Brief Fact Summary. Jonah D. Cornett and Ralph Moore (Plaintiffs) sued Neumiller Farms, Inc. (Defendant) for breach of contract. Defendant appealed from a judgment for the Plaintiffs.
Synopsis of Rule of Law. A rejection of goods based on dissatisfaction, which was not made in good faith, is invalid and constitutes a breach of contract upon which damages are recoverable.
Issue. Whether the Defendant’s refusal to accept Plaintiff’s delivery of potatoes was a breach of contract?
Held. Yes. Judgment affirmed.
An aggrieved party may recover for breach of contract when the buyer wrongfully rejects the goods. A buyer may reject delivery of goods if the delivery fails to conform to the contract. Here, Defendant did not claim that the tender was inadequate rather he asserted that the potatoes failed to conform to the requirements of the contract.
A claim of dissatisfaction must be made in good faith. Here, the Defendant deals in farm products and is a merchant with respect to dealing in such goods. In testing the good faith of a merchant, the Code of Alabama requires honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade. Therefore, the rejection of goods based on a claim of dissatisfaction, which was not made in good faith is ineffectual and constitutes a breach of contract for which damages are recoverable.
Discussion. The standard used by the court to determine good faith of a merchant is an objective standard.
This case presents a common example of bad faith when the promisor is dissatisfied with the overall bargain rather than the other party’s performance.