## Facts

- NHF Hog Marketing, Inc. contracted to deliver approximately 750,000 hogs per year to JBS Swift from 2006 through 2010 at a market-based price with adjustments.
- To supply Swift, NHF entered a hog-procurement contract with Pork-Martin, LLP requiring deliveries of 2,333 market-weight hogs per month.
- Pork-Martin’s price mirrored NHF’s Swift pricing, except Pork-Martin received $0.33 less per carcass hundredweight; the $0.33 spread was NHF’s commission on resale to Swift.
- In May 2008, as hog market prices rose, Pork-Martin stopped delivering under its contract and sold into the higher-priced market.
- NHF sued for breach, seeking (1) roughly $440,000 based on the contract–market differential under Minn. Stat. § 336.2-713, tied to asserted exposure to Swift for nondelivery, and (2) $43,197.50 in lost commissions.
- The record contained no evidence that Swift demanded performance for the missing hogs or otherwise sought to enforce the master contract against NHF.

## Issues

1. Whether Minn. Stat. § 336.2-713 entitled NHF to recover market-differential damages for Pork-Martin’s nondelivery when NHF’s expected resale profit was a fixed commission and NHF showed no likelihood Swift would enforce the resale contract.
2. Whether the proper measure of damages was limited to NHF’s proven lost commission rather than the larger contract–market differential.

## Decision

- The Minnesota Court of Appeals affirmed the judgment.
- The court held Pork-Martin breached the procurement contract by failing to deliver hogs.
- The court limited NHF’s recovery to $43,197.50 in lost commissions.
- The court rejected NHF’s claimed market-differential damages because the amount exceeded NHF’s actual expected profit and NHF failed to show a likely, non-speculative liability to Swift for nondelivery.

## Legal Principles

- U.C.C. remedies are compensatory and aim to place the injured party in as good a position as performance would have, but not better.
- Under Minn. Stat. § 336.2-713, market-differential damages may be limited to actual damages when the breaching seller shows (a) the buyer’s expected resale profit is less than the market-differential measure and (b) the buyer does not show a likelihood the downstream purchaser will enforce the resale contract.
- A buyer cannot recover damages based on speculative, unproven exposure to third-party enforcement when its proven loss is limited to a fixed resale margin.

## Conclusion

The court held that a resale middleman with a fixed commission cannot recover U.C.C. § 2-713 market-differential damages that exceed its actual lost profit absent evidence that the downstream buyer will enforce the resale contract, and it affirmed an award limited to NHF’s lost commission.


NHF Hog Mktg., Inc. v. Pork-Martin, LLP, 811 N.W.2d 116 (Minn. Ct. App. 2012)