Ohio Grain Co. v. Swisshelm
318 N.E.2d 428, 15 U.C.C. Rep. Serv. (West) 305, 40 Ohio App. 2d 203 (1973)
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Rule of Law:
Under the Uniform Commercial Code, a farmer who is knowledgeable about agricultural markets is considered a 'merchant,' and a written confirmation of an oral agreement sent between merchants becomes a binding contract, including its additional non-material terms, if the recipient does not object within a reasonable time.
Facts:
- On February 9, 1973, an agent for The Ohio Grain Company and a farmer had a telephone conversation regarding the purchase of 1500 bushels of soybeans.
- During the call, the parties agreed on a price of five dollars per bushel, with payment upon delivery.
- On the same day, The Ohio Grain Company sent the farmer a signed 'Grain Purchase Confirmation' which, in addition to the price and quantity, specified quality standards (e.g., test weight, moisture content) and a delivery date of February 20, 1973.
- The confirmation form stated that its retention by the seller without immediate notification of error constituted an acceptance of the contract as written.
- The farmer received the confirmation but did not sign it, return it, or object to any of its terms.
- After receiving the confirmation, the farmer sold the 1500 bushels of soybeans to a different buyer.
Procedural Posture:
- The Ohio Grain Company (plaintiff) sued the defendant farmer in the Court of Common Pleas (trial court) for breach of contract.
- The case was tried to the court, which found no valid contract and entered judgment for the defendant.
- The Ohio Grain Company (plaintiff-appellant) appealed the trial court's judgment to the intermediate court of appeals.
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Issue:
Under the Uniform Commercial Code, does a written confirmation containing additional terms regarding quality and delivery, sent after an oral agreement, operate as an acceptance and form a binding contract between merchants when the recipient, a farmer, does not object?
Opinions:
Majority - Crawford, P. J.
Yes, a written confirmation with additional terms forms a binding contract between merchants if not objected to. The court determined that the defendant farmer qualifies as a 'merchant' under the UCC because modern farming is an agribusiness, and the defendant was familiar with farm markets, their operations, and the fact that prices vary with quality. The initial telephone conversation formed an oral agreement. The subsequent written confirmation, pursuant to R.C. 1302.10 (UCC § 2-207), operated as an acceptance, and its additional terms regarding quality standards were proposals that became part of the contract because they did not materially alter it and the defendant, as a merchant, failed to object within a reasonable time.
Analysis:
This decision is significant for its broad interpretation of 'merchant' under the Uniform Commercial Code to include farmers who possess market knowledge and experience. By classifying the farmer as an 'agribusinessman' rather than a 'simple tiller of the soil,' the court subjects farmers to the same commercial standards as other businesses. This holding solidifies that under UCC § 2-207, an oral agreement between such parties can be finalized and modified by a subsequent written confirmation if the recipient fails to object, thereby strengthening the enforceability of common commercial practices in the agricultural sector.
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