Tongish v. Thomas

Facts

On April 28, 1988, Tongish entered into a contract with Coop where Tongish agreed to grow 160 acres of sunflower seeds and sell them to Coop in incremental deliveries of one-third by December 31, 1988, March 31, 1989, and May 31, 1989. Coop had a separate contract to resell the seeds to Bambino Bean & Seed, Inc. (Bambino). Coop’s only anticipated profit was to be a handling fee in the delivery of the seeds to Bambino. Due to a short crop, bad weather, and other factors, the market price of sunflower seeds in January 1989 became double that set forth in the Tongish/Coop contract. On January 13, Tongish informed Coop he would not deliver any more seeds. Instead, Tongish sold the sunflower seeds to a different buyer, Danny Thomas, taking advantage of the increase in market price. When Thomas failed to pay for some of the seeds, Tongish brought this action to collect the balance due. Thomas paid the remaining balance and was dismissed from the suit. However, Coop intervened in the suit, seeking damages for Tongish’s breach of contract. The trial court applied U.C.C. § 1-305 and found that Coop was entitled to only the loss of profits, the handling fee, amounting to $455.51. The appellate court reversed, finding that Coop was entitled to market damages under U.C.C. § 2-713, meaning the difference between the market price of the seeds at the time Coop discovered Tongish’s breach and the contract price in the Tongish/Coop contract.