## Facts

- Sellers harvested and stored approximately 45,000 cwt of potatoes; buyer inspected and found some “hollow heart,” but contracted to buy at $3.80 per cwt.
- Contract provided that if internal problems made the potatoes unfit for fresh-pack shipping, the contract would become “null and void”; buyer would pay transport; state inspectors would grade potatoes at the plant.
- Over 30,000 cwt were processed and shipped as fresh-pack grade.
- State inspectors later declared the remaining 4,838.77 cwt unfit for fresh-pack grade due to increased hollow heart.
- The parties met and agreed the buyer would attempt to blend the remaining potatoes with higher-grade potatoes to meet fresh-pack standards; the attempt failed.
- About one-third of the remaining potatoes were destroyed during removal from the plant.
- Without further notice to the sellers, the buyer processed the remaining 4,838.77 cwt into potato flakes and sold them for $1.25 per cwt.
- Sellers demanded the full contract price; buyer refused, asserting no U.C.C. acceptance and that the “null and void” clause relieved payment.
- A jury awarded sellers $12,832 for potatoes “received” under the contract; buyer appealed.

## Issues

1. Whether the buyer’s retention, processing, and resale of nonconforming potatoes constituted “acceptance” under U.C.C. § 2-606.
2. Whether a contract clause making the agreement “null and void” if potatoes became unfit for fresh-pack shipping excused payment after the goods were processed and sold by the buyer.
3. Whether acceptance, if found, required payment of the full contract price under U.C.C. § 2-607.

## Decision

- The Idaho Supreme Court affirmed the judgment for the sellers.
- The buyer accepted the disputed potatoes under the U.C.C. by conduct inconsistent with the sellers’ ownership.
- The “null and void” clause did not permit the buyer to commercially use the potatoes and avoid paying the contract price.
- The evidence supported the jury’s award of $12,832.

## Legal Principles

- Under U.C.C. § 2-606, a buyer accepts goods by acts inconsistent with the seller’s ownership, including processing and reselling the goods.
- Under U.C.C. § 2-607, a buyer that accepts goods must pay at the contract rate for the goods accepted, even if they are nonconforming (subject to any separate remedies for breach).
- A quality-contingency clause may permit rejection of goods that fail the condition, but it does not authorize the buyer to appropriate the goods for its own commercial purposes and then deny payment.

## Conclusion

The court held that the buyer’s unilateral decision to process and sell the nonconforming potatoes constituted U.C.C. acceptance, obligating payment of the contract price notwithstanding the contract’s “null and void” quality clause.


Borges v. Magic Valley Foods, Inc., 616 P.2d 273 (Idaho 1980)