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Contracts Set of Facts

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Practice Case Study Exercise

Read the following set of facts. This set of facts is to be addressed using the relevant sections of the UCC that you have read and are familiar with thus far in the course. Your response should not be more than four (4) pages, double spaced and should focus on why and how the relevant sections of the UCC will guide the parties to a conclusion, and which party should prevail under the UCC.

Is a farmer a merchant under the UCC?

Rush Johnson Farms, Inc., (Johnson) is thinking of filing a lawsuit against Missouri Farmers Association, Inc., (MFA) for $4,094.60, which Johnson claimed to be the balance due for soybeans sold to MFA. MFA said it withheld the amount on the ground that Johnson had entered into a contract to deliver 6,000 bushels of beans and had failed to deliver the entire amount and the sum MFA withheld represented damages to MFA for the shortage.

When Johnson was getting ready to sell his 1972 crop in 1973, he stated he had checked with a number of elevators to determine the market price of soybeans. He called the MFA elevator at Salisbury and requested he be notified when beans reached $4.00 a bushel. On January 2, 1973, the secretary at the elevator called Johnson and told him beans had reached $4.02 per bushel. He stated he agreed to sell his crop at the $4.02 figure and estimated he would have from 5,000 to 6,000 bushels. The elevator secretary has told everyone that her understanding was the agreement was to sell the definite quantity of 6,000 bushels.

Within a few days after January 2, the secretary mailed Johnson a written contract calling for the sale of 6,000 bushels of soybeans at $4.02 per bushel. Johnson stated he received the contract and was excited, but he did not contact the elevator about any difference in understanding of number of bushels sold. Instead he threw the contract away.

Johnson contended the contract was not for a definite quantity of beans. Further, Johnson argued the contract was oral and under sections of the UCC could not be proven because it involved more than $500 and was not in writing signed by him. As a result, he was not obligated to the entire 6,000 bushels. MFA countered that Johnson was a "merchant" within the UCC definition and therefore the specifics of the oral representation would be admissible.

The underlying issues are pretty simple here - does the UCC apply to this transaction? Did there need to be a contract in writing for either party to prevail? If not, how would the UCC dictate how the disposition of this case would be? Remember, the UCC is written to address circumstances such as these where there is either no writing, or there is an incomplete writing.

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Solution Preview

http://www.foodliabilitylaw.com/2012/07/articles/uniform-commercial-code/farmers-can-be-article-2-merchants-but-not-necessarily-always/

http://digitalcommons.law.villanova.edu/cgi/viewcontent.cgi?article=2585&context=vlr

Is a farmer a merchant under the UCC?

In reference to whether the farmer is a merchant, the courts have been non-definitive in their rulings on this issue, which is why the facts related to any particular case should be used to deduce whether or not the farmer is a merchant under Article 2 of the UCC. Some courts have argued that farmers should represent the primary focus in which their knowledge of the practice of oral ...

Solution Summary

The set of facts to be addressed are determined. How the relevant sections of the UCC will guide the parties to a conclusion is determined.

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