Facts
- A peanut buyer and a peanut seller entered into seven contracts (July 1980) for delivery of shelled, edible peanuts from the 1980 crop, which was unharvested at contracting.
- A drought later reduced crop yield, and the seller invoked U.C.C. § 2-615 to allocate deliveries among contract customers.
- The buyer was notified it would receive about 65% of the contracted quantity; it accepted that share but sued for breach, alleging bad faith invocation of § 2-615 and an unreasonable allocation.
- The record included evidence that pre-harvest contracting was customary, peanut harvests had been strong for many years, and experts were surprised by the drought; prices rose after the shortfall.
- Before trial, the district court granted a motion in limine excluding any reference to the seller’s size, sales volume, or financial resources.
- A jury returned a verdict for the seller.
Issues
- Whether commercial impracticability under U.C.C. § 2-615 is assessed objectively such that the seller’s size and financial resources are irrelevant and properly excluded.
- Whether the court should have ruled as a matter of law that the crop failure was foreseeable, the seller’s allocation was unreasonable, and the seller failed to give reasonable notice of allocation.
- Whether refusing the buyer’s requested jury instruction defining “good faith” was reversible error.
Decision
- The court affirmed the judgment for the seller.
- Excluding evidence of the seller’s size and wealth was proper because § 2-615 impracticability uses an objective standard focused on whether performance would require a commercially unreasonable expenditure, not on the promisor’s ability to pay.
- Foreseeability, the reasonableness of allocation, and the reasonableness of notice were supported by disputed evidence and were properly submitted to the jury rather than resolved as matters of law.
- The jury instructions, considered as a whole, adequately addressed good faith; the trial court was not required to give the buyer’s requested wording.
Legal Principles
- Commercial impracticability under U.C.C. § 2-615 is an objective inquiry centered on the nature of the agreement and the parties’ expectations and on whether performance would require a commercially unreasonable expenditure.
- A party’s financial strength or corporate size is generally irrelevant to § 2-615 impracticability and may be excluded to prevent a subjective “ability to pay” analysis.
- Under U.C.C. § 2-615(b), a seller facing partial inability to perform must allocate production and deliveries among customers in a fair and reasonable manner.
- Foreseeability of the supervening event, the fairness of an allocation, and the reasonableness of notice under § 2-615 commonly present fact questions for the jury when the evidence is contested.
- A trial court does not commit instructional error by refusing a party’s proposed charge if the instructions as a whole fairly and correctly state the governing law, including applicable good-faith obligations.
Conclusion
The court upheld a jury verdict excusing partial nonperformance under U.C.C. § 2-615 after a drought-related crop shortfall, holding that impracticability is judged objectively, that wealth evidence is irrelevant, and that foreseeability, allocation, notice, and good faith were properly resolved by the jury under adequate instructions.