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Panike & Sons Farms, Inc. v. Smith - 147 Idaho 562, 212 P.3d 992 (2009)


Pursuant to Idaho Code Ann. § 28-1-303(c) "usage of trade" is any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question. The existence and scope of such a usage must be proved as facts. In addition, § 28-1-303(d) provides that usage of trade of which the parties are or should be aware is relevant in ascertaining the meaning of the parties' agreement, may give particular meaning to specific terms of the agreement, and may supplement or qualify the terms of the agreement.


This action involves a dispute over a pre-season contract between Appellant Panike & Sons Farms, Inc. (Panike) and Respondent Four Rivers Packing Co. (Four Rivers) for the sale of onions. The contract stated that the buyer (Four Rivers) would designate the fields from which the onions would come, and then required that the onions "meet 75% three-inch minimum requirements." Panike contends that the district court erred in finding that Panike breached the contract by failing to deliver onions from the fields specified by Four Rivers. Panike also argues that the district court improperly calculated the damages awarded to Four Rivers. 


Did Four Rivers rightfully reject the non-conforming goods when Panike attempted to deliver onions that were not from the designated fields?




The court affirmed the finding that the rejection was proper, but remanded for the entry of damages consistent with the opinion. Based upon the contract and usage of trade, Four Rivers had a right to designate the fields from which the onions came. When Panike attempted to deliver onions that were not from the designated fields, Four Rivers rightfully rejected the non-conforming goods under Idaho Code Ann. § 28-2-601(a). Four Rivers did not take any action inconsistent with the terms of the contract or usage of trade and thus acted in good faith, for purposes of Idaho Code Ann. § 28-2-311(1). Panike was not entitled to damages or an offset as a result of the breach of contract. The trial court erred by considering the costs to cover in determining Panike’s breach. The trial court need to apply Idaho Code Ann. § 28-2-713 to put Four Rivers in as good a position as if Panike had fully performed, for purposes of Idaho Code Ann. § 28-1-305. Remand was necessary.

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