Top of Iowa Cooperative v. Sime Farms, Inc.

Top of Iowa Cooperative (the co-op) (plaintiff) sued Sime Farms, Inc. (Sime) for breach of several contracts for the co-op’s purchase of Sime’s corn. The parties had a hedge-to-arrive (HTA) contract, with the price based on estimated market pricing. Sime initially pushed back the delivery date of the corn by three months. Handwritten amendments were added to the contracts regarding the new delivery date and price adjustment based on market prices. Sime then sold its crop to other parties for more than the contracted price. The parties were aware that the delivery would inevitably be pushed back again, as Sime would not have crops to sell until the next harvest, and that this would result in another price adjustment that would be a loss for Sime. Sime pushed back the delivery two more times and anticipated having to push it back again before crop availability. During that time, market prices dropped significantly, and delivery would have been at a significant loss to Sime. Around the same time, the Iowa Attorney General’s office announced that these HTA contracts might be illegal. The co-op, concerned about Sime’s lack of performance, sent a written request for assurances of ability and willingness to perform that threatened repudiation otherwise. The request for assurances demanded (1) a specific date of performance and (2) that Sime pay commission costs previously paid by the co-op. Sime’s lawyer responded that Sime considered the request for assurances to be a repudiation of the contracts and that the contracts were illegal under the Commodity Exchange Act. The co-op filed suit and claimed that Sime had breached the contract by failing to give adequate assurances upon demand. Sime requested a directed verdict, claiming that as a matter of law, the co-op lacked any reasonable grounds for doubting its performance. The trial court held it was a matter for the jury. The jury found for the co-op, and Sime appealed.