Ag Law - Class 6

1. Ag Law - Class #6 Try it (optional): Lexis-Nexis - Access: 1. http://www.lib.purdue.edu/mel/ 2. Go to �Lexis-Nexis Academic� and 3. click on �Legal Research� For example, pick �state cases� and Indiana, enter key words from a text case to see what may �come up� in Indiana. -- Questions -- class #6 � Sales Text-Chap. 11, 298-312 Homework #1 comment. Case page Brief Question(s)* Potter 300 Jaret Brett Kimball 303 Tom Daniel Pillsbury 307 Jordan Amanda Every student may (should) have a �question�, comment or inquiry on each case. P.s. Bring a picture for me.

2. Homework #1� Pr.#1, page13 Consider the ethics of the situation. Farmers have historically, made deals by oral agreement�not anymore! In this case�defendant farmer failed to answer and was defaulted. After default, an appeal even with a �good defense� will fail! Farmer should have answered the complaint with his defense. He may have prevailed or at least had a good case to appeal. What was the farmer�s defense? What is the elevator�s �case�?

3. Homework #1� Comments Get the right problem! Pr.#1, page13 Ask questions if you are not sure. Read the materials to prepare for the assignments. Be careful what you use for an argument. There are bonus home works to catch-up on points.

4. Parol Evidence Rule--Review In written agreements, the writing is the best evidence of the agreement, and evidence of prior or contemporaneous agreements is not admissible to contradict a term of the writing. In short, incorporate the words to give them effect. Exceptions: ambiguity in the terms, or a dispute as to meaning

5. Excused Performance--Review When don�t you have to do what was promised? Generally, performance is excused if conditions have so changed that the parties would not have entered the contract if the changed circumstances existed at the out set. Impossibility, e.g., the subject matter is peculiar and has become unavailable Impracticability, e.g., a crop dusters only plane is destroyed Frustration of Purpose, e.g., a crop no longer exists

6. Remedies for Breach of Contract Damages Sufficient to make the party �whole� (to get the benefit of �the bargain�) Guideline: market price - contract price = Damages Liquidated Damages (LD) An amount or formula for determining damages stipulated in the contract. LD must be reasonable to be enforceable. A �Penalty� is not permitted � but?

7. Remedies for Breach of Contract Restitution payment for benefits already received Rescission (an equitable remedy) Cancellation of a contract with restitution, i.e, payment for benefits received. Specific Performance When the subject matter is unique Or, when damages are inadequate

8. Statute of Limitations Statutory limit on the time to bring an action for recovery. To miss the time limit �bars� an action! In common law, if one who did not seek relief in a �reasonable� time relief is barred by the doctrine of laches�don�t sit on your rights too long!

9. Statutes of Limitation in Indiana 2 years - personal injury; damage to personal property; wrongful death; and medical malpractice. 4 years - contract for the sale of goods (whether written or oral). 6 years - accounts; oral contracts other than the sale of goods; rent and landlord-tenant disputes; damage to real estate; promissory notes and written contracts for the payment of money. 10 years - An action upon contracts in writing other than those for the payment of money, and including all mortgages - Other than chattel mortgages, deeds of trust, judgments of courts of record, �

10. 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.

11. Scope of UCC 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.

12. Potter v. Hatter Farms, Inc. Ct. of Appeals of Oregon, �82, 641 P. 2d 628 Action: Issue: Facts: Law: Holding: Rule:

13. Potter Action: For a contract enforcement by promissory estoppel Issue: Should Hatter be barred on the basis of promissory stoppel from raising the Statute of Frauds (SF) as a defense? Facts: Potter (Pl) hatched and grew out turkey poults for growers. Hatter Farms (def.) finishes the turkeys for food processing companies. Potter and Hatter had discussions in Jan. �79 as to specifics of a sale of 192,000 poults.

14. Potter Facts: In June Potter had feelers from others for his poults, but Hatter gave no indication of not wanting the poults Hatter�s agent testified that he told Potter it was unwise to hold the poults for them since the transportation had not been arranged. Potter testifies that he was convinced that Def was still going to buy the poults, and there were no contractual terms to be worked out. In August, Hatter informed Potter they would not take the poults.

15. Potter Law: Promissory estoppel is a bar to the defense of SF Holding: Oregon UCC does not exclude promissory estoppel as a bar to a SF defense & Promissory estoppel requires proof of: 1) reliance on a promise, 2) a definite and substantial change of position occasioned by the promise, & 3) foreseeability by the promisor, as a reasonable person, the promise would induce conduct of the kind that occurred.

16. Potter Holding: Contract damage due to estoppel Potter satisfied the above three part test: There was a promise, albeit oral Reliance on the promise, and change in position Hatter, had to foresee Potter�s predicament Rule: If the pl can prove the elements of Promissory Estoppel he or she can defeat the SF defense.

17. 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. �merchant�s 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 �

18. 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. �merchant�s 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 �

19. Kimball County Grain Coop. V. YungS.Ct. of NE, �78, 263 N.W. 2d 818 Action: Facts: Law: Holding: Rule:

20. 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.

21. 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 �merchant�s exception -- whether a farmer is a �UCC merchant� depends on the facts. Note: Sebasty v. Perschke (1980), Ind. App., 404 N.E.2d 1200, 1202-03, (farmer was a merchant).

22. Quiz #2 � T or F & MC 1. A contract may be enforced without a signed writing if there is partial performance. 2. A farmer can usually avoid the deal in 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. Is a farmer a �UCC merchant?� a. Yes b. No c. Maybe

23. Pillsbury Co. v. Buchanan, App. Ct. of IL, 4th D.�76,346 N.E. 2d 386 Action: Issue: Facts: Law: Holding: Rule:

24. Pillsbury Co. Action: Breach of contract, and for damages. Issue: Can Buchanan be charged with receipt of a timely memo? I.E., What is timely regarding the noticie. 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.

25. Pillsbury Co. Law: Merchant�s exception (ME) may make a contract and ME 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 �merchant�s exception� since he did not reject the contents of the memo, he owes the damages. Rule: ?

26. Seller�s Remedies 1. Keep the goods and sue for difference between contract and market price with adjustments for incidental expenses, and for savings due to buyer�s 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 sale:Commercially reasonable

27. Seller�s Remedies 3. Loss of profits: This additional recovery may be requested if damages from above are inadequate.

28. Buyer�s 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.