Wednesday, December 4, 2013

Scott v. Crown case brief

Scott v. Crown case brief summary
765 P.2d 1043 (1988)


CASE SYNOPSIS
Plaintiffs, sellers, brought an action against defendant buyer in the District Court of Rio Grande County (Colorado), claiming that the buyer had breached a contract to purchase a large quantity of wheat by failing to pay for the shipment prior to delivery pursuant to their demand for adequate assurance of performance, although payment was not due until after delivery. The trial court entered judgment for the sellers. The buyer appealed.

CASE FACTS
The sellers had been advised that the buyer might not pay for the wheat.

DISCUSSION

  • The court stated that under Colo. Rev. Stat. § 4-2-609(1) of the Uniform Commercial Code, whether the sellers had reasonable grounds for insecurity was a question of fact, and that the evidence supported the trial court's conclusion. 
  • The court noted that generally, the express language of § 4-2-609(1) was followed such that a demand for assurances of performance had to be in writing. 
  • The court pointed out that the sellers made only an oral statement before suspending performance, and determined that that was insufficient to make the suspension justified. 
  • The court also pointed out that there was not a subsequent pattern of interaction between the parties that would clearly demonstrate that the buyer understood that the sellers had requested assurances of performance, and concluded that the conditions necessary to validate an oral demand were not met. 
  • The court concluded that the sellers did not have the right to suspend performance, and that their action constituted an anticipatory repudiation which gave the buyer the right to cancel the contracts.

CONCLUSION
The court reversed the trial court's judgment, and remanded the cause with directions to enter judgment for the buyer after making findings on the issues of the quality of the grain then being delivered, the date the buyer first learned of the breach, and the fair market value of the wheat on the date the buyer learned of the breach.

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