This preview shows page 1. Sign up to view the full content.
Unformatted text preview: offer, the acceptance, and the consideration.
2. Would the case have come out differently under the common law?
3. How could Lark have better protected its interests? Case Study: Cook Grains, Inc., v. Fallis
395 S.W.2d 555 (Ark. 1965)
Facts: Fallis, a farmer, and Horton, an agent of Cook Grains, Inc. (Grains) made an agreement for
Fallis to sell and deliver to Grains 5,000 bushels of soybeans at $2.54 per bushel. The company sent
Fallis a written contract signed by Grains, but Fallis neither signed the contract nor returned it. When
Fallis failed to deliver soybeans, Grains sued him for breach of contract and damages in the sum of
$1,287.50. Fallis admitted that the sale of soybeans was discussed but argued no agreement was
reached. He also argued that the lawsuit was barred by the statute of frauds. The trial court ruled
in favor of Fallis, and Grains appealed. Grains argued that there was an exception to the statute of
frauds: according to the UCC, as between merchants, a merchant is liable on a written contract—
whether he signs it or not—if the merchant does not give within ten days of receiving the contract a
written notice that he rejects it. Grains argued that Fallis is a merchant and, therefore, liable under
Issues: Is a farmer a merchant within the meaning of the UCC? Was the contract enforceable?
Discussion: The appellate court examined the definition of a “merchant” in the UCC—“a person who
deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or
skill peculiar to the practices or goods involved in the transaction . . .” However, there is no evidence
that Fallis has such knowledge or skills—he is a farmer “and nothing else.” After analyzing the definition
of a “farmer” from previous cases, the court found that a farmer is “one devoted to the tillage of the
soil” and “a man who cultivates a considerable tract of land.” The court did not find any cases where
the word “farmer” could be interpreted as “merchant.” The court stated that, if the state (continued) rog80328_07_c07_134-156.indd 153 10/26/12 5:52 PM Section 7.6 Chapter Summary CHAPTER 7 Case Study: Cook Grains, Inc., v. Fallis (continued)
legislators intended that the word “merchant” should include farmers, “no doubt clear and explicit
language would have been used in the statute.” There is nothing in the statute that indicates that
a farmer should be considered a merchant when he is mostly acting in his capacity as a farmer and
involved in the commerce only when he tries to sell the produce that he raised. The court also found
that a “merchant” mostly means a “trader”—one who buys and sells—and does not include a farmer
who sells what he makes. The court concluded that, in construing a statute, “its words must be given
their plain and ordinary meaning.” Therefore, Fallis is not a merchant within the meaning of the UCC,
and the alleged contract is barred by the statute of frauds.
Holding: The judgment of the trial court is affirmed.
Questions for Discussion
1. What made...
View Full Document