Alimenta (U.S.A.), Inc. v. Cargill Incorporated

861 F.2d 650, 7 U.C.C. Rep. 2d 1100 (1988)

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Alimenta (U.S.A.), Inc. v. Cargill Incorporated

United States Court of Appeals for the Eleventh Circuit
861 F.2d 650, 7 U.C.C. Rep. 2d 1100 (1988)

Facts

Alimenta (U.S.A.), Inc. (Alimenta) (plaintiff) entered into several contracts with Cargill, Incorporated (Cargill) (defendant) to purchase peanuts. When the parties entered the contract, the peanut crops had not been harvested. A drought occurred, which reduced Cargill’s peanut-crop yield. Consequently, Cargill informed Alimenta of its choice to allocate deliveries of the peanut crop among its customers pursuant to Uniform Commercial Code (UCC) § 2-615. As a result, Alimenta only received 65 percent of the peanuts it contracted to purchase. Alimenta sued Cargill for breach of contract and alleged that Cargill acted in bad faith in choosing to allocate under UCC § 2-615. At trial, the trial court granted Cargill’s motion in limine, which barred Alimenta from referring to Cargill’s massive size and sales of between 30 and 40 billion dollars that year. The evidence showed that peanut crops had been performing well over the last 20 years, that entering into preharvest sales contracts was an industry custom, and that improved technologies suggested continuation of the successful harvests. Moreover, most experts were surprised by the drought, and peanut prices soared after the drought. The jury ruled for Cargill. On appeal, Alimenta argued that the trial court erred by granting Cargill’s motion in limine because the evidence of Cargill’s size and financial resources was relevant to the question of commercial impracticability. Alimenta further argued that the trial court erred by not finding as matters of law that the peanut-crop failure was foreseeable, Cargill’s peanut allocation was unreasonable, and Cargill failed to give reasonable notice of its intent to allocate. Lastly, Alimenta argued that the trial court erred by refusing to give its jury instruction on the definition of good faith.

Rule of Law

Issue

Holding and Reasoning (Nesbitt, J.)

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