Ralston Purina Co. v. McNabb

Ralston Purina Company (company) (plaintiff) contracted to buy soybeans from F. R. McNabb (defendant), to be delivered in November 1972. That fall, heavy rains devastated McNabb’s crop, and McNabb delivered less than a tenth of the promised amount by the delivery date. Each month from December 1972 through February 1973, the company sent McNabb letters permitting him to go on delivering soybeans. Each month, McNabb sent the company another small shipment of soybeans. The company managed to cover its losses in March 1973 and sued McNabb in federal district court to recover the difference between the contract and cover prices. The court rejected McNabb’s sole defense, the impossibility of performance due to bad weather, and found McNabb in breach. McNabb contended that the company’s damages should be measured as of November 1972, the original date for contract performance. The company argued that its December 1972 – February 1973 letters merely extended the contract performance date, and that McNabb agreed to modify the contract by accepting the extensions and continuing to deliver grain. The company contended that damages should be measured as of March 1973, when it covered its losses. The jury found, based on substantial evidence, that the company showed bad faith in attempting to extend the contract because the company knew that it could claim damages at March 1973 prices, which the company expected to be higher than they were in November 1972.