## Facts

- Laredo Hides Company, Inc. (buyer) purchased cattle hides for shipment to tanneries in Mexico; H & H Meat Products Company, Inc. (seller) generated hides as a by-product of meat processing.
- The parties executed a written contract (Feb. 29, 1972) for the buyer to purchase the seller’s entire cattle hide production from March through December 1972.
- The contract stated: “Terms: Cash upon delivery — deliveries to be made at least twice a month.”
- Deliveries were picked up at the seller’s plant by a Laredo-based transfer company acting as the buyer’s agent for receiving hides and making payment.
- The first shipment proceeded with payment by check tendered at loading and accepted by the seller.
- For a later shipment, the buyer issued a $9,000 check intended to accompany the pickup, but the transfer-company driver forgot it.
- The transfer-company owner promptly called the seller’s manager, disclosed the mistake, and asked for instructions; the manager authorized release of the hides and directed that the check be mailed.
- After releasing the shipment, the seller demanded immediate payment on a short deadline and, when payment was not received within that window, declared the contract breached and stopped further deliveries.
- The buyer attempted to cure promptly, including arranging a funds transfer within the demanded time, but the seller still refused to continue performance.
- Hide prices rose sharply after contracting; the buyer claimed it covered at higher prices to meet downstream commitments and sought market/cover damages plus incidental expenses.

## Issues

1. Whether the contract term “cash upon delivery” made time of payment essential, so a brief delay in payment justified termination.
2. Whether the seller’s release of hides after learning the check was missing waived strict contemporaneous payment and barred cancellation based on that deviation.
3. Whether a delayed payment for a single shipment in a continuing supply/output contract constituted a material breach justifying cancellation of the entire agreement.
4. Whether the buyer was entitled to damages measured by cover/market differential and incidental damages after the seller ceased deliveries.

## Decision

- The appellate court reversed the take-nothing judgment and rendered judgment for the buyer.
- “Cash upon delivery,” without an express “time is of the essence” provision or circumstances showing essentiality, did not make strict time of payment a condition whose minor breach permitted termination.
- By authorizing release of the hides with knowledge that the check was not present and instructing that it be mailed, the seller waived strict insistence on immediate payment for that shipment.
- The buyer’s short, non-bad-faith delay, coupled with prompt efforts to cure, did not constitute a material breach justifying termination of the entire contract.
- The seller’s refusal to make further deliveries was a wrongful termination and breach, entitling the buyer to buyer’s remedy damages, including contract/market (or cover) differential and incidental losses proved.

## Legal Principles

- Time is not of the essence in a contract unless expressly stated or clearly implied by the contract’s nature and surrounding circumstances.
- A “cash upon delivery” term does not, standing alone, establish that strict simultaneity of payment and delivery is essential when course of performance shows acceptance of checks and tolerance of minor deviations.
- A party may waive strict compliance with a contract term through conduct indicating that exact performance will not be required, including continuing performance with knowledge of a deviation.
- In continuing supply/output arrangements, a minor or promptly cured delay in payment for a single shipment does not automatically justify cancellation of the entire contract absent a material breach.
- Upon wrongful termination by the seller, a buyer may recover damages commonly measured by the difference between contract price and cover/market price, plus incidental damages.

## Conclusion

The court held that the seller breached by canceling an output contract after a brief, promptly addressed payment delay, because time of payment was not essential under the agreement and course of performance and the seller waived strict contemporaneous payment by releasing the shipment despite knowing the check was missing.


Laredo Hides Co. v. H & H Meat Prods. Co., 513 S.W.2d 210 (Tex. Civ. App.—Corpus Christi 1974)