Reference no: EM131675432

Question: ALASKA PACIFIC TRADING CO. v. EAGON FOREST PRODUCTS INC. WASHINGTON APPELLATE DIVISION 1

FACTS: Alaska Pacific Trading Company (ALPAC) and Eagon Forest Products, Inc., contracted to buy and sell raw logs. ALPAC and Eagon engaged in months of communications about a shipment of 15,000 cubic meters of logs from Argentina to Korea between the end of July and the end of August 1993. The delivery date passed without ALPAC shipping the logs. Eagon canceled the contract, alleging that ALPAC had breached the agreement by failing to deliver. ALPAC alleged that its failure to deliver was not a material breach and that the parties had modifi ed the delivery date. Alternatively, ALPAC argued that Eagon breached the contract by failing to provide adequate assurances or repudiating the contract. The miscommunication between the parties occurred after the market for logs began to soften, making the contract less attractive to Eagon. ALPAC was reluctant to ship the goods because it was concerned that Eagon might not accept the shipment. However, Eagon never stated that it would not accept the cargo.

ISSUE: The question for the court is whether to apply the common law doctrine of material breach or the UCC doctrine of perfect tender.

REASONING: In the court's own words: As a contract for the sale of goods, this contract is governed by the Uniform Commercial Code, Article II (UCC II) which replaced the common law of material breach, on which ALPAC relies, with the "perfect tender" rule. Under this rule, "If the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may reject the whole." Both the plain language of the rule and the offi cial comments clearly state that, if the tender of the goods differs from the terms of the contract in any way, the seller breaches the contract and the buyer is released from its duty to accept the goods.

DECISION AND REMEDY: The court applied the literal language of the UCC, holding that the perfect tender rule applied and that ALPAC's failure to deliver was a breach of contract.

SIGNIFICANCE OF THE CASE: Though diffi cult to measure at times, the perfect tender rule is a departure from the common law rule of substantial performance. Any deviation from the contract may indeed constitute a breach of the perfect tender rule, materiality notwithstanding

CRITICAL THINKING: Here, Eagon got lucky. The company got out of a contract that was unfavorable to it, given the softening market for logs. In what way did the judge simplify the case? Is it fair to say the judge oversimplifi ed the case?

ETHICAL DECISION MAKING: What ethical norm or value underlies the judge's decision? Explain