Ag Law Class

1
Ag Law - Class 6

• Note, those who may have missed class 2 on using
  Lexis-Nexis -
• Access 1. http//www.lib.purdue.edu/mel/
• 2. Go to Lexis-Nexis Academic and
• 3. click on Legal Research
• Lexis-Nexis may be handed in next Wed or Friday.
• Questions
• See Reserve Reading --Hamiltons, Production
  Contracts
• Recitation today
• Straatman --- Justin Mohler
• Zummo   -- Michael O'Neal 
• Stoltzfus, p.53 -- Chris Liddell
• Adams, p.57 Lance Mathies

2
Writing Sales of Goods--UCC

• IC 26-1-2-201 (1) Except as otherwise provided in
  this section, a contract for the sale of goods
  for the price of five hundred dollars (500) or
  more is not enforceable by way of action or
  defense unless
• there is some writing sufficient to indicate
  that a contract
• for sale has been made between the parties and
  signed by
• the party against whom enforcement is sought or
  by his authorized agent or broker.

3
Key Areas for FarmersRequiring a Written
Document

• Transfers of real estate
• Farmland leases of more than three years
• Contracts that cannot be performed in one year
• Contracts to sell goods of 500 or more
• includes auctions

4
Sorrells v. Bailey Cattle Co.

• Court of Appeals of Ark., 1980
• Action
• Issue
• Facts

5
Sorrells v. Bailey Cattle Co.

• Action To rescind a contract due to seller
  breach.
• Issue Was there an enforceable contract?
• Facts - Earnest money paid with a written offer
  on a form with an inadequate description.
• That offer was accepted by Bailey Cattle Co.

6
Sorrells v. Bailey Cattle Co.

• More facts At a later date, the parties executed
  a Purchasers Agreement without a description,
  but attached an undated note for the balance of
  the price, but without a legal description, only
  a county reference.
• This later document added stipulations 9
  interest,
• Retained 1/2 the mineral rights, and stipulated
  a lesser title insurance than the first
  document.

7
Sorrells v. Bailey Cattle Co.

• Applicable law Statute of frauds
• Holding
• Neither agreement meets the statute of frauds.
• The two together do not make an agreement since
  they do not describe the land.

8
Sorrells v. Bailey Cattle Co.

• Neither referred to the other to allow
  incorporation.
• Different buyers were referenced in each.
• Oral testimony left a state of confusion.
• Rule It takes clear writing to insure an
  enforceable deal.

9
Exceptions to the Writing Requirement

• Statute of frauds may be interpreted narrowly to
  prevent unfairness or injustices. Examples
• 1. partial performance- once work is started,
  there may be a contract-- there must be evidence
  to prove an oral agreement.
• 2. promissory estoppel-applies when one party has
  relied on a promise to his or her detriment.
• See Chapter 11 for an estoppel case.

10
Straatmann v. Straatmann, Mo. Ct. of Appeals, E.
Div., 1991

• Action -
• Issue -
• Applicable law -
• Facts
• Holding
• Rule -

11
Straatmann

• Action Enforcement of a contract, and more ...!!
• Issue Was there sufficient evidence to support
  an oral agreement to avoid the Statute of Frauds?
• Was there a contract for the equip., and the
  land?
• Facts Ken, son, was promised equipment and
  livestock if he stayed to help his parents,and he
  would receive an equal share of land.
• In 1966, Ken and wife were furnished a house and
  a share of income but no salary or wage.
• Dad, retired in 72, and died in 73, Hence Ken
  ran the farm paying all the expenses and keeping
  all income, until 82!

12
Straatmann

• More Facts In May 83, Ken sold the cattle and
  kept the proceeds.
• July, 83 Mom (appellant) prepared a deed
  retaining a life estate with remainder in her
  four daughters!
• Mom sought a share of the cattle proceeds ...
• Ken, counterclaimed on other matters.
• Ken sought specific performance on an oral
  contract for his share of the farmland.
• Ken, prevailed in the trial court!!

13
Straatmann

• Law Partial performance, equitable remedy, may
  support a contract to get around the Statute of
  Frauds defense. Under the Walker standard, in
  Mo. an alleged oral contract must be
• clear
• proved as pleaded
• not too ancient or from casual conversation

14
Straatmann

• oral contract must be
• fair
• in fact, made and performed
• with consideration, and performance demanding
  equity
• shown to be a contract to devise and/or give
  rather than a mere disposition

15
Standard (test) for Specific Performance (p.43,
Walker, 1912)

• An oral contract must be clear, explicit, and
  definite.
• It must be proven as pleaded.
• Not ancient, loose or casual
• Fair and not unconscionable
• No reasonable doubt about the contract, and there
  was full performance
• No other contract relates to the actual
• Adequate an legal consideration, and such that
  performance demands fulfillment of the deal.
• There must be a real contract to perform, not
  just a mere disposition (intention) to devise or
  convey or to make a gift.

16
Straatmann

• Holding Ken gets specific performance.
• His staying on the farm at the request of Ben was
  consideration.
• Mom admitted that the agreement existed!
• While the Mo. law may only require partial
  performance by the party seeking enforcement, Ken
  had 29 years (since 1961) toward his part of the
  bargain.

17
Straatmann

• Rule
• To get the benefit of the remedy of specific
  performance, the party must have clean hands,
• i.e., have done his or her part under a
  provable, clear, fair agreement.

18
Parol Evidence Rule

• In written agreements, the writing is the best
  evidence of the agreement, and evidence of prior
  or contemporaneous agreements is not admissible
  to contradict a term of the writing.
• In short, incorporate the words to give them
  effect.
• Exceptions
• ambiguity in the terms, or a dispute as to meaning

19
Parol Evidence Rule

• In written agreements, the writing is the best
  evidence of the agreement,
• and evidence of prior or contemporaneous
  agreements is not admissible to contradict a term
  of the writing.
• In short, incorporate the words to give them
  effect.
• Exceptions
• ambiguity in the terms, or a dispute as to meaning

20
Zummo Cattle Co. v. Millard Ct. of Civil Appeals
of Tex. 72

• Class Review?
• Action -
• Issue -
• Facts -
• Applicable law -
• Holding -
• Rule -

21
Zummo Cattle Co.

• Action For loss of profits by Zummo
• Issue Is there a basis for an exception to the
  parol evidence rule?
• Facts
• The contract stated that Millard was responsible
  for all death losses and mysterious
  disappearances (there is no missing term or
  ambiguity).

22
Zummo Cattle Co. v. Millard

• Facts Millard introduced a phone conversation
  with Zummo to let the loss limit be 3 before
  Millard would agree to the contract.
• But, he didnt change the written contract that
  he signed!
• Trial court held for Millard, limiting his
  liability to 3 for death and mysterious
  disappearance.
• Law Statute of Fraud/Parol evidence rule.

23
Zummo Cattle Co. v. Millard

• Holding
• Millard is liable under the death loss clause in
  the contract -- all losses!
• Trial court permitted a violation of the parol
  evidence rule
• Rule Parol evidence rule-- the writing is the
  best evidence of the agreement, and evidence of
  prior or contemporaneous agreements is not
  admissible to contradict a term in the writing.

24
Excused Performance

• When dont you have to do what was promised?
• Generally, performance is excused if conditions
  have so changed that the parties would not have
  entered the contract if the changed circumstances
  existed at the out set.
• Impossibility, e.g., the subject matter is
  peculiar and has become unavailable
• Impracticability, e.g., a crop dusters only plane
  is destroyed
• Frustration of Purpose, e.g., a crop no longer
  exists

25
Remedies for Breach of Contract

• Damages
• Sufficient to make the party whole (to get the
  benefit of the bargain)
• Guideline market price - contract price
  Damages
• Liquidated Damages (LD)
• An amount or formula for determining damages
  stipulated in the contract.
• LD must be reasonable to be enforceable.
• A Penalty is not permitted or what appears to
  be coercive.

26
Remedies for Breach of Contract

• Restitution
• payment for benefits already received
• Rescission (an equitable remedy)
• Cancellation of a contract
• with restitution, I.e, payment for benefits
  received.
• Specific Performance
• When the subject matter is unique
• Or, when damages are inadequate

27
Statute of Limitations

• Statutory limit on the time to bring an action
  for recovery. To miss the time limit bars the
  action!
• In common law, if one who did not seek relief in
  a reasonable time was barred by the doctrine
• of laches.

28
Statutes of Limitation in Indiana

• 2 years - personal injury damage to personal
  property wrongful death and medical
  malpractice.
• 4 years - contract for the sale of goods (whether
  written or oral).
• 6 years - accounts oral contracts other than the
  sale of goods rent and landlord-tenant disputes
  damage to real estate promissory notes and
  written contracts for the payment of money.
• 10 years - An action upon contracts in writing
  other than those for the payment of money, and
  including all mortgages - Other than chattel
  mortgages, deeds of trust, judgments of courts of
  record,

29
Uniform Commercial Code (UCC)

• UCC is a uniform body of law governing major
  commercial transactions including sales and
  secured transaction of special interest to
  agriculture.
• Also, covered by the UCC are bank deposits and
  collections, commercial paper(checks and notes)
  and warehouse receipts and other documents of
  title.
• All states, but Louisiana, have adopted the UCC
  with some small variations.

30
Scope of UCC Article 2

• All things that are movable
• Timber and minerals, if to be removed by the
• seller,
• Growing crops buildings that can be moved
  without materially harming the real estate,
• Animal products while on or in the animal,
• Unborn young of animals,
• Contracts involving both goods and services if
  the goods are a predominant factor.

31
Potter v. Hatter Farms, Inc.

• Ct. of Appeals of Oregon, 82, 641 P. 2d 628
• Action
• Issue
• Facts
• Law
• Holding
• Rule

32
Potter

• Action For a contract enforcement by promissory
  estoppel
• Issue Should Hatter be barred on the basis of
  promissory stoppel from raising the Statute of
  Frauds (SF) as a defense?
• Facts Potter (Pl) hatched and grew out turkey
  poults for growers.
• Hatter Farms (def.) finishes the turkeys for food
  processing companies.
• Potter and Hatter had discussions in Jan. 79 as
  to specifics of a sale of 192,000 poults.

33
Potter

• Facts In June Potter had feelers from others for
  his poults, but Hatter gave no indication of not
  wanting the poults
• Hatters agent testified that he told Potter it
  was unwise to hold the poults for them since the
  transportation had not been arranged.
• Potter testifies that he was convinced that Def
  was still going to buy the poults, and there were
  no contractual terms to be worked out.
• In August, Hatter informed Potter they would not
  take the poults.

34
Potter

• Law Promissory estoppel is a bar to the defense
  of SF
• Holding Oregon UCC does not exclude promissory
  estoppel as a bar to a SF defense Promissory
  estoppel requires proof of
• 1) reliance on a promise,
• 2) a definite and substantial change of position
  occasioned by the promise,
• 3) foreseeability by the promisor, as a
  reasonable person, the promise would induce
  conduct of the kind that occurred.

35
Potter

• Holding
• Contract damage due to estoppel
• Potter satisfied the above three part test
• There was a promise, albeit oral
• Reliance on the promise, and change in position
• Hatter, had to foresee Potters predicament
• Rule If the pl can prove the elements of
  Promissory Estoppel he or she can defeat the SF
  defense.
  

36
UCC - Article 2

• 2-201- 1. a writing signed by the party being
  charged is required for sales of goods for a
  price of 500 or more.
• 2. merchants exception -- between merchants if
  within a reasonable time a writing in
  confirmation of the contract, sufficient against
  the sender, is received, and
• the party receiving it has reason to know its
  contents, it satisfies
• the requirements of subsection (1) against such
  party unless written notice of objection to its
  contents is given within 10 days after it is
  received.
• There are other exceptions. E.g., estoppel,
  partial performance