## Facts

- Shields, a hog producer, contracted to supply Swiss Valley, a reseller, feeder pigs over 36 months in monthly shipments of about 600.
- The written contract required Shields to use best efforts to provide healthy, high-quality pigs and defined “merchantable” pigs as those within a specified weight range and “progeny from a Newsham line then sold commercially in the United States.”
- The contract required Swiss Valley’s approval for any change in genetic makeup and limited Swiss Valley’s delivery rejections to enumerated conditions (e.g., rupture, sickness, and failure to meet the contract’s merchantability/genetic criteria).
- March 1998: Swiss Valley accepted a shipment as conforming.
- April 1998: Shields tendered 680 pigs; Swiss Valley accepted 380 and refused 300 because a downstream customer allegedly did not need more pigs, not because the pigs were nonconforming. Shields sold the remaining pigs elsewhere.
- The parties continued performing after April 1998.
- Swiss Valley later questioned whether Shields could supply “100% Newsham” pigs, based on discussions about Shields’s breeding and replacement practices.
- August 1998: Swiss Valley accepted a shipment but soon complained of problems, refused Shields’s offer to replace pigs, and announced it would not accept further shipments.
- Shields sued for breach regarding the April rejection and Swiss Valley’s refusal to accept future deliveries; Swiss Valley counterclaimed that Shields breached by failing to meet genetic requirements.
- The trial court found both parties repudiated and denied relief on both claims.

## Issues

1. Whether Swiss Valley breached the contract by refusing to accept 300 pigs from the April 1998 tender for reasons unrelated to contractual nonconformity.
2. Whether Swiss Valley’s August 1998 refusal to accept further shipments was an anticipatory repudiation of the remaining contract term.
3. Whether Shields materially breached or repudiated by abandoning efforts to meet the contract’s Newsham genetic requirements, thereby excusing Swiss Valley’s nonperformance.

## Decision

- The appellate court affirmed in part, reversed in part, and remanded.
- Swiss Valley breached the contract by rejecting the 300 pigs in April 1998 for a noncontractual reason (downstream demand), and Shields was entitled to pursue damages for that breach.
- Swiss Valley’s categorical refusal after August 1998 constituted anticipatory repudiation of the remaining contract term.
- Swiss Valley failed to establish that Shields repudiated or materially breached the genetic specifications; thus Swiss Valley was not excused from performance.
- The trial court’s “both parties repudiated” finding was erroneous to the extent it eliminated Shields’s damages claims; the case was remanded for damages determinations consistent with the appellate court’s analysis.

## Legal Principles

- Under U.C.C. Article 2 and a contract limiting rejection grounds, a buyer may reject goods only for contractual/U.C.C. nonconformity; business convenience or downstream market demand is not a valid basis when not included in the agreement.
- Continued performance after a breach may show the contract remained in effect, but it does not erase the prior breach; it affects whether conduct amounts to termination or mutual repudiation.
- Anticipatory repudiation requires a clear, definite indication of nonperformance; disputed interpretations or incomplete proof of nonconformity do not justify repudiation.
- Where a contract defines technical specifications (including genetic lineage), courts apply the written definition and the parties’ demonstrated understanding, rather than imposing stricter requirements not expressed in the agreement.

## Conclusion

The appellate court held Swiss Valley wrongfully rejected conforming pigs in April 1998 and later anticipatorily repudiated the remaining term, while Swiss Valley did not prove that Shields repudiated or materially breached the contract’s genetic requirements; the matter was remanded for calculation of damages.


Shields Pork Plus, Inc. v. Swiss Valley Ag Serv., 767 N.E.2d 945 (Ill. App. Ct. 4th Dist. 2002)