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What is a Suit for “Trade Contract Price”

When your San Diego business delivers goods, but you are not getting paid, you have several options in terms of filing a lawsuit. First, you can sue for breach of contract — hopefully, a lawsuit based on a written contract. Here at San Diego Corporate Law, we encourage all of our clients to have written contracts. Indeed, when dealing with commercial goods, a written contract is necessary under the California Uniform Commercial Code (“UCC”) if the sales price is over $500. See Cal. Comm. Code, §2201. Aside from suing for breach of contract, another option that is sometimes quicker is to bring suit for “trade contract price.” This is a lawsuit provided for by the UCC if the buyer fails to pay the price for goods that have been delivered. See Cal. Com. Code § 2709(1).

To succeed on a claim for trade contract price, you, the seller, must provide evidence to the court of the following:

  • Acceptance of the goods by the buyer, meaning that the goods were delivered and not rejected or somehow disputed after an opportunity to inspect
  • The price of the goods accepted
  • The past due date of the price and
  • The failure of the buyer to pay

A good illustration of these legal principles is found in the case of Land O’Lakes, Inc. v. Triple V Dairy, Case No. 1:18-cv-00460-SAB (US Dist. E.D. California, 2018). In that case, pursuant to various credit arrangements over several months from February through September 2017, Triple V Dairy, operated as a California partnership, ordered various dairy and milk products totaling about $700,000. However, Triple V Dairy only paid one invoice and, eventually, the plaintiff, Land O’Lakes, was forced to sue. Land O’Lakes sued for breach of contract, breach of the credit agreements, and for a claim of trade contract price under the UCC. With respect to the latter claim, on summary judgment proceedings, the court held in favor of Land O’Lakes.

The plaintiff presented invoices listing what Triple V ordered, shipping records showing that the products were delivered to Triple V’s ranch in Tulare, California, and additional records showing that no products were returned or disputed. Further, Land O’Lakes was able to provide delivery and packing slips that were signed by employees of Triple V Dairy. Thus, there was no dispute with respect to the delivery and acceptance of the goods. Land O’Lakes also provided documentation with respect to when payment was due and that, other than one early payment of about $6,000, no payments had been received. At that point, it was “easy” for the court to rule in favor of Land O’Lakes. The court entered judgment for the amount due plus over $100,000 in financing charges and related fees.

California Business Contracts: Contact San Diego Corporate Law Today

If you would like more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard can be reached at (858) 483-9200 or via email. Mr. Leonard’s law practice is focused on business, transactional, and corporate matters. Mr. Leonard has, for the fourth year, been honored as “Best of the Bar” by the San Diego Business Journal for 2018. Like us on Facebook.

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