913 contract interest in general restatement 2nd of

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Essentials of Business Law and the Legal Environment
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Chapter 15 / Exercise 01
Essentials of Business Law and the Legal Environment
Mann
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9/13Contract Interest – In GeneralRestatement (2nd) of ContractsReliancereturn party to the situation he/she was in before the agreementRestitutionrestoring the non-breaching party any benefit that she has conferred on the other party
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Essentials of Business Law and the Legal Environment
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Chapter 15 / Exercise 01
Essentials of Business Law and the Legal Environment
Mann
Expert Verified
Bolin Farms v. American Cotton Shippers AssociationUnited States District Court for the Western District of Louisiana370 F.Supp. 1353 (W.D. La. 1974)Rule of LawA change in circumstances following entrance into a forward sales contract does not make the contract unenforceable.FactsBetween January 9, 1973 and March 29, 1973, Bolin Farms (plaintiff) and 13 other cotton farmers entered into forward sales contracts with American Cotton Shippers Association (American) (defendant). American agreed to purchase for an agreed-upon price all the future cotton produced by Bolin Farms on a set amount of acreage. At the time the contract was made, cotton was selling for between 29 and 41 cents per pound. However, due to a variety of environmental and market factors, when the cotton was ready for harvest in September 1973 the price had risen to 80 cents per pound. Bolin Farms brought suit in United States district court, seeking a declaratory judgment that dueto the extreme change in price following the making of its contract with American, the contract was now unenforceable. Thirteen other suits were filed on the same ground against American before Bolin Farms’ suit, and in all 13, the contracts were held enforceable.IssueWhether a change in circumstances following entrance into a forward sales contract makes the contract unenforceable.Holding and Reasoning (Hunter, C.J.)No. The contract between Bolin Farms and American is enforceable despite the change inthe price of cotton. A change in circumstances following entrance into a forward sales contract does not make the contract unenforceable. A forward sales contract presents many risks for both the buyer and the seller. If both parties are experienced in their field, they are expected to fully appreciate and accept the possible risks when entering into a forward sales contract. Both Bolin Farms and American were experienced in the growing,buying, and selling of cotton, and thus should have appreciated the risks involved. A drastic increase in the price of cotton after formation of the contract is a possible risk Bolin Farms should have appreciated when entering into this type of contract. While firm forward sales contracts may sometimes mitigate risks to farmers by shifting many risks tobuyers, when the farmer is negatively impacted by the terms of the contract, it may not automatically rescind the contract. There is no evidence that American entered into the contract with Bolin Farms with inside information about the cotton market, or that the contract was unfairly negotiated or entered without knowledge, willingness, and experience by both parties. Additionally, while the holdings in the 13 other cases involving cotton farmers in similar circumstances are not controlling, they are persuasive.In each case, the forward sales contracts made between the farmers and American were

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