Purina entered in a contract with the defendant to sell the defendant piglets, known as weanlings—baby pigs that have been weaned. It is uncontested that the buyer breached and that Purina is entitled to damages resulting from the breach.
Iowa has adopted the Uniform Commercial Code (UCC) in Chapter 554 of the Iowa Code. The Iowa Uniform Commercial Code applies only to transactions in “goods”:
“Goods” means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale…. “Goods” also includes the unborn young of animals and growing crops. IOWA CODE § 554.2105(1)
As the subject matter of the Agreement, weanling pigs, falls within this definition of “goods,” the Iowa Uniform Commercial Code applies to the Agreement.
The dispute between the parties boils down to a battle over the amount of damages Purina is entitled to for the Lesses’ repudiation of the Agreement. In its motion for summary judgment, Purina argues that because weanling pigs are “goods” as defined by the Uniform Commercial Code (UCC) the appropriate measure for damages under Iowa Code Chapter 554, Iowa’s adoption of the UCC. Specifically, Purina alleges that as to the weanling pigs that the Lesses already accepted, Purina is entitled to damages for the amount still outstanding on the transaction (\($1,432.00)\) … As to the Lesses’ repudiation, Purina asserts that it is entitled to … the measure of damages for nonacceptance or repudiation by the buyer. Those damages are the difference between the market price at the time and place for tender and the unpaid contract price together with any incidental damages … but less expenses saved in consequence of the buyer’s breach.
Purina claims that as an aggrieved seller it is entitled to select any remedy available under the UCC … Purina asserts a market price of \($18.38\) per weanling pig, evidenced by the fact that the United States Department of Agriculture (“USDA”) quoted the market price of a weanling pig at \($18\) … ] the reported price allegedly closest in time to when Purina learned of the Lesses’ repudiation … A contract price of \($35.00,\) minus the asserted market price of \($18.38\) yields a difference of \($16.62.\) This difference of \($16.62\) times 76,250 the number of weanling pigs that Purina alleges the Lesses were to purchase under the remaining term of the agreement equals \($1,267,275.00.\) As Purina claims to not have saved any expenses as a result of the Lesses’ repudiation, Purina claims that it should recover damages of \($1,432.00\) under section 554.2709, plus \($1,267,275.00\) under section 554.2708, for a grand total of \($1,268,707.00.
In\) their resistance, the Lesses do not dispute the damages Purina claims … Rather, the Lesses argue that based on the UCC mantra … that the aggrieved seller is not entitled to a windfall … The Lesses assert that, to date, Purina has resold all of the weanling pigs that the Lesses were to have purchased at prices in excess of the USDA market rate, and in some instances at prices in excess of the \($35.00\) per pig the Lesses were to have paid under the Agreement … Therefore, to avoid overcompensation the Lesses assert that Purina’s damages must be calculated using lost profits.
The Lesses assert that had they performed; Purina’s profit would be only \($3.00\) per weanling pig. Therefore, using section 554.2708(2), Purina is not entitled to the nearly \($1.3\) million dollars in damages that it is claiming. Further … the Lesses argue that the market price used by Purina is not appropriate. The Lesses argue that due to the length of the contract term that the USDA market price is not the applicable market price to apply to the remainder of the Agreement, but that the correct market price under this formula is the market price at each specific time the Lesses would have been required to perform under the Agreement.
Stated another way, the Lesses claim that the USDA market price … is not the appropriate market price to apply to determine Purina’s recovery under the contract/market differential, but that the applicable market price is the USDA market price at the time that the Lesses’ performance would become due under the Agreement (i.e., the market price is different for each week the Lesses would have received a shipment). Additionally, the Lesses contend that Purina’s damage calculation doesn’t deduct the expenses Purina saved on those weanling pigs that may have been graded “substandard” and rejected. Finally, the Lesses claim that any damages awarded should be discounted to present value.
Citing Iowa legal precedent, the court held that “A party is not entitled to use the breach to better its position by recovering damages not actually suffered.”
The only actual loss caused by the Lesses’ repudiation, in light of Concord’s almost simultaneous buyout offer, is Purina’s lost profits … this court finds that based on undisputed material facts, considerations of equity require that Purina be restricted to lost profits damages.
CRITICAL THINKING:
Is the reason the resale (at approximately \($18\) per piglet) versus the contract price (at approximately \($35\) per piglet) is not an applicable measure of damages here because the market numbers are so fluid? Neither party could have anticipated the market price of \($35,\) and thus, that measure of damages becomes speculative.
Or, is it just easier for the court to compute the lost profit of \($3\) per piglet and multiplying that by the number of piglets not bought under the Lesses’ repudiation?
In other words, are the reasons the court gives for its decision not necessarily its actual reasons? Consider the next Case Nugget before formulating your answer.
ETHICAL DECISION MAKING:
Do you think that Purina was attempting to “game” the system in arguing for damages that, according to the Lesses amounted to a “windfall”? Is it consistent with any of the ethical guidelines in the WH approach to ethics to argue for more than you are entitled in the hope of getting either more than what you are entitled? Is this any different from prosecutors overcharging a criminal defendant to get a plea bargain to the charges that are factually justified?