
  requirement. Prices continued to rise during the
  winter.

18
Ralston Purina Co. v. McNabb

• Law Rule Good faith and due diligence is
  required in covering breaches of contract.
• Holding Jury found that Purina had knowledge of
• McNabbs short production by Nov. 30, 72
  and by exercise of due diligence they had a duty
  to cover at that time for which the damages were
  only 1,496.59 and the court feels this result is
  supported by substantial evidence. (Note this is
  a trial court holding.)

19
F.W. MyersCo. v. Hunter FarmsS. Ct. of Iowa,
1982, 319 N.W. 2d 186

• Kent Schroeder
• Action
• Facts
• Issue
• Holly Smith
• Holding
• Law --- Rule?

20
F.W. Myers

• Action Breach of duty by an agent
• Issue Did Myers breach his duty of care as an
  agent? (Is Myers entitled to reimbursement?)
• Facts Myers was acting as an agent for Hunter
  for the importation of Sencor, a farm chemical.
• A five duty was mentioned, but not final, it
  depended...

21
F.W. Myers

• When the deal was processed Sencor had chemicals
  not on the label, and the duty went from 30,000
  to 128,000!
• Hunter refused to pay Myers the increased duty
  claiming Myers breached his duty of care as an
  import broker.
• Trial court held for Myers

22
F.W. Myers

• Holding Evidence at trial supported Myers
  conduct
• There was no duty by an import agent to advise
  the principal nor was there evidence that Hunter
  wanted an extra measure of assistance from Myers.
• Myers had no special duty to inform Hunter of the
  peculiar import fee, and apparently nor was Myers
  held to be responsible for knowing how the higher
  fee could arise.

23
F.W. Myers

• Law An agent with apparent authority has the
  capacity to bind the principal, and has a right
  of indemnity.
• An agent is required to exercise skill such as to
  accomplish the object of his employment.
• Rule There is a limit to an agents
  responsibility to principal without some notice
  to the agent of the peculiar needs of the
  principal.

24
Quiz 2 True or False

• 1. A contract may be enforced without a signed
  writing if there is partial performance.
• 2. A farmer can usually avoid a forward cash
  contract when there is a short crop due to
  drought.

• 3. Strict liability does not require a showing of
  fault or failure.
• 4. Contract law will allow written contracts that
  specify damages in advance of a failure to
  perform.
• 5. Can a farmer be a UCC
  merchant?
• a. Yes
• b. No