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Citation Text: 525 N.E.2d 1185
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11.12 Business Ethics Contract Sales and Lease Contracts: Performance and Breach

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525 N.E.2d 1185 Page 1
171 Ill.App.3d 532, 525 N.E.2d 1185, 121 Ill.Dec. 878, 7 UCC Rep.Serv.2d 1106
(Cite as: 171 Ill.App.3d 532, 525 N.E.2d 1185, 121 Ill.Dec. 878)

Sales 343 182(1)

Appellate Court of Illinois, 343 Sales


Fourth District. 343IV Performance of Contract
343IV(C) Delivery and Acceptance of Goods
ALLSOPP SAND & GRAVEL, INC., an Illinois 343k182 Questions for Jury
Corporation, Plaintiff-Appellee, 343k182(1) k. In General. Most Cited
v. Cases
LINCOLN SAND & GRAVEL CO., an Iowa Cor- It is a question of fact whether a contract for sale of
poration, Defendant-Appellant. goods has been performed according to its terms
No. 4-87-0731. and trial court's determination will not be disturbed
unless it is against the manifest weight of the evid-
June 30, 1988.
ence.
Seller of sand brought suit for breach of contract
[2] Sales 343 384(1)
for the sale of goods against buyer. The Circuit
Court, Logan County, Gerald G. Dehner, J., found 343 Sales
for seller. On appeal, the Appellate Court, Knecht, 343VII Remedies of Seller
J., held that: (1) damage award did not properly 343VII(F) Actions for Damages
consider amounts that seller would save by not hav- 343k384 Damages
ing to perform under contracts; (2) seller, not buyer, 343k384(1) k. In General. Most Cited
breached contract by refusing to make special ar- Cases
rangements as provided in contract; and (3) buyer's Breach of contract damage award for buyer's breach
request for more sand after normal operating season of contract for sale of goods was to consider
of seller had ended was not commercially unreason- amount seller saved by not having to perform rest
able in light of contract between parties. of contract, and whether seller profited by buyer's
breach by being able to sell its goods on open mar-
Reversed.
ket. S.H.A. ch. 26, ¶¶ 2-708, 2-708(1).
West Headnotes
[3] Contracts 95 320
[1] Appeal and Error 30 1012.1(8)
95 Contracts
30 Appeal and Error 95V Performance or Breach
30XVI Review 95k320 k. Rights and Liabilities on Defective
30XVI(I) Questions of Fact, Verdicts, and Performance. Most Cited Cases
Findings Party suing for breach of contract must prove he
30XVI(I)3 Findings of Court substantially complied with material terms of the
30k1012 Against Weight of Evidence agreement which were attributable to him.
30k1012.1 In General
[4] Sales 343 153
30k1012.1(7) Particular Cases
and Issues 343 Sales
30k1012.1(8) k. Contracts in 343IV Performance of Contract
General; Insurance; Sales. Most Cited Cases 343IV(C) Delivery and Acceptance of Goods
343k153 k. Tender or Offer by Seller.

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525 N.E.2d 1185 Page 2
171 Ill.App.3d 532, 525 N.E.2d 1185, 121 Ill.Dec. 878, 7 UCC Rep.Serv.2d 1106
(Cite as: 171 Ill.App.3d 532, 525 N.E.2d 1185, 121 Ill.Dec. 878)

Most Cited Cases (Orr), approached the Owensbys and offered to pur-
Seller's refusal to make “special arrangements” for chase sand from Allsopp so Lincoln could meet its
sale of sand at contract price, following close of its customer's needs for the upcoming construction
operating season, was not commercially reasonable season.
in light of specific contractual terms between
parties requiring “special arrangements” to be The parties entered into a contract in March of 1986
made, the large quantities of sand already stock- wherein Allsopp agreed to supply and Lincoln
piled by seller, and contract's duration which went agreed to purchase 50,000 tons of FA-1 specifica-
beyond normal operating season. tion sand for $1.20 per ton. The contract stipulated
the *534 volume requirement would be waived if
[5] Sales 343 152 the sand was not of FA-1 quality. Lincoln agreed to
pay the balance due under the contract by Decem-
343 Sales ber 31, 1986, and to take delivery of the remaining
343IV Performance of Contract tonnage of sand by the spring of 1987. The sand
343IV(C) Delivery and Acceptance of Goods was to be loaded out to Lincoln's trucks during All-
343k152 k. Demand or Notice by Buyer. sopp's regular business hours (7:30 a.m. to 3:30
Most Cited Cases p.m., Monday through Friday) and during the regu-
Request of buyer for more sand under contract for lar operating season (March through November).
sale of sand was not untimely even though sand pits Loading out at other times was to be by “special ar-
of seller had been closed due to expiration of oper- rangements.”
ating season, where request was made well within
duration of contract between the two parties. During March and April of 1986, Lincoln took de-
**1186 *533 ***879 Harris & Harris, Lincoln, for livery and paid $14,759.64 for 12,299.7 tons of All-
defendant-appellant. sopp sand. The balance due under the agreement,
$45,240.36, was not paid by December 31, 1986.
William O. Martin, Jr., Darrell A. Woolums, Martin On February 19, 1987, Allsopp filed its complaint
D. Hoke, Samuels, Miller, Schroeder, Jackson & in the circuit court of Logan County for breach of
Sly, Decatur, for plaintiff-appellee. contract and asked for judgment against Lincoln in
the amount of the contract balance.
Justice KNECHT delivered the opinion of the
Lincoln filed an answer containing general denials
court:
and affirmative defenses. Lincoln alleged Allsopp
Plaintiff Allsopp Sand and Gravel, Inc. (Allsopp), (1) did not supply sand of the quality specified in
filed suit in the circuit court of Logan County al- the contract and (2) wrongfully refused to make
leging defendant, Lincoln Sand and Gravel Com- “special arrangements” to load out sand at the ori-
pany (Lincoln), failed to pay for the balance of sand ginal contract price before the contract expired, but
due under an existing contract. The trial court at a time outside Allsopp's regular operating season.
rendered a verdict for Allsopp and entered judg-
The evidence presented at the bench trial was as
ment against Lincoln in the amount of $45,240.36.
follows:
Lincoln appeals and we reverse.
**1187 ***880 Lincoln returned six loads of sand
The two parties in this action are competitors in the
to Allsopp on March 31, 1986, because the sand
sand and gravel business. John and Jay Owensby,
contained mud. Allsopp gave Lincoln credit for the
father and son, own and operate Allsopp. In the
loads and paid for the cost of the return trucking.
spring of 1986, when Lincoln's dredge became in-
Lincoln continued to take deliveries from April 1
operable, one of Lincoln's owners, Paul Robert Orr

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525 N.E.2d 1185 Page 3
171 Ill.App.3d 532, 525 N.E.2d 1185, 121 Ill.Dec. 878, 7 UCC Rep.Serv.2d 1106
(Cite as: 171 Ill.App.3d 532, 525 N.E.2d 1185, 121 Ill.Dec. 878)

through April 18, 1986, without complaint. All- been performed according to its terms and the trial
sopp's sand pit closed for the season on November court's determination will not be disturbed unless it
26, 1986. is against the manifest weight of the evidence. (
Ralph v. Karr Manufacturing Co. (1974), 20 Ill.
Jay Owensby testified that Orr contacted him the App. 3d 450, 314 N.E.2d 219.) From the record and
second week in December of 1986 and requested to oral argument before us, we find not only did the
load out the remaining sand due under the contract. trial court miscalculate the damages, but it's entire
Jay told him the pit was closed and he did not have judgment in favor of Allsopp was against the mani-
the manpower to load out at that time. Jay said Lin- fest weight of the evidence.
coln would have to pay 25 to 30 cents more per ton
to load the sand in December. [2] We first address the issue of damages. Section
2-708 of the Uniform Commercial Code contains
Orr then called the elder partner, John Owensby, the formula to compute a seller's damages caused
and the two attempted to negotiate a special ar- by a buyer's nonacceptance or repudiation. Section
rangement. John testified he told Orr they would 2-708(1) provides:
have to charge Lincoln extra for a load out in
December because Allsopp would have to recall “(1) * * * [T]he measure of damages for non-
employees and pay them at union wage. Orr offered acceptance or repudiation by the buyer is the dif-
to pay five cents more per ton and to supply one of ference between the market price at the time and
Lincoln's employees to facilitate the loading pro- place for tender and the unpaid contract price to-
cess. The Owensbys refused the offer. During a gether with any incidental damages * * *, but less
subsequent conversation in the latter part of Janu- expenses saved in consequence of the buyer's
ary 1987, Orr told Owensby Lincoln did not intend breach.” (Emphasis added.) Ill.Rev.Stat.1985, ch.
to pay for the balance of the sand due under the 26, par. 2-708(1).
contract.
The statute clearly directs that the trial court, when
Allsopp's expert, Loren Bloome, from the Illinois it computed damages, should have subtracted from
Highway Department,*535 testified he tested All- the unpaid contract price the amount Allsopp saved
sopp's sand on 47 different occasions during 1986. in loading expenses as a result of the severed agree-
Each test result showed the sand met FA-1 specific- ment. Failure to utilize the above formula put All-
ations. sopp in a better position than it would have occu-
pied had there been no breach of contract. Central
The trial court found Allsopp had acted in a com- Information Financial Services, Ltd. v. First Na-
mercially reasonable manner and had performed all tional Bank of Decatur (1984), 128 Ill. App. 3d
conditions required of it under the contract. Lincoln 1052, 84 Ill.Dec. 226, 471 N.E.2d 992.
was found to have waived rejection of the parties'
agreement when it took delivery of Allsopp's sand In addition, we are unable to determine from the re-
after discovering certain loads were contaminated. cord the market price of the sand. We are also un-
The court held the evidence sufficiently established able to determine whether the trial court's order
Allsopp had supplied FA-1 specification sand and contemplates that Allsopp not only recovers dam-
that Lincoln's request to load out sand in December, ages but also retains the sand. The trial court's order
outside Allsopp's regular operating season, was appears to require Lincoln to pay damages based on
commercially unreasonable. Allsopp's damages the contract price for the *536 sand, but gives no
were computed at $45,240.36. credit for any **1188 ***881 expenses saved by
Allsopp nor for Allsopp's ability to sell the sand to
[1] It is a question of fact whether a contract has another buyer at market price.

© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.


525 N.E.2d 1185 Page 4
171 Ill.App.3d 532, 525 N.E.2d 1185, 121 Ill.Dec. 878, 7 UCC Rep.Serv.2d 1106
(Cite as: 171 Ill.App.3d 532, 525 N.E.2d 1185, 121 Ill.Dec. 878)

[3][4] A party suing for breach of contract must the rate of $1.20 per ton and take the sand in the
prove he substantially complied with the material spring of 1987.
terms of the agreement attributable to him. (
George F. Mueller & Sons, Inc. v. Northern Illinois
Allsopp Sand & Gravel, Inc. shall load out
Gas Co. (1975), 32 Ill. App. 3d 249, 336 N.E.2d
sand during regular business hours (7:30 a.m. to
185.) After careful consideration of the contract
3:30 p.m.-Monday thru Friday) and during the
language and the contents of the record, we con-
regular operation season (March thru November).
clude Allsopp was the breaching party in this case,
Special arrangements can be made for load outs
and is not entitled to any damages.
at other times.”
The dispositive issue on review is whether All-
First, we must determine whether a price increase is
sopp's refusal to make special arrangements to load
inherent *537 in the term special arrangements. A
out sand in December at the original contract price
contract for goods will not be held invalid for in-
was commercially reasonable. The trial court is the
definiteness just because certain details of perform-
initial determiner of commercial reasonableness.
ance are not spelled out in the contract.
(Ill.Rev.Stat.1985, ch. 26, par. 1-204(2); GNP Com-
(Ill.Rev.Stat.1985, ch. 26, par. 2-311(1); Ill.
modities, Inc. v. Walsh Heffernan Co. (1981), 95
Ann.Stat., ch. 26, par. 2-311, Uniform Commercial
Ill.App.3d 966, 51 Ill.Dec. 245, 420 N.E.2d 659.)
Code Comment, at 209 (Smith-Hurd 1963).) Sec-
However, a reviewing court may overturn the trier
tion 2-311(1) applies only when the sales contract
of fact's finding if, after viewing the evidence in the
is “otherwise sufficiently definite.”
aspect most favorable to the prevailing party, it ap-
Ill.Rev.Stat.1985, ch. 26, par. 2-311(1).
pears the determination was clearly improper.
Ceres Illinois, Inc. v. Illinois Scrap Processing, Inc. Lincoln maintains the contract is indefinite and am-
(1986), 114 Ill.2d 133, 102 Ill.Dec. 379, 500 biguous due to the special arrangements language.
N.E.2d 1. Accordingly, Lincoln argues this court should con-
strue the problem term in the context of the preced-
The trial court found it was commercially reason-
ing language referring only to time, not price.
able for Allsopp to refuse to make special arrange-
ments with Lincoln in December absent an increase [5] Due to the clearly divergent positions of the
in price. Lincoln's request to load out at that time parties, the trial court's, and our own reading of the
and at the original contract price was held to be contract, we are compelled to conclude that the spe-
both unreasonable and untimely. Our interpretation cial arrangements language is ambiguous. When in-
of the term “special arrangements” leads us to the terpreting contractual ambiguity, this court “[must]
conclusion the trial court's finding was against the attempt to give a reasonable effect to all of the con-
manifest weight of the evidence, even as viewed in tract's parts and, if necessary, resolve any ambigu-
a light most favorable to Allsopp. ity most strongly against its author.” KFK Corp. v.
American Continental Homes, Inc. (1979), 71 Ill.
In pertinent part the contract provides:
App. 3d 304, 27 Ill.Dec. 420, 311, 389 N.E.2d 232,
“The volume requirement shall be waived 237 cert. denied (1980), 445 U.S. 904, 100 S. Ct.
should Allsopp Sand & Gravel, Inc. captures [sic] 1081, 63 L.Ed.2d 320.
Lincoln Sand & Gravel Co.'s major customers or
The distinction between Allsopp's seasonal operat-
if sand does not meet the FA-1 specification. If
ing hours and its load out hours is critical to our in-
Lincoln Sand & Gravel Co. does not take the
terpretation of the contract. Seasonal hours are gov-
50,000 tons by 31 December 1986, they agree to
erned by the calendar (March through November)
pay Allsopp Sand & Gravel, Inc. the balance at

© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.


525 N.E.2d 1185 Page 5
171 Ill.App.3d 532, 525 N.E.2d 1185, 121 Ill.Dec. 878, 7 UCC Rep.Serv.2d 1106
(Cite as: 171 Ill.App.3d 532, 525 N.E.2d 1185, 121 Ill.Dec. 878)

and load out hours depend only on material **1189 McCULLOUGH and SPITZ, JJ., concur.
***882 availability. The record and oral argument Ill.App. 4 Dist.,1988.
revealed Allsopp had 30,000 tons of sand already Allsopp Sand & Gravel, Inc. v. Lincoln Sand &
stockpiled on its premises when Lincoln requested Gravel Co.
delivery in December. Allsopp argues that its sea- 171 Ill.App.3d 532, 525 N.E.2d 1185, 121 Ill.Dec.
son closed in November. This gives added import- 878, 7 UCC Rep.Serv.2d 1106
ance to “special arrangements” as Allsopp, by the
contract, agreed to deliver sand until December 31, END OF DOCUMENT
1986.

We do not believe the cost of load out in December


was such as to permit Allsopp to alter the terms of
the contract by increasing the price per ton. Since
the original price quoted to Lincoln included over-
head costs, it was commercially unreasonable for
Allsopp to charge more to make the special ar-
rangements requested by Lincoln.

Next, we consider whether Lincoln's request for


special arrangements was untimely because it was
made after Allsopp's 1986 operating season was
complete.

The contract itself was to expire on December 31,


1986, regardless of the operating season. Lincoln's
request for a special load out was made on Decem-
ber 5, 1986, a date well within the contract's life-
time. There is nothing in the contract language
which intimates that the making of such a request
was allowed only during the regular operating*538
season. Lincoln's request was not untimely given
the language of the contract.

We conclude it was against the manifest weight of


the evidence for the trial court to conclude Allsopp
had performed its contract with Lincoln according
to terms. Our holding releases Lincoln from all li-
ability on the contract.

Accordingly, we need not address the remaining


complained-of errors.

For the foregoing reasons, the order of the circuit


court of Logan County is reversed.

Reversed.

© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.