Wednesday, April 28, 2021
This case, out of the 7th Circuit, comes to us from @NY_Contracts, which may evidence some sort of eggsistential crisis. In the case, Rexing Quality Eggs v. Rembrandt Enterprises Rexing agreed to buy twelve loads of eggs per week from Rembrandt. A load consists of no less than 25 pallets of eggs, with each pallet holding 900 dozen eggs. That's a lot of eggs! No wonder one of the parties bawked!
From the start, there were problems with the quality of Rembrandt's eggs. Then, a party to which Rexing was selling a lot of eggs notified Rexing that it no longer needed them, depriving Rexing of a major customer for the eggs it was getting from Rembrandt. But Rexing had nothing to squawk about, because their agreement with that other party was never formalized (oy!) Rexing, apparently a hard-boiled sort, started refusing delivery, Rembrandt sought assurances of performance. Rexing responded by alleging breach of express warranties of quality and alleging that its performance was excused under the contract's force majeure clause. Not having received the assurances it sought, Rembrandt, clucked a bit, but attempted to mitigate its damages by selling its eggs elsewhere.
Fearing the frying pan of Rembrandt's suit to collect on unpaid invoices, Rexing jumped into the fire, seeking a declaration that its performance was excused through force majeure and that its repudiation was a justified response to Rembrandt's breaches of warranty. Rembrandt counterclaimed for breach of contract. The district court granted Rembrandt summary judgment on Rexing's claims. That part of the case was over easy. The force majeure argument played no role in the appeal. A jury awarded Rembrandt nearly $1.5 million in damages for eggs sold below the contract price and for eggs that it could not sell elsewhere.
The trial court denied Rembrandt's request for pre-judgment interest based on a contractual provision which the trial court struck as usurious. The Seventh Circuit found that the challenged provision fell within the business credit exception to Iowa's anti-usury statute and remanded the case for calculation of contractual interest.
The court describes Rexing Quality Eggs as "the unincorporated trade name under which the Rexing brothers have bought and sold eggs for more than twenty years." I hope for the brothers sake that this does not mean that they have no liability shield. Otherwise, this judgment is going to make a hash of the brothers' personal finances, as well as their business.