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This case looks at whether an otherwise valid usage of trade argument can be defeated. Cases of Interest
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Rudiger Charolais Ranches v. Van De Graaf Ranches

Case Brief 2

Case Name: Rudiger Charolais Ranches v. Van De Graaf Ranches

Case Cite: 994 F.2d 670 (9th Cir. 1993).

Facts: A seller agreed to sell his cattle to the buyer. The buyer subsequently sold the cattle to a transferee. The transferee paid the buyer for the cattle without verifying the buyer's ownership of the cattle. The buyer had not yet paid the seller and the seller sought payment for the cattle from the transferee. The transferee argued it was the custom of the industry for a buyer of cattle to take possession and pay for the cattle while waiting for documentation of ownership.

Procedure: The seller sought review of the judgment of the United States District Court for the Eastern District of Washington, which granted a directed verdict in favor of the transferee in seller's action for recovery of the sales price for cattle sold to a buyer, who in turn sold it to the transferee without paying the seller.

Holding: The court vacated and remanded the directed verdict granted in favor of the transferee in the seller's action to recover the price of cattle sold to a buyer who did not pay appellant and then sold the cattle to the transferee. The court held that transferee paid for the cattle without documentation of ownership in violation of the branded cattle statute and that the transferee's actions did not conform to reasonable commercial standards.

Reasoning: The state statute made it illegal to take possession of the cattle unless the cattle were accompanied with documentation of ownership. Because the original buyer did not pay for the cattle and receive documentation from the original seller, the transferee violated the statute by taking possession of the cattle without receiving documentation of ownership. It did not matter that the custom of the industry was to take possession of the cattle while waiting for documentation because it was in conflict with a state statute.

Future Importance: The part cannot solely rely on the usage of trade in his industry. The court will always refuse a usage of trade argument in favor of expressly agreed upon terms. Furthermore, a party would be wise to make sure his contract does not violate a statute.

Critical Analysis: The previous case is an extreme example because any contract term despite usage of trade, course of dealing, or even expressly agreed upon terms or invalid when in conflict with a federal or state statute. However, the underlying point from the case is beneficial to understand how courts consider additional or ambiguous contract terms. A party can set out a perfect argument for usage of trade before the court, but the court may determine that even a perfect usage of trade argument is not strong enough to defeat the other party's argument if it carries more authority in the realm of contracts.

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