## Facts

- H-W-H Cattle Company, Inc. (HWH) operated as an order-buying cattle company, purchasing cattle on commission for feedlots.
- On September 13, 1978, HWH contracted with Clayton Schroeder to buy 2,000 steers at $67.00 per hundredweight, for delivery between March 1 and May 31, 1979, in Artesia, New Mexico.
- HWH paid Schroeder a $50,000 down payment.
- HWH separately contracted to sell 2,000 comparable steers to Western Trio Cattle Co. at $67.35 per hundredweight; Western Trio paid HWH a $50,000 down payment, which HWH used to fund its down payment to Schroeder.
- Schroeder delivered 1,397 steers, leaving 603 undelivered; the district court found this was a breach.
- After a bench trial, the district court awarded HWH $15,075 (the retained balance of the down payment) and $1,371.83 for lost commission attributable to the 603 undelivered steers.
- HWH appealed, seeking greater damages under Iowa’s Uniform Commercial Code (UCC).

## Issues

1. Under Iowa’s UCC, when a seller fails to deliver, may an order-buyer recover market-price damages under Iowa Code § 554.2713 (UCC § 2-713) based on the contract/market differential?
2. Or are damages properly limited to the buyer’s actual expectancy where the buyer’s profit was only a fixed commission spread (plus return of retained down payment)?

## Decision

- The Eighth Circuit affirmed the judgment.
- The court held HWH was not entitled to market-price differential damages under Iowa Code § 554.2713.
- The court upheld the award of (1) the retained portion of HWH’s down payment and (2) lost commission on the undelivered 603 steers.

## Legal Principles

- UCC remedies are compensatory: they are intended to place the injured party in as good a position as if the contract had been performed, but not in a better position.
- The proper measure of damages for nondelivery depends on the buyer’s actual economic expectancy under the transaction; damage formulas should not produce a recovery exceeding that expectancy.
- An order-buyer whose profit is a predetermined commission spread may be limited to lost commission (and any unrecovered payments), rather than receiving the full benefit of a market-price increase that it did not bargain to capture.
- A buyer cannot convert a limited commission interest into recovery of the entire market-price increase where doing so would create a recovery beyond the buyer’s bargain.

## Conclusion

Because HWH’s expected gain from full performance was only its commission spread, the nondelivery damages were properly confined to the retained down payment and the commission lost on the 603 undelivered steers, rather than a market-price differential that would have exceeded HWH’s contractual expectancy.


H-W-H Cattle Co. v. Schroeder, 767 F.2d 437 (8th Cir. 1985)