BUS311_chapter_07

Grains made an agreement for fallis to sell and

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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 the contract. 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...
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