Conagra, Inc. v. Nierenberg

7 P.3d 369 (2000)

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Nature of the Case

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Facts

On April 9, 1996, D discussed the sale of D's number-one, dark northern spring wheat with Marcus Raba (Raba), who at the time managed P's Shelby, Montana, grain elevator. P claims the parties agreed that 12,500 bushels of wheat would be sold for $ 5.01 a bushel. Raba filled out a customary order sheet memorializing the terms discussed during the phone call. P contends that such an oral agreement by phone is routine, as a matter of its own course of dealing with D and other area farmers, as well as within the trade of grain purchase and sales by other area grain elevators. D maintains that he was doing nothing more than checking the market price that day and that it was understood that unless he signed a contract, no enforceable agreement was reached. D alleges that he has never consummated a grain sale with P without first signing a written contract. Raba instructed Eve Jacobson (Jacobson), another ConAgra employee, to prepare what P characterizes as a written 'confirmation' contract based on the order sheet. P asserts that 'Raba signed it and held it for D to come in and sign.' D failed to show up at the elevator and sign the contract and Raba 'sent the original contract he signed to D's address on April 17,' which was the following Wednesday. D received the confirmation contract on April 19, 1996, a Friday, and that this contract expressly provided the terms discussed on April 9, 1996: 12,500 bushels of wheat at $ 5.01 per bushel. The contract also provided a time of shipment: April 9, 1996, to May 31, 1996, and provided discount information, which pertains to reductions in the sales price determined by the actual quality of the grain, including protein, moisture content, and 'waste.' A handwritten line was drawn in above the printed signature line, where Raba had signed. Raba would explain at trial that whether a farmer actually signs and returns such a confirmation contract is a formality that has no bearing on the formation of such an agreement; rather, the farmer's receipt confirms the existing oral agreement. After receiving the confirmation, D stopped by the elevator and discussed lowering the quantity to 10,000 bushels. Raba explained that the grain in the D's bins already belonged to P and that it had sold the grain to another buyer immediately after making the oral agreement and D would be liable for a shortfall. D did not assert, at this time, that a contract had not been formed between the parties. D returned later that day, after 4 p.m., and discussed selling 600 bushels in his daughter's name with another P employee Jacobson. The per-bushel price at that time was $ 5.60. D instructed Jacobson to mail the contract to his residence. The confirmation arrived at his residence a few days later, but he did not sign that confirmation. D ultimately sold the 12,500 bushels to another grain elevator for $ 5.85 per bushel the following Tuesday, April 23, 1996. D did not notify Raba or any other P agent. P learned of the sale and demanded payment of the difference between the contract price ($ 5.01 per bushel), and the current market price ($ 6.14 per bushel) it had incurred in purchasing other grain to fulfill its sale obligations. P sued D for a total of $14,125. D claimed the alleged oral contract between the parties was unenforceable, because the sale of goods price exceeded $500, and it is undisputed that D never signed a contract. The court determined that D was a 'merchant' as a matter of law. It also determined that D generally sells grain pursuant to an initial oral agreement, memorializing such agreement in a written contract signed when he received payment for the grain sold. He has sold grain to a local elevator on several occasions without a written contract. He is aware the elevator that he sells grain to may resell the grain purchased, but he is not aware of the particulars of those sales. P claims that an exception to the Uniform Commercial Code's statute of frauds governing sales exists for a 'merchant' who provides written confirmation to another 'merchant' within a 'reasonable time,' and thus exempts the sales transaction from the signed-writing requirement. The court concluded that, although both parties were merchants, the confirmation received within 10 days was not within a reasonable time in light of the 'upwardly changing price at the time' of the phone conversation between P and D. P appealed a judgment for D.