Scott v. Crown

Defendant (buyer) entered into a contract with Plaintiff (seller) for the sale of 16,000 bushels of U.S. No. 1 wheat. Buyer paid seller $2,000 as an advance payment, and was condition upon completion of delivery of the total goods to pay the full balance 30 days after shipment. Seller delivered 9,086 bushels of wheat to the buyer, and then ceased performance because of his belief that buyer could not pay for the wheat. Other contractors had told the seller that the buyer was a shady character. Seller then tried to contact buyer several times by phone, but to no avail. Buyer sent seller a letter stating that seller had breached the agreement, and followed up with a letter notifying that he was canceling the contract, unless the contract was performed. Seller replied with a letter demanding assurances of performance, which was ignored by buyer.

Seller brought suit for breach of contract for not paying in full and assuring performance. Initial judgment in favor of the seller/plaintiff, and dismissal of buyer/defendant’s counterclaim.

1. Whether reasonable grounds for insecurity justifies a further demand for assurance of performance.
2. Whether suspension of performance can occur before a written demand for assurance of performance.

Judgment reversed and the cause remanded that the court enter judgment for the buyer after making findings on certain issues.

1. Reasonable grounds for insecurity does justify a further demand for assurance of performance.
2. A written demand for assurance of consideration must be made before suspension of performance, and an oral statement is insufficient; additionally this cannot justify a modification of the contract.