Brief Fact Summary.
Cherwell-Ralli, Inc. (Seller) sued Rytman Grain Company (Buyer) for money it owed for accepted deliveries of products under an oral installment contract.
Synopsis of Rule of Law.
. The Uniform Commercial Code applied because this case involved a sale of goods.
A party to a sales contract may not suspend performance of its own for which it has “already received the agreed return.”
But if the buyer's conduct is sufficiently egregious, such conduct will, in and of itself, constitute substantial impairment of the value of the whole contract and a present breach of the contract as a whole.View Full Point of Law
The contract called for weekly shipments according to instructions from Buyer, within payment to be made within ten days after delivery. Buyer almost immediately fell behind in its payments, and Seller pointed it out but continued to make deliveries.
The Buyer later became concerned that the Seller might not complete performance because the market price of the goods had risen significantly above the contract price. The Seller assured the Buyer it would continue deliveries, if the Buyer would pay the money it owed. The Buyer sent a check for $9825.60, to cover shipments it had accepted through the end of the prior month. However, several days later, Buyer stopped payment on the check because he heard from a truck driver that the shipment would be his last load.
Two letters were exchanged between the parties in which Seller demanded payment, and Buyer demanded assurances. Seller stopped delivery after learning payment had been stopped on the check, and was forced to close its plant.
The trial court found that Buyer did not have a valid reason for stoppage of payment, that Buyer as the breaching party, and seller was entitled to the final balance of $21, 013.60 that was due and owing.
· Did Buyer’s failure to pay “substantially impair the value of the whole contract” so as to put him in breach?
· Could the Seller under the installment contract terminate?
· Was the Seller obligated to provide assurances of its future performance?
There was no error.
· The record amply sustained the trial court’s finding that Buyer substantially impaired the value of the whole contract, particularly in light of the fact that it stopped payment of the check that was supposed to make its outstanding arrearages current.
· The Seller was expressly permitted, pursuant to UCC §42a-2-703(f), upon breach of the contract as a whole, to cancel the remainder of the contract “with respect to the undelivered balance.”
· The Buyer’s insecurity was not reasonable, as the Seller had delivered all of the goods the Buyer ordered.
The Buyer was the breaching party, clearly in the wrong for accepting goods and not paying for them.