## Facts

- Panike & Sons Farms, Inc. (an onion grower) entered a written January 2006 contract to deliver 25,000 cwt of “75% three-inch minimum field run onions” for $4.75 per cwt.
- The contract included a field-selection term: the buyer would choose the fields (“Buyer will specify field(s)”).
- During the 2006 growing season, the buyer informed Panike it would designate the fields and later sent letters (including a map) designating them.
- Panike refused to deliver onions from the designated fields, asserting they were a different variety and larger than contemplated.
- Panike delivered two truckloads from non-designated fields; the buyer rejected them as nonconforming.
- Panike sued for wrongful rejection and challenged a crop lien filed by the buyer/associated individuals; the buyer counterclaimed for breach and damages.
- After a bench trial, the district court found Panike breached by refusing delivery from designated fields and awarded damages using a market price for packed onions and including packing-related costs.

## Issues

1. Whether Panike breached the contract by failing to deliver onions from the fields specified by the buyer under the field-selection clause, as informed by usage of trade.
2. Whether the trial court erred in calculating the buyer’s damages by using packed-onion market prices and including packing costs, despite the contract’s “field run” term.

## Decision

- The Idaho Supreme Court affirmed the finding that Panike breached the contract by refusing to deliver onions from the buyer-designated fields.
- The court affirmed that the buyer properly rejected deliveries from non-designated fields as nonconforming.
- The court vacated the damages award and remanded for recalculation.
- The proper measure of damages was the difference between the market price of unpacked (“field run”) onions at the time of breach and the contract price, excluding packing costs.

## Legal Principles

- A contract term granting the buyer authority to “specify field(s)” may be interpreted in light of usage of trade concerning when and how selection occurs.
- Appellate review defers to trial court fact-finding on trade usage when supported by substantial and competent evidence.
- Under UCC sales principles, goods that fail to conform to contract terms (including field-of-origin specifications) may be rejected.
- Buyer’s expectation damages for seller’s non-delivery are measured by contract price versus the relevant market price for the contracted goods at the time of breach.
- Damage calculations must match the contract’s product form; when the contract is for “field run” goods, packed-goods prices and packing costs are improper components of the market-price comparison.

## Conclusion

The court held that the buyer could designate the delivery fields during the growing season consistent with trade usage and that the grower’s refusal to deliver from those fields was a breach, but it required damages to be recalculated using market prices for unpacked “field run” onions and excluding packing costs.


Panike & Sons Farms, Inc. v. Smith, 147 Idaho 562, 212 P.3d 992 (Idaho 2009)