## Facts

- James H. Woods, Jr., d/b/a Chaumiere Farms, entered into a contract with Ralston Purina Company, d/b/a Arkavalley Farm (Arkavalley), involving the raising and return sale of dairy heifers.
- Under the arrangement, Woods would purchase three- and four-month-old Holstein heifers from Arkavalley, feed and raise them, and allow them to breed with bulls supplied by Arkavalley.
- Woods agreed to sell the bred heifers back to Arkavalley when they reached about 24 to 30 months of age, at a price determined by each heifer’s weight.
- Woods expected the heifers to reach approximately 900 pounds at 18 to 19 months, which would increase the resale price to Woods and provide Arkavalley heavier animals suitable for dairy production.
- Most heifers did not reach the anticipated weight on that timetable, and Woods claimed he was losing money because of the slow growth.
- Ralston Purina sold Arkavalley’s operation to Fred H. Martella and others, who succeeded to Arkavalley’s contract rights.
- After the sale, Woods ultimately sold heifers to a third party instead of selling them back to Arkavalley as the contract contemplated.
- To replace part of the supply Woods did not provide, Arkavalley purchased 50 pregnant heifers from third parties for $63,088; these replacement heifers weighed about 1,100 to 1,200 pounds each.
- The district court found the 50-heifer purchase was partial cover and found the contract price for those 50 heifers would have been $19,840, awarding Arkavalley $43,248 (cover price minus contract price).
- Woods appealed, arguing the replacements were not proper cover because they were not sufficiently similar to the heifers he was obligated to supply.

## Issues

1. Whether Arkavalley’s purchase of 50 heavier, pregnant heifers qualified as a reasonable substitute purchase (“cover”) under U.C.C. § 2-712, permitting recovery of the difference between the cover cost and the contract price.

## Decision

- The Eighth Circuit affirmed the judgment for Martella and the other Arkavalley successors.
- The court held that Arkavalley’s purchase of the 50 pregnant heifers constituted reasonable cover under U.C.C. § 2-712 even though the replacements were heavier and more developed than the heifers Woods was to provide.
- The court upheld the damages award based on the difference between the cover price ($63,088) and the contract price ($19,840), totaling $43,248.

## Legal Principles

- Under U.C.C. § 2-712, after a seller’s breach, a buyer may cover by making, in good faith and without unreasonable delay, a reasonable purchase of substitute goods.
- Cover does not require an exact match; the standard is whether the substitute purchase is reasonable in light of the buyer’s needs and the market conditions at the time.
- When cover is proper, the buyer’s basic measure of damages is the difference between the cost of cover and the contract price, plus allowable incidental and consequential damages, minus expenses saved due to the breach.
- On appeal, a trial court’s determination that a cover purchase was reasonable will be upheld when supported by the record; a seller cannot defeat cover damages solely by showing the replacements were not identical.

## Conclusion

*Martella v. Woods* affirms a cover-damages award under U.C.C. § 2-712, holding that Arkavalley’s post-breach purchase of heavier, pregnant heifers was a good-faith, reasonable substitute for the bred heifers Woods failed to supply, supporting recovery of the difference between the cover cost and the contract price.


Martella v. Woods, 715 F.2d 410, 36 U.C.C. Rep. 1200 (1983)