## Facts

- A grain processor contracted with a Tennessee farmer for soybeans under two written contracts for November 1972 delivery: 5,000 bushels at $3.33/bu and 3,000 bushels at $3.29/bu.
- The contracts incorporated trade-association rules by reference.
- By the original deadline (November 30, 1972), the farmer delivered only 738.23 bushels.
- The buyer sent monthly extension letters for December, January, and February; the farmer made additional deliveries totaling 4,228.53 bushels.
- After the extensions, 3,771.47 bushels remained undelivered (771.47 under one contract and 3,000 under the other).
- The parties stipulated that unusually heavy rains and flooding affected the farmer’s operations during fall and winter 1972.
- Soybeans were scarce in 1972–73 and market prices increased substantially between November 1972 and March 1973.
- The buyer claimed it covered on March 8, 1973 and demanded $11,131.32 in damages based on the higher March market; the farmer refused to pay.
- The case was tried to a jury on special interrogatories, with additional facts stipulated and remaining fact issues left to the court where not determined by stipulation or the jury.

## Issues

1. Whether the farmer’s shortfall was excused as commercial impracticability under U.C.C. § 2-615 due to severe weather.
2. Whether the buyer’s repeated extensions were good-faith modifications/performance under U.C.C. § 1-203 (and related modification principles), or bad-faith conduct aimed at increasing damages in a rising market.
3. For U.C.C. § 2-713 damages, whether “the time when the buyer learned of the breach” was the original delivery deadline (Nov. 30, 1972) or the later asserted cover date (Mar. 8, 1973).

## Decision

- The court upheld the jury’s rejection of the farmer’s § 2-615 defense; the breach was not excused.
- The court accepted the jury’s finding that the buyer acted without good faith in extending the delivery deadlines.
- The court held the buyer could not measure § 2-713 damages using the March 8, 1973 market price.
- Damages were limited to the contract/market differential as of November 30, 1972 for the undelivered quantity, with judgment for the buyer on liability subject to that limitation.

## Legal Principles

- U.C.C. § 2-615 excuses nonperformance only when an unforeseen contingency, the nonoccurrence of which was a basic assumption of the contract, makes performance commercially impracticable; the seller bears the burden and must show any allocation among customers is fair and reasonable.
- U.C.C. § 1-203 requires good faith in performance and enforcement; for merchants, good faith includes conduct consistent with reasonable commercial standards of fair dealing.
- Contract modifications and performance extensions in sales contracts must be undertaken in good faith; a buyer may not extend performance primarily to enlarge the seller’s exposure in a rising market.
- Under U.C.C. § 2-713, the market-price date is when the buyer learned of the breach; a buyer with sufficient knowledge of breach at the original due date cannot, consistent with good faith, delay action to capture a higher market and claim increased damages.

## Conclusion

The court enforced the soybean contracts and rejected the farmer’s commercial-impracticability defense, but limited the buyer’s recovery because the buyer’s deadline extensions were found to be in bad faith; as a result, damages were fixed by the market price at the original delivery deadline rather than a later, higher price.


Ralston Purina Co. v. McNabb, 381 F. Supp. 181 (W.D. Tenn. 1974)