Laredo Hides Co. v. H & H Meat Prods. Co.

513 S.W.2d 210 (Tex. Civ. App. 1974)

 

RULE:

Under Tex. Bus. & Comm. Code Ann. §§2.612 and 2.703, if only the seller's security in regard to future installments is impaired, he has the right to demand adequate assurances of proper performance but has not an immediate right to cancel the entire contract. A "cash on delivery" term in an installment contract for the sale of goods makes payment a requisite before delivery of that installment is required, but the provision, of itself, will not have the legal effect of making time of payment essential to the whole contract.

FACTS:

A cattle processor and a meat company entered into a written agreement whereby the cattle processor agreed to purchase all ofthe company's cattle hide production for a set period at a fixed price. The company brought an action for breach of contract on the ground that the cattle processor failed to meet a "time is of the essence" payment condition. The trial court gave judgment to the company. The cattle processor challenged the judgment and argued that it had complied with the written agreement between the parties.

ISSUE:

Does a party mailing a payment check on the due date of a contract satisfy his obligation and even if mailed later would that satisfy the requirement if the delay were not unreasonable?

ANSWER:

Yes.

CONCLUSION:

The court found that the cattle processor had deposited its check in the mail on the agreed date. The court also found that even if the check was mailed two days later, which was what the company contended, the delay was immaterial. The court rejected the company's argument that the parties had agreed orally that "time was of the essence" with regard to payment, because there was no evidence in the record to support the company's position. The court also held that even if payment at the time of delivery was the essence of the entire contract, the company waived the condition as a matter of law when it delivered hides even though the cattle processor did not pay for them at the time.

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