Facts
- Royal Jones & Associates, Inc. (Royal Jones) was in the business of constructing rendering plants.
- First Thermal Systems, Inc. (First Thermal) agreed to manufacture three steel rendering tanks for Royal Jones for a contract price of $64,350.
- First Thermal had not manufactured rendering tanks before this order.
- The tanks were made to Royal Jones’s specifications, including a special size, the absence of internal components, and features that would require further engineering before the tanks could be used.
- Under the contract, Royal Jones was to take delivery at First Thermal’s manufacturing facility in Chattanooga, Tennessee.
- On the delivery date, Royal Jones did not appear to take delivery, refused to accept shipment, and refused to pay the contract price.
- First Thermal continued holding the tanks at its plant and had no other customers for the tanks.
- The trial court found Royal Jones breached the contract and awarded First Thermal the full contract price, prejudgment interest, and attorney’s fees and costs under section 672.709, Florida Statutes (1987).
- Royal Jones appealed, arguing First Thermal was not entitled to recover the full price because it did not prove an inability to resell after reasonable effort, or that the circumstances showed resale efforts would be futile.
Issues
- Whether a seller may recover the full contract price under section 672.709(1)(b), Florida Statutes (1987), when the buyer refuses to accept and pay for specially manufactured goods and the evidence shows the goods are not suitable for sale to others in the seller’s ordinary course of business.
- Whether section 672.709(1)(b) permits recovery of the price without proof that the seller actually attempted resale when the circumstances reasonably indicate resale efforts would be unavailing.
Decision
- The First District Court of Appeal affirmed the judgment for First Thermal.
- The court held the evidence supported the trial court’s findings that the tanks were specially manufactured for Royal Jones, were not suitable for sale to others in First Thermal’s ordinary course of business, and that resale efforts would have been unavailing.
- The court rejected Royal Jones’s argument that First Thermal had to present evidence of actual resale attempts to recover the price under section 672.709(1)(b).
- The court upheld the award of the contract price, prejudgment interest, and attorney’s fees and costs pursuant to section 672.709.
Legal Principles
- Under section 672.709(1)(b), Florida Statutes (1987) (U.C.C. § 2-709), when a buyer fails to pay as the price becomes due, a seller may recover the price of goods identified to the contract if the seller cannot resell them at a reasonable price after reasonable effort, or if circumstances reasonably indicate that such effort will be unavailing.
- Special manufacture and lack of suitability for sale to others in the seller’s ordinary course of business can support a finding that the circumstances reasonably indicate resale efforts would be unavailing.
- A seller need not prove actual attempted resale where the record supports a finding that resale efforts would not succeed; circumstantial proof of futility can satisfy section 672.709(1)(b).
- In applying section 672.709, a buyer’s mitigation argument based on a supposed ability to resell may fail when the proof shows the goods are effectively unsalable to other customers.
Conclusion
The court affirmed a price judgment for First Thermal because Royal Jones ordered tanks built to its specifications, then refused delivery and payment, and the evidence supported the trial court’s finding that the specially manufactured tanks were not suitable for sale to others and that resale efforts would likely fail, satisfying section 672.709(1)(b) without proof of actual resale attempts.