## Facts

- A grain dealer and a farmer entered a written forward contract in August 1972 for 10,000 bushels of No. 2 yellow soybeans at $3.35 per bushel, deliverable in January 1973 at the buyer’s facility in Price’s Landing, Missouri.
- The contract did not require the seller to grow the soybeans or to deliver soybeans from any particular land or crop; the buyer had a contractual right to extend the delivery time.
- The parties had multiple soybean contracts; the seller delivered substantial quantities under other contracts during November 1972 through January 1973, including some beans sold at prices above $3.35.
- The seller did not deliver any beans under the specific 10,000-bushel contract at issue.
- Severe winter weather in early January 1973 prevented harvesting of a large portion of the seller’s soybean acreage; the buyer’s agents observed the unharvestable conditions.
- The buyer notified the seller that delivery had not occurred and extended the delivery deadline to March 31, 1973.
- Soybean market prices rose between late January and early April 1973.
- After no delivery by the first market day following March 31, the buyer sued for damages measured by the difference between the contract price and the market price at that time.
- The seller admitted non-delivery but asserted an “act of God” excuse based on the weather-related crop loss.

## Issues

1. Whether severe weather excused the seller’s non-delivery under UCC impracticability/“act of God” principles when the contract did not identify the goods to the seller’s particular crop.
2. Whether the trial court could reduce the buyer’s damages based on an alleged lack of good faith in extending the delivery date when lack of good faith had not been pleaded as an affirmative defense.

## Decision

- The court of appeals upheld the determination that the seller’s non-delivery was not excused because the contract was for generic soybeans not identified to a specific crop or source.
- The court held that lack of good faith by the buyer, used to limit damages, was an affirmative defense closely related to fraud and had to be specifically pleaded.
- Because the seller did not plead lack of good faith and relied only on the “act of God” theory, the trial court erred in using an unpleaded good-faith theory to set damages by an earlier market date.
- The judgment was vacated to the extent it relied on the unpleaded good-faith theory, and the case was remanded to permit amendment of the pleadings and further proceedings on the good-faith issue.

## Legal Principles

- A seller is not discharged for impracticability or “act of God” when the contract calls for generic goods and does not identify the goods to a particular crop or source, leaving the seller free to obtain substitutes.
- Under the UCC, “good faith” includes honesty and observance of reasonable commercial standards.
- A defense asserting the other party’s lack of good faith, when used to defeat or limit recovery, is an affirmative defense that must be pleaded; absent pleading, a court should not reduce damages on that basis.
- When a damages limitation rests on an unpleaded affirmative defense, the proper remedy is vacatur and remand to allow proper pleading and litigation of the issue.

## Conclusion

The seller’s weather-related crop loss did not excuse non-delivery because the contract did not tie performance to a specific crop, and the trial court could not cut off damages based on the buyer’s alleged bad-faith extension of delivery absent a pleaded affirmative defense; the case was remanded for further proceedings after amendment of the pleadings.


Bunge Corp. v. Recker, 519 F.2d 449 (8th Cir. 1975)