## Facts

- Two Washington corporations in the raw-log trade contracted in April 1993 for ALPAC to ship about 15,000 cubic meters of logs from Argentina to Korea between the end of July and the end of August 1993, and for Eagon to purchase them.
- After contracting, timber prices fell, and Eagon internally expressed concern about the deal; internal memoranda discussed avoiding acceptance but also described performance as inevitable under the contract.
- ALPAC became concerned Eagon might cancel; the parties exchanged meetings and communications that ALPAC characterized as efforts by Eagon to reassure ALPAC it would perform.
- On August 23, ALPAC faxed a proposal to reduce price and volume; Eagon did not respond.
- ALPAC’s president learned Eagon’s vice-president was having trouble obtaining internal approval and, believing Eagon was canceling, ALPAC canceled the vessel reserved to ship the logs.
- No logs were shipped by the end of August, the contractual shipment window.
- In early September, Eagon’s vice-president told ALPAC he would try to convince Eagon to accept delivery and did not want ALPAC to sell to another buyer; Eagon internally discussed possibly accepting a September or October shipment.
- By September 27, ALPAC still had not shipped; it declared Eagon in breach for “failing to take delivery.”
- Eagon responded that ALPAC’s failure to ship by the deadline breached the contract and excused Eagon’s performance.
- The trial court granted summary judgment for Eagon; ALPAC appealed.

## Issues

1. In a sale-of-goods contract governed by UCC Article 2, does failure to meet a contractual delivery deadline constitute nonconforming tender permitting the buyer to treat the contract as terminated under the perfect-tender rule?
2. Did the parties’ post-deadline communications modify the contract’s July–August shipment term under UCC § 2-209?
3. Did Eagon repudiate the contract, or did ALPAC become excused from performance because Eagon failed to provide adequate assurances under UCC § 2-609?

## Decision

- The Court of Appeals of Washington, Division One, affirmed summary judgment for Eagon.
- ALPAC’s failure to ship within the agreed July–August period was nonconforming tender under UCC § 2-601, entitling Eagon to reject and treat the contract as terminated.
- The evidence did not show a mutual, enforceable modification of the delivery term.
- Eagon did not repudiate the contract, and ALPAC did not make a proper demand for adequate assurances under UCC § 2-609.

## Legal Principles

- Under UCC § 2-601, a buyer may reject goods if the goods or the tender of delivery fails in any respect to conform to the contract (perfect-tender rule).
- In Article 2 transactions, the right to reject for nonconforming tender is not limited by common-law material-breach or “time is of the essence” analysis when the contract specifies delivery terms.
- Contract modification under UCC § 2-209 requires evidence of mutual assent to change the contract; tentative negotiations and internal deliberations do not establish an enforceable modification.
- Anticipatory repudiation requires a clear and unequivocal refusal to perform; expressions of difficulty or internal reluctance, without such a refusal, are insufficient.
- A party seeking to suspend performance based on insecurity must make a proper demand for adequate assurances under UCC § 2-609; without a demand (and failure to provide assurances), the party is not excused from performance.

## Conclusion

Because ALPAC did not ship within the contract’s stated time window and did not prove a valid modification, repudiation, or a § 2-609 assurance demand, Eagon was entitled under the UCC perfect-tender rule to treat the contract as terminated, and summary judgment for Eagon was affirmed.


Alaska Pac. Trading Co. v. Eagon Forest Prods., Inc., 85 Wn. App. 354, 933 P.2d 417 (Wash. Ct. App. 1997)