Borges v. Magic Valley Foods, Inc.

Borges and another company (the harvesters) (plaintiffs) harvested many potatoes. Magic Valley Foods, Inc. (Magic West) (defendant) considered purchasing the potatoes, so it performed an inspection. The inspection showed that some of the potatoes had a hollow-heart defect such that the affected potatoes had a hole in the center. Nevertheless, Magic West entered into a contract with the harvesters to purchase the potatoes for $3.80 per cwt. The contract provided that the contract would become null and void if internal problems with the potatoes rendered them unfit for fresh-pack shipping. Magic West agreed to bear the cost of transporting the potatoes from the harvesters’ storage cellar to the processing plant, where state inspectors would determine whether the potatoes met the fresh-pack shipping grade. Upon arrival, the state inspectors processed most of the potatoes without any problems. However, the state inspectors deemed some of the potatoes unfit for the fresh-pack grade because of the hollow-heart defect. Magic West and the harvesters discussed how to handle the situation. Magic West and the harvesters decided that Magic West should blend the defective potatoes with higher-quality potatoes to see whether the combination met the fresh-pack grade threshold. The plan failed, and the potatoes could not be removed from the processing plant without destroying many of them. Without further discussion, Magic West processed the potatoes into flakes and sold them for $1.25 per cwt. The harvesters demanded the full $3.80 per cwt contract price. Magic West refused to pay the full price, which resulted in a lawsuit. The jury ruled in the harvesters’ favor. Magic West appealed and argued that it never accepted the defective potatoes.