Brief Fact Summary. Plaintiffs, cotton farmers, entered into a contract with Defendant to sell cotton at an agreed price. The parties entered into the contracts between January and March of 1973. Between the time that the parties entered into the contracts and the time of the harvest, the price of cotton skyrocketed. Plaintiffs wish to annul the contracts.
Synopsis of Rule of Law. When two knowledgeable, competent parties enter into a contract, the contract stands regardless of changed circumstances that might make the contract less attractive to one of the parties, at the time of performance.
The nature, validity, and construction of a contract are determined by the lex loci contractus; the remedy according to the lex fori.View Full Point of Law
Issue. Should the contracts be upheld despite the changed circumstance?
Parties were both experienced in the cotton industry. Plaintiffs had been cotton producers for several years. Defendants had been cotton buyers for several years.
The price they agreed upon was fair market vale at the time the contract was made.
Although Plaintiffs contend that Defendants had advanced warning that the price would increase when they made the contracts, they did not prove this contention.
Defendants took certain risks when they signed the contract. The farmers did not guarantee quality or quantity of cotton, merely that they would sell all the cotton that they had planted on certain tracts of land.
Discussion. The decision emphasizes the equal footing the parties were on in experience and knowledge and that both parties took risks in entering into the contracts they did. The price of cotton could have dropped between entering into the contracts and performance, but the Defendants would still be bound to the contract. Upholding the contract despite the change in circumstance makes it possible for business to continue. Nobody would make a contract if one party could walk away if circumstance changed making the contract less attra