## Facts

- Potato farmers Jonah D. Cornett and Ralph Moore contracted to deliver twelve loads of “chipping” potatoes to Neumiller Farms, Inc., a merchant potato broker, at $4.25 per hundredweight in July–August 1976.
- The contract required potatoes to be U.S. Grade No. 1 and to “chip to buyer satisfaction”; each load contained 430 hundredweight.
- Sellers produced about 20–24 loads and delivered three loads that the buyer accepted without objection while the market price approximated the contract price.
- After the market price fell to about $2.00 per hundredweight, the buyer rejected additional tenders, claiming the potatoes would not chip satisfactorily.
- Sellers obtained expert evaluation from a Cooperative Extension Service specialist, who found the potatoes suitable for chipping.
- After sellers demanded performance, the buyer agreed to “try one more load”; sellers tendered a load purchased from another grower whose potatoes the buyer had recently bought at the lower market price, but the buyer again claimed dissatisfaction.
- Sellers offered to obtain the remaining nine loads from other growers to complete performance; the buyer refused and stated it could buy potatoes for $2.00 and would ensure further loads were turned down.
- Sellers attempted resale in a depressed market and sold only part of the remaining potatoes.
- A jury found for the sellers and awarded $17,500; the buyer appealed on liability and damages.

## Issues

1. Whether a merchant buyer’s rejection under a “buyer satisfaction” chipping clause was wrongful because it was not made in good faith under the UCC.
2. Whether the $17,500 verdict was supportable under UCC seller-remedy provisions when the market-price-minus-contract-price measure would not adequately compensate the sellers.

## Decision

- The judgment for the sellers was affirmed.
- The court held the buyer’s rejection was not made in good faith and therefore constituted wrongful rejection and breach of contract.
- The court upheld the jury’s damages award as supported by the evidence and consistent with UCC remedies permitting alternative measures when the standard market differential is inadequate.

## Legal Principles

- Under the UCC, rejection for nonconformity must be made in good faith; for a merchant, good faith includes honesty in fact and observance of reasonable commercial standards of fair dealing.
- A “satisfaction” term concerning commercial quality or utility is constrained by objective commercial reasonableness; it does not permit rejection to avoid an unfavorable price movement.
- A seller may recover for wrongful rejection, and when the market-differential measure does not place the seller in as good a position as performance would have done, the UCC permits damages measured by lost profits and related incidental losses, supported by the evidence.

## Conclusion

A merchant buyer cannot use a satisfaction-based quality clause as a pretext to escape a contract after market prices fall; where the evidence shows rejection was driven by price rather than genuine quality concerns, the rejection is wrongful, and the seller may recover UCC damages sufficient to approximate the position full performance would have produced.


Neumiller Farms, Inc. v. Cornett, 368 So. 2d 272 (Ala. 1979)