SULLIVANS ISLAND SEAFOOD COMPANY, A SOUTH CAROLINA CORPORATION, APPELLANT,
v.
ISLAND SEAFOOD COMPANY, A FLORIDA CORPORATION, APPELLEE
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Sullivan's Island Seafood Company, a buyer of nonconforming shrimp, rejected the shipment and later resold it at a loss. The trial court awarded damages based on a supposed offer from a third party that the buyer declined, but the appellate court reversed that damage calculation, holding that the buyer's liability depends on whether it acted in good faith to mitigate damages, not whether it rejected a particular offer.
The trial court's findings regarding Albert King's offer and the finding that appellant acted at its peril are reversed and set aside. The correct standard under Florida Statutes § 672.2-603 requires a showing of lack of good faith by the buyer, not merely the rejection of a particular offer. The buyer's liability depends on whether there was good faith exercise of reasonable business judgment in attempting to mitigate damages.
[1] A buyer's rejection of nonconforming goods is rightful and timely when the buyer properly inspects and rejects the goods and the seller provides no instructions for their…
[2] A buyer who rightfully rejects nonconforming goods is not required to accept a speculative offer to purchase the goods from a third party.
Previewing 2 of 5 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“What is required under Florida Statutes § 672.2-603 is a showing of lack of good faith on the part of the buyer such as appellant in failing to make a salvage sale of the nonconforming merchandise.”
Establishes the correct legal standard for evaluating buyer liability when rejecting goods; requires proof of lack of good faith, not mere rejection of an offer.
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Join FLexlaw to unlock all legal intelligenceAppellant purchased 44,370 pounds of shrimp from appellee. The trial court found the shrimp tendered were nonconforming, that appellant timely and pro…
The full statement of facts, procedural history, and disposition for this case are member content.
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BOOTH, Judge.
This cause is before us on appeal and cross-appeal from final judgment in a cause tried to the court without a jury. Appellee was the seller, and appellant the buyer, of some 44,370 pounds of shrimp. The trial court found appellee’s tender of the shrimp to be nonconforming under Flor ida Statutes § 672.2-601; that appellant rightfully and timely inspected and rejected the shrimp with proper notice; and that appellee gave no instructions to appellant as to the disposition of the tendered shrimp after notice of their rejection. These findings are essentially undisputed. The issue here is the damage awarded in the amount of $29,755.04 plus costs, an award challenged by both sides.
The trial court’s order is, in pertinent part, as follows:
8. Plaintiff stored the shrimp at its expense in Mobile and eventually reshipped them and sold them piecemeal over a period of time extending from 1977 to mid 1978, recovering in the range of $80,-000 to $90,000 as resale proceeds. 9. Some 30 days after plaintiff’s rejection, while the tendered shrimp were warehoused in Mobile, Alabama, one Albert King, a seafood merchant, inspected the shrimp and made a good faith offer to buy the tendered lot at a price of $.30 per pound less than plaintiff’s purchase price. Plaintiff declined this offer. 10. The decision not to accept King’s offer was made at plaintiff’s peril. 11. Plaintiff is entitled to recover the difference between the offered price and the purchase price, plus sales commission and incidental expenses incurred in the storage and inspection of said shrimp up to the time of Mr. King’s offer, plus interest where appropriate as set out in the addendum hereto. By addendum to the final judgment, the court computed the damages as follows:
Price Difference: $.30 lb. x 44,370 lbs. $13,311.00 Commission: 10,537.77 Storage: 194.02 Inspection: 747.15 Interest: 4,965.10 Total: $29,755.04 Thus, the trial court determined that appellant should have sold the shrimp to Albert King, whom the record shows discussed the purchase of the entire lot. The record also shows that appellant and King were between “20 and 30 cents per pound apart” on price. Apparently, the trial judge computed damages based on the assumption that appellant was asking its full purchase price, $118,688.70, and that the potential buyer, King, was offering between 20 and 30 cents a pound less than that amount. The record, however, does not reveal what price King was willing to pay; and, in fact, the evidence falls short of showing that an offer to purchase at any price was made.
Findings number nine and eleven of the trial court’s order, supra, based as they are on a supposed offer by King, are, accordingly, set aside. Also set aside is the trial court’s finding number ten that the failure to sell to King was at appellant’s “peril.” What is required under Florida Statutes § 672.2-603 is a showing of lack of good faith on the part of the buyer such as appellant in failing to make a salvage sale of the nonconforming merchandise.1 The question is whether there was a good faith exercise of reasonable business judgment in an effort to mitigate damages. Appellant here cannot be held to have acted at its peril under this standard, and the record is devoid of evidence showing a lack of good faith.
Accordingly, the judgment below is affirmed in part and reversed in part, and the cause is remanded for computation of damages in accordance herewith.
ROBERT P. SMITH, Jr., and SHAW, JJ., concur. . Florida Statutes § 672.2-603(1), (3):
(1) ... [W]hen the seller has no agent or place of business at the market of rejection a merchant buyer is under a duty after rejection of goods in his possession or control to follow any reasonable instructions received from the seller with respect to the goods and in the absence of such instructions to make reasonable efforts to sell them for the seller’s account if they are perishable or threaten to decline in value speedily. (3) In complying with this section the buyer is held only to good faith ....