D.R. Curtis, Co. v. Mathews
35 U.C.C. Rep. Serv. (West) 1425, 103 Idaho 776, 653 P.2d 1188 (1982)
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Rule of Law:
Under the Uniform Commercial Code (UCC) § 2-305, a contract for the sale of goods does not fail for indefiniteness if the parties intended to make a contract but left the price term open. If the parties fail to later agree on the price, a court will enforce the contract at a reasonable price at the time of delivery.
Facts:
- Grant Mathews, a grain farmer, entered into an oral agreement to sell 30,000 bushels of hard red spring wheat to D.R. Curtis Company.
- The parties agreed on a base price of $3.58 per bushel, but the final price was subject to adjustment based on the wheat's protein content.
- This adjustment required a 'protein basis' and 'protein scale,' which the parties left open to be established later, with Mathews expecting it to be by mutual agreement.
- Curtis Company sent Mathews a written memorandum confirming the base price and stating 'Protein scale to be established,' which Mathews signed and returned.
- Relying on the agreement, Curtis Company immediately sold a commensurate quantity of grain to its exporters.
- Subsequently, the parties were unable to mutually agree on a protein 'basis' figure.
- Mathews then refused to deliver the grain to Curtis Company as required by their agreement.
Procedural Posture:
- D.R. Curtis Company sued Grant Mathews in an Idaho trial court for breach of contract.
- The trial court held that a binding contract existed, Mathews had breached it, and awarded Curtis Company $12,450 in damages for the cost of 'cover'.
- Grant Mathews, as appellant, appealed the judgment of the trial court to the Court of Appeals of Idaho.
- D.R. Curtis Company is the respondent/appellee in the appeal.
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Issue:
Does a contract for the sale of goods fail for indefiniteness when the parties intend to be bound but leave a component of the price term to be agreed upon later, and subsequently fail to agree on that component?
Opinions:
Majority - Court of Appeals of Idaho (Author not specified)
No. A contract for the sale of goods does not fail for indefiniteness if the parties intended to form a binding agreement, even if they left the price term open. The court found substantial evidence that both Mathews and D.R. Curtis Company intended to enter into a binding contract. Citing Idaho Code § 28-2-305 (the UCC's provision on open price terms), the court reasoned that when parties intend to be bound but fail to agree on a price term they left open, the contract is still enforceable. In such cases, the law supplies a 'reasonable price at the time for delivery' as the missing term, preventing the contract from failing for indefiniteness.
Analysis:
This case exemplifies a core principle of the Uniform Commercial Code (UCC), which favors the enforcement of commercial agreements that parties intend to be binding, even with open terms. It marks a significant departure from the stricter common law requirement that all essential terms, like price, must be definite for a contract to be valid. The decision reinforces the UCC's role in promoting commerce by providing 'gap-filler' provisions, such as a 'reasonable price,' to save contracts from failing. This prevents a party from using a minor, unresolved detail as a pretext to escape a deal that has become economically unfavorable.
