Neumiller Farms, Inc. v. Cornett - 368 So. 2d 272 (Ala. 1979)

Rule:

A rejection of goods by a buyer based on a claim of dissatisfaction, which is not made in good faith, is ineffectual and constitutes a breach of contract for which damages are recoverable.

Facts:

Defendant buyer contracted with the seller for 12 loads of potatoes at a price of $ 4.25 per hundredweight. The buyer accepted three loads. When the market price of potatoes dropped to $ 2 per hundredweight, the buyer refused to accept delivery of the remaining loads of potatoes, asserting that the potatoes were not satisfactory. Plaintiff seller filed an action for breach of contract for wrongfully rejecting goods under Ala. Code § 7-2-703 (1975). The trial court entered judgment in favor of the seller upon a jury verdict, and awarded damages for lost profits, including overhead, and for incidental damages under Ala. Code § 7-2-708(2) (1975). Defendant buyer appealed. 

Issue:

1. Was the Buyer's refusal to accept delivery of Sellers' potatoes a breach of contract?
2. Were the sellers entitled to the damages awarded by the jury? 

Answer:

1) Yes. 2) Yes.

Conclusion:

The court found that there was sufficient evidence that the potatoes were satisfactory and the jury was not required to accept the buyer's subjective claim to the contrary. The court rejected the buyer's claims that the seller had an obligation to sell those potatoes allocated to the contract. According to the court, a rejection of goods based on a claim of dissatisfaction, which was not made in good faith, was ineffectual and constituted a breach of contract for which damages were recoverable. The court further held that the sellers were entitled to the damages awarded by jury under § 7-2-708(2) because there was evidence in the record from which the jury could reasonably have concluded that the seller substantially performed and incurred the expenses incidental to performance. Accordingly, the court affirmed the judgment in favor of the seller.