80 F.2d 172 (3rd Cir. 1949)
Facts: A written contract between the CampbellSoup Company (a New Jersey company) and the Wentzes (carrot farmers in Pennsylvania) stated that the Wentzes would deliver to Campbell all Chantenay red cored carrots grown on the Wentz farm during the 1947 season. The carrots had a contract price of $30 per ton. The contract between CampbellSoup and all carrot sellers was drafted by Campbell, and it included a provision that prohibited farmers/sellers from selling their carrots to anyone else except those carrots rejected by Campbell. The contract also included a $50 per ton liquidated damages provision if the seller breached, but no similar provision if Campbell breached. The contract not only allowed Campbell to reject nonconforming carrots, but it also gave Campbell the authority to decide who could purchase the carrots it had rejected. The Wentzes harvested 100 tons of carrots, but because the market price for these rare carrots at the time of harvesting was $90 per ton, the Wentzes refused to deliver them to Campbell and instead sold 62 tons of carrots to a farmer, who sold some of those carrots to Campbell. Campbell filed a lawsuit against the Wentzes, seeking a court order to halt further sales of the contracted carrot toothers and to compel specific performance of the contract. Campbell filed an appeal after the trial court ruled in favor of the Wentzes.
Issues include whether specific performance is an appropriate legal remedy in this case, or whether the contract is unconscionable.
In January 1948, it was nearly impossible to find Chantenay carrots on the open market.
Campbell uses Chantenay carrots (which are easier to process for soup making than other carrots) in large quantities and provides seeds to farmers with whom it has contracts.
Campbell made a long-term contract for carrots, and farmers gladly agreed to it. Specific performance should have been granted if the facts of this case were this simple.
The issue, however, is with the contract itself, which was one-sided. The provision that, under certain conditions, Campbell may reject carrots, but farmers cannot sell them anywhere without Campbell’s permission, according to the appellate court, was the most direct example of unconscionability. Though the contract was legal, Campbell was wrong to seek the court’s assistance in enforcing this unconscionable bargain (one that “shocks the conscience of the court”). The sum of the contract’s provisions, according to the court, “drives too hard a bargain for a court of conscience to assist.”
Holding: The trial court’s decision in favor of the farmers is upheld.
What were the terms of Campbell and the Wentzes’ contract?
Did the Wentzes live up to their end of the bargain?
In this case, did the court find that specific performance was an adequate legal remedy?
Why did the court deny Campbell’s request for assistance in enforcing its legal contract?
How might Campbell modify its contract in the future to avoid the unconscionability issue?