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Q: commercial impracticability/impossibility doctrines ( Answered,   0 Comments )
Question  
Subject: commercial impracticability/impossibility doctrines
Category: Miscellaneous
Asked by: jones1914-ga
List Price: $15.00
Posted: 02 Nov 2003 18:30 PST
Expires: 02 Dec 2003 18:30 PST
Question ID: 272015
We are working on an MBA business law class. We have to find, and I
have spent hours unsuccessfully looking for, a case where a farmer
committed to deliver a commodity to his client. He had ten year
contract. The sixth year his crop was wiped out by virus. He could not
get replacements because others lost their crops too. He notified the
client. Client sued for breach of contract. The farmer won using
commerical impracticablity argument. His client appealed saying he did
not have enough adequate notice. HELP I NEED TO FIND THE REAL CASE.

Request for Question Clarification by juggler-ga on 02 Nov 2003 20:18 PST
Are you positive that it's a real case rather than a hypothetical fact
pattern loosely based on an actual case?

I've located a case in which a farmer used the impracticability
doctrine to get out of a contract after his crops were ruined by
unusually wet weather (instead of a virus).  Do you think that could
be the case that you want?

Clarification of Question by jones1914-ga on 03 Nov 2003 04:09 PST
That is right. It is made up case based on real case. It is real case
that is needed. Your iniital response sounds like it might be on
track.
Answer  
Subject: Re: commercial impracticability/impossibility doctrines
Answered By: pafalafa-ga on 03 Nov 2003 04:34 PST
 
Hello Jones1914-ga,

The case you  are looking for appears to be:

ALIMENTA (U.S.A.), INC., Plaintiff-Appellant, Cross-Appellee, v. GIBBS
NATHANIEL (CANADA) LTD., Defendant-Appellee, Cross-Appellant

No. 85-8910

UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

802 F.2d 1362; 1986 U.S. App. LEXIS 32516; 2 U.C.C. Rep. Serv. 2d
(Callaghan) 490

 
October 23, 1986

==============================

Here are some key excerps from the case:

...Alimenta (U.S.A.) Inc. (Alimenta) of Georgia and Gibbs, Nathaniel
(Canada), LTD. (Gibbs) of Toronto, Canada, each an international
dealer in agricultural commodities, entered into three separate
contracts in advance of the 1980 peanut harvest. Gibbs was the seller
and Alimenta the Buyer [**2]  under each contract; neither was a
grower. All three contracts called for the delivery in installments by
Gibbs to Alimenta of 1980 crop U.S. runner split peanuts. n1 When
Gibbs failed to deliver all  [*1363]  of the quantities specified in
the contract and made deliveries later than the scheduled dates,
Alimenta instituted this action on August 21, 1981, seeking damages
for breach of the three contracts.

-----

Relying upon the provisions of O.C.G.A. Sec. 11-2-615, n2 Gibbs
affirmatively answered that its delay in delivery and nondelivery in
part were excused by the occurrence of a drought in the peanut growing
areas of the southeast and southwest. n3 By motion for directed
verdict at the close of the evidence, Alimenta submitted that as a
matter of law Gibbs was not entitled to rely upon Sec. 11-2-615.
Alimenta's argument runs something like this: because Gibbs did not
insist upon a contractual provision relieving it of liability for
delay or nonshipment owing to contingencies beyond its control, as a
matter of law it "assumed a greater obligation" within the exception
of the introductory sentence to Sec. 2-615. We do not agree.

-----

{footnote 2] Except so far as a seller may have assumed a greater
obligation and subject to Code Section 11-2-614 on substituted
performance:


(a) Delay in delivery or nondelivery in whole or in part by a seller
who complies with paragraphs (b) and (c) of this Code section is not a
breach of his duty under a contract for sale if performance as agreed
has been made impracticable by the occurrence of a contingency the
nonoccurrence of which was a basic assumption on which the contract
was made or by compliance in good faith with any applicable foreign or
domestic governmental regulation or order whether or not it later
proves to be invalid.

(b) Where the clauses mentioned in paragraph (a) of this Code section
affect only a part of the seller's capacity to perform, he must
allocate production and deliveries among his customers but may at his
option include regular customers not then under contract as well as
his own requirements for further manufacture. He may also allocate in
any manner which is fair and reasonable.

(c) The seller must notify the buyer seasonably that there will be
delay or nondelivery and, when allocation is required under paragraph
(b) of this Code section, of the estimated quota thus made available
for the buyer. (Code 1933,  109A-2-615, enacted by Ga. L. 1962, p.
156,  1.)

-----

Experience teaches that there are many risks inherent in agricultural
production and marketing, not the least of which is a crop failure due
to some natural disaster. Under Alimenta's theory, a farmer who
contracts for the future delivery of his crop is, as a matter of law,
foreclosed from reliance upon Sec. 2-615 because such risk was
foreseeable and was assumed when not negated in his agreement. This
would drain the vitality out of the allocation statute which does not
differentiate between the sophisticated and the unsophisticated
seller.

In this diversity action we are bound by the Georgia Supreme Court's
interpretation of this statute:
We therefore construe Code Ann. Sec. 109A-2-615 to mean that in order
for there to be an exception to and an exemption from the rule of
allocation applicable to a contract of sale, such a contract must
contain an affirmation [**5]  provision that the seller will perform
the contract even though the contingencies which permit allocation
might occur.

 

Mansfield Propane Gas Company, Inc. v. Folger Gas Company, 231 Ga.
868, 870, 204 S.E.2d 625, 628 (1974). See also Gold Kist v. J.W.
Stokes, 138 Ga. App. 482, 226 S.E.2d 268 (1976), and Swift Textiles,
Inc. v. W.C. Lawson, 135 Ga. App. 799, 219 S.E.2d 167 (1975).

 [*1364]  Since neither of the contracts contained such an affirmative
provision, Gibbs was entitled to allocate if it could satisfy the jury
n4 by a preponderance of the evidence that the occurrence of the
contingency (drought) was not reasonably foreseeable when the
contracts were entered into and that performance as agreed was made
impracticable thereby. Obviously, its burden entailed the production
of persuasive factual evidence.

-----

At the close of the evidence, Alimenta moved for a directed verdict,
which was denied by the court. After the entry of final judgment,
Alimenta filed a motion in the alternative for judgment NOV or for a
new trial, which the court overruled. Thus, we are called upon to
search the record to determine whether it contains sufficient material
evidence to support the jury's answers to the special interrogatories.
We are acutely aware that the factual issues were vigorously contested
by both parties. Our focus upon the record evidence which tends to
lend support to the jury's answers is not intended to denigrate the
body of evidence adduced in opposition thereto.

Relevant to the issue of foreseeability of the contingency of a
drastically reduced production of edible peanuts are the facts
surrounding and antecedent to the execution of the three contracts
involved. The crop was planted in April and May. Rainfall was adequate
in April, May and June, and the crop came up in good condition. The
price was stable; everything was normal. In the twenty-five years
preceding 1980, the nation's peanut industry experienced steady growth
in total production with yield per acre increasing 250% over [**8] 
that period as the result of increased irrigation, better herbicides,
and the development of the "flo-runner" variety. In addition to
Alimenta, Gibbs sold 1980 crop peanuts to seventy-five other customers
and had contracted to purchase peanuts from fifteen  [*1365]  shellers
in quantities 7% in excess of its sales.

In early July a hot and dry spell developed and became a "full fledged
drought" which did not break until late September. A climatology
expert testified that July, 1980, was the driest and third hottest
July in 91 years of recorded data and that August, 1980 was the third
driest and fifth hottest August. He further testified that the onset
and duration of this drought in the southeast and southwest was
unprecedented and that he would have viewed its probability before
1980 as "very low, near zero". These severe weather conditions
throughout the harvesting season had a severe impact on the peanut
crop, reducing production to 48% of the amount produced the previous
year.

In early October, Gibbs received notices from thirteen of the fifteen
shellers from which it had contracted to buy peanuts, each stating
that because of the crop shortage it was invoking U.C.C. Sec.  [**9] 
2-615 and containing estimates of the quantities Gibbs could expect to
receive. Bearing on the issue of commercial impracticability of
performance, on October 17 Gibbs calculated that, on the basis of such
estimates, it would receive only 52% of the peanuts it had contracted
to purchase and that fully to perform all of its sales obligations, it
would be required to purchase an additional 5,700 tons at a cost of
$9,200,000.00. It thereupon proceeded to notify all of its customers
that it was invoking the provisions of Sec. 2-615, advising each of
the expected percentages, Alimenta was so notified on October 21 and
told to expect between 80% and 90% of the contract quantity. The
undisputed evidence is that it ultimately received 87%. n6

-----

The answer of the jury to Interrogatory 1, in obedience to the
instruction of the court with respect to proof required to sustain a
Section 2-615 defense, subsumes its findings that the occurrence of
the 1980 drought and its effect on the peanut crop were not reasonably
foreseeable when the contracts were entered into and that, measured
objectively, performance was made commercially impracticable thereby.
Concluding that the answers of the jury to the special interrogatories
were supported by substantial evidence, we affirm on the direct
appeal.

========================

By the way, in order to locate this case, I conducted a Lexis search
at:

http://www.lexis.com 

on:  commerc! w/2 impractical! and farm!

I searched this phrase on both federal and state case law, in order to
find variations on the phrase [commercial impracticality] such as,
e.g., "commercially impractical" and to find this in case documents
that also contained the word farm or farmer or farming.



I hope this meets your needs, but if you think there may be some other
case that is pertinent to your question, let me know, and I'll be
happy to asist you further on this.

pafalafa-ga

Request for Answer Clarification by jones1914-ga on 03 Nov 2003 05:21 PST
pafalafa. I think this is the right genere except I am believe it is
between farmer and client. Former President Jimmy Carter claimed to be
peanut farmer. He was really a peanut broker. The example you found is
brokered peanuts not raised peanuts. I thinkg it is much more current
- early 2000, 2001. I also think it is more directly farmer and end
user relationship. The client sued. The farmer won based on commercial
impracticablity because he/she not only could not deliver produced
crop was unable to find replacement crop. The farmer also maintained
he/she gave ample notice. If you could try some more I would
appreciate the effort. Thanks

Request for Answer Clarification by jones1914-ga on 03 Nov 2003 05:31 PST
HI again.
Earlier research response said there might be a case involvinig too
much rain, too wet. Where is that case? What about that path? Thanks.

Clarification of Answer by pafalafa-ga on 03 Nov 2003 07:25 PST
Hello again,

I'll be glad to continue searching for the best case law, here,
although I must say...there appear to be relatively slim pickings.

I did find mention of "wet weather" impracticability doctrine case
known as Campbell v. Hotstetter Farms, but from what I can tell, this
is a hypothetical case developed as an academic exercise.  You can
read about it here:

www.kentlaw.edu/classes/rwarner/contracts/
Docs/remedies/krell%20v.%20henry.rtf

Beyond this, I have not found much in the way of recent vintage cases,
beyond the Alimenta case I already cited.

Is there anything else you can tell me about the case in question: 
where the farm was?  What crop?  What was the event making fulfilment
impracticable?  Why do you think it is a recent case?

Any additional information you can provide will help me to narrow down
the search.

If needed, I can ask the editors to remove my answer, so that another
researcher can attempt a more precise response.  Let me know if you'd
like to go that route.

pafalafa-ga

Clarification of Answer by pafalafa-ga on 03 Nov 2003 09:50 PST
I take it back...the Campbell case isn't hypothetical, I just had the
spelling wrong (as my colleague, juggler-ga, was kind enough to alert
me to):

Charles C. CAMPBELL, v. HOSTETTER FARMS, INC., Appellant

Superior Court of Pennsylvania

251 Pa. Super. 232; 380 A.2d 463; 1977 Pa. Super. LEXIS 2699; 23
U.C.C. Rep. Serv. (Callaghan) 563


It's a 1977 case, though, which makes it even older than the one I
first cited, so the question remains...are you sure it is a more
recent case that you're after?

pafalafa-ga

Request for Answer Clarification by jones1914-ga on 03 Nov 2003 12:08 PST
Hi. Thanks for continuing your efforts. The word is there is a real
case. The inference from instructor was closer to 2001 than to older
example. I understand from hints from others the case(s) exist. I am
sure I have exceeded my $15 worth of help. Would you give
Frustration of Purpose a look see?
Again it farmer not delivering in sixth year of ten year contract. He
had not delivered in past however was able to find replacement crop.
This time his replacement sources were adversly impacted by same
problem hence he could not deliver. Thanks.

Clarification of Answer by pafalafa-ga on 03 Nov 2003 14:20 PST
Whew!

How about:


RAY C. CLARK, Appellant, v. WALLACE COUNTY COOPERATIVE EQUITY
EXCHANGE, Appellee.
No. 80,535 
COURT OF APPEALS OF KANSAS 
26 Kan. App. 2d 463; 986 P.2d 391; 1999 Kan. App. LEXIS 728; 267 Kan.
754; 39 U.C.C. Rep. Serv. 2d (Callaghan) 405
September 3, 1999, Opinion Filed


Here, the crop is corn, and the weather culprit was an early freeze.

The summary (syllabus) is given in case as follows:

==========

1. Within the meaning of K.S.A. 84-2-613, grain sold for future
delivery on a contract is not identified unless the agreement
expressly requires the seller to grow the grain himself or at a
specified location or to deliver already harvested grain stored at a
specified location.
 
2. Unless the grain is identified when a forward grain contract is
made, K.S.A. 84-2-613 does not excuse a seller from the obligation to
deliver the requisite number of bushels of grain even though drought,
freezing, or other weather conditions have resulted in a crop failure,
either partial or complete.
 
3. K.S.A. 84-2-615 is discussed and applied.
 
4. Farmers in Kansas are deemed to know of the risk to their crops
represented by adverse weather conditions and, therefore, a short crop
caused by adverse weather conditions is foreseeable under K.S.A.
84-2-615.

==========

Think that might be it...?

pafalafa-ga
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