Research Project Essay and Discussion: Rush Johnson Farms, Inc. No unread replies.
Is a farmer a merchant under the UCC?
Does the UCC apply to this transaction?
Did there need to be a contract in writing for either party to prevail? If not, how would the UCC dictate how the disposition of this case would be? Remember, the UCC is written to address circumstances such as these where there is either no writing, or there is an incomplete writing.
Rush Johnson Farms, Inc., (Johnson) is thinking of filing a lawsuit against Missouri Farmers Association, Inc., (MFA) for $4,094.60, which Johnson claimed to be the balance due for soybeans sold to MFA. MFA said it withheld the amount on the ground that Johnson had entered into a contract to deliver 6,000 bushels of beans and had failed to deliver the entire amount and the sum MFA withheld represented damages to MFA for the shortage.
When Johnson was getting ready to sell his 1972 crop in 1973, he stated he had checked with a number of elevators to determine the market price of soybeans. He called the MFA elevator at Salisbury and requested he be notified when beans reached $4.00 a bushel. On January 2, 1973, the secretary at the elevator called Johnson and told him beans had reached $4.02 per bushel. He stated he agreed to sell his crop at the $4.02 figure and estimated he would have from 5,000 to 6,000 bushels. The elevator secretary has told everyone that her understanding was the agreement was to sell the definite quantity of 6,000 bushels.
Within a few days after January 2, the secretary mailed Johnson a written contract calling for the sale of 6,000 bushels of soybeans at $4.02 per bushel. Johnson stated he received the contract and was excited, but he did not contact the elevator about any difference in understanding of number of bushels sold. Instead he threw the contract away.
Johnson contended the contract was not for a definite quantity of beans. Further, Johnson argued the contract was oral and under sections of the UCC could not be proven because it involved more than $500 and was not in writing signed by him. As a result, he was not obligated to the entire 6,000 bushels. MFA countered that Johnson was a “merchant” within the UCC definition and therefore the specifics of the oral representation would be admissible.
After reading the scenario, write an essay responding to the questions below.
To answer the questions, please conduct research beyond the textbook from this course – for example, utilize Web sources, resources at your public library, and your professional networks.
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Research Project Essay and Discussion: Rush Johnson Farms, Inc.
The UCC enforces standardized codes for the process of actualizing checks and others forms of commercial paper. It only applies when there is sale of goods between entities defined as merchants. Generally, the law defines a “merchant” is an individual (who for the purpose of the business in which they engage regularly), that deals in good of a certain kind or his occupation, in its intrinsic form, requires them to develop and gain knowledge central to understanding how transactions of the goods he is dealing with are conducted (Articles of the UCC). Rush Johnson Farms, Inc., qualifies the definition of merchants. Johnson ideally understands (or is compelled by his business to understand) the requirements of transactions within his business. Johnson regularly interacts with Missouri Farmers Association, Inc., (MFA) for the sale of crop produced within his farm. His occupation as a farmer requires him to have knowledge and skills that compel him to regularly participate in the transaction process. Johnson is primarily a merchant seeing that he is the point of contact between Rush Johnson Farms, Inc., and the MFA.
Johnson’s argument that the oral contract could not be proven because it involved more than $500 is invalid because he is a merchant. The statute of fraud has a merchant’s exception. This exception identifies that if one merchant sends a written confirmation for the oral agreement another merchant within a reasonable time (10 days) needs to contest. Failure to which implies agreement and enforceability (The Articles of the UCC). MFA sent a written document and Johnson threw it away without officially disputing its terms. This meant that the contract was enforceable under the law.
The UCC only applies to contracts established for the sales of goods between merchants. Johnson being designated as a merchant can require or seek to make modification to the already established contract by contacting MFA to clarify that he could not be able to make 6,000 bushels. Oral agreement in good faith is legal under the UCC law. Acceptance of the written documents on the other hand defines agreement established between the two parties. In so doing, the Articles of the UCC identify that additional deliberations are usually not necessary. As such it is not necessary for Johnson to establish seek a written document or seek to be availed with modifications to a written contract at the time of the agreement. This is especially if the contract was established in good faith. On the contrary the farmer should be availed with the modified contract and the farmer will be required to contest the terms within 10 days if they disagree with any of the stated terms (Massey, 1976). Contesting the terms will imply that one is not in agreement with the terms and as such will be required to reestablish their own for consideration. Johnson failed to do.
By failing to notify the MFA secretary about his inability to reach the target and throwing away the contract Johnson, inadvertently agreed to the modifications of the contract of sale of goods to MFA. The agreement between MFA and Johnson was reached when he made an oral call to the secretary who in turn offered him a contract in writing. It is assumed that by Johnson failing to raise any issues with MFA on the mailed contract failed to contest the terms. Implying under the law that he was in agreement to produce 6,000 bushels of beans. In the Rush Johnson Farms, Inc., (Johnson) and MFA case study, MFA is the non-breaching party. MFA and Johnson agreed to supply 6,000 bushels of beans and Johnson as the seller failed to deliver to the tuned of $4,094.60. Articles of the UCC, Article Two Section IV remedies for Breach, identifies that the buyer (MFA) can substitute the goods from another sources and cover the breach by seeking damages for the difference between the original contract requirement and what was brought. In this case, the MFA is allowed by law to report Johnson’s non-conformity in order to seek for remedies for damages incurred.
Articles of the The Uniform Commercial Code (UCC). (2020). Sales of Goods under the UCC and Product Liabilities. Retrieved 11 September 2020, from https://projects.ncsu.edu/project/are306/lecturenotes/Unit14NUCC.pdf
Massey, B. (1979). Uniform Commercial Code – Farmers as Merchants in North Carolina. Campbell Law Review, 1(1). Retrieved from https://scholarship.law.campbell.edu/cgi/viewcontent.cgi?article=1005&context=clr