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Oloffson v. Coomer

Appellate Court of Illinois
11 Ill. App. 3d 918, 296 N.E.2d 871 (1973)
ELI5:

Rule of Law:

Under the Uniform Commercial Code, when a seller anticipatorily repudiates a contract, the buyer's damages are measured by the difference between the contract price and the market price at the end of a commercially reasonable time after the buyer learns of the repudiation, not at the time of performance.


Facts:

  • On April 16, 1970, Clarence Coomer, a farmer, contracted to sell 40,000 bushels of corn to Richard Oloffson, a grain dealer, for delivery in October and December 1970 at specified prices.
  • On June 3, 1970, Coomer informed Oloffson that due to a wet season, he was not going to plant corn and would not be able to deliver the 40,000 bushels.
  • On that same day, Coomer advised Oloffson to secure the corn from another source.
  • The market price for future delivery of corn on June 3, 1970, was $1.16 per bushel, slightly higher than the contract prices.
  • Oloffson did not attempt to buy replacement corn at that time.
  • In September 1970, Oloffson again contacted Coomer, who repeated that he would be unable to deliver the corn.
  • After the contractual delivery dates in October and December passed with no delivery from Coomer, Oloffson purchased replacement corn at the then-current market prices of $1.35 and $1.49 per bushel, which were significantly higher than the prices in June.

Procedural Posture:

  • Richard Oloffson filed a lawsuit against Clarence Coomer in the circuit court of Bureau County, Illinois, a trial court.
  • The case was decided by the court in a bench trial (without a jury).
  • The trial court found in favor of Oloffson but awarded damages of only $1,500, calculating the loss based on the market price on June 3, 1970, the date Coomer repudiated the contract.
  • Oloffson, the plaintiff, appealed the trial court's judgment to the Appellate Court of Illinois, seeking higher damages based on the market price on the contract delivery dates.

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Issue:

Under the Uniform Commercial Code, when a seller unequivocally repudiates a contract for future delivery of goods before the performance date, are the buyer's damages measured by the market price on the date of repudiation or on the originally scheduled date of performance?


Opinions:

Majority - Presiding Justice Alloy

No. When a seller unequivocally repudiates a contract, the buyer's damages are measured against the market price at the expiration of a 'commercially reasonable time' following the repudiation, not the future performance date. Coomer's statement on June 3, 1970, constituted an unequivocal anticipatory repudiation under UCC § 2-610. This gave Oloffson the option to await performance for a 'commercially reasonable time' or resort to remedies for breach. The court reasoned that this 'commercially reasonable time' under § 2-610(a) expired on June 3, 1970, the day of the repudiation, because Coomer's repudiation was absolute and Oloffson, a merchant, had immediate access to a well-organized market to 'cover' (buy substitute goods). Oloffson's decision to wait until the delivery dates was commercially unreasonable and a failure to act in good faith, as it amounted to speculating on a fluctuating market at Coomer's expense. Therefore, damages should be calculated based on the difference between the contract price and the market price on June 3, 1970, when Oloffson should have mitigated his damages.



Analysis:

This case clarifies the meaning of 'commercially reasonable time' under UCC § 2-610 in the context of anticipatory repudiation. It establishes that when a repudiation is unequivocal and a market for cover is readily available, the reasonable time to await performance can be very short, potentially expiring on the day of the repudiation itself. The decision shifts the risk of a rising market to the non-breaching party, imposing a duty to mitigate damages promptly rather than waiting until the performance date. This prevents the aggrieved party from speculating on the market at the breaching party's expense and aligns the UCC with the broader contract law principle of mitigation of damages.

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