Section 3 Farmers as Merchants

• Library: Farm Law 2006

Section 400.2-104(1), RSMo 2000, defines a merchant as follows:

“Merchant” means a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill.

So, while farmers are not merchants per se under the Missouri UCC, the above definition is broad enough to cover them in many transactions. Rush Johnson Farms, Inc. v. Mo. Farmers Ass’n, Inc., 555 S.W.2d 61, 65 (Mo. App. W.D. 1977) (a farmer who sold beans to an elevator for many years was a merchant). Whether, in the course of a particular transaction, a farmer will be deemed a merchant is determined on a case-by-case basis and by looking at “the individual experience and activities of the person involved.” Id. at 65.

If a farmer is found to be a merchant in a particular transaction,
Article 2 of the Missouri UCC, §§ 400.2-101–400.2-725, RSMo 2000 and Supp. 2005, imposes special obligations on the farmer. Specifically, special rules apply to agreements between merchants. “‘Between merchants’ means in any transaction with respect to which both
parties are chargeable with the knowledge or skill of merchants.” Section 400.2-104(3). In particular, the Missouri UCC does not require consideration on firm offers from merchants to create irrevocability, § 400.2-205, RSMo 2000, and merchant status significantly impacts the requirements of the statute of frauds as found in § 400.2-201, RSMo 2000.

(§1.4) The Statute of Frauds

Section 400.2-201(1), RSMo 2000, embodies the statute of frauds as it relates to contracts for the sale of goods. It states in part:

a contract for the sale of goods for the price of five hundred dollars or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker.

Such a writing will not be deemed insufficient under the Missouri UCC because it “omits or incorrectly states a term agreed upon,” but in such cases, the contract cannot be enforced beyond the quantities shown. Id. Special rules apply regarding transactions between merchants. Between merchants, a written confirmation of sale may satisfy the writing required under the statute of frauds. Section 400.2-201(2); see also Rush Johnson Farms, Inc. v. Mo. Farmers Ass’n, 555 S.W.2d 61 (Mo. App. W.D. 1977) (a confirmation sent to a farmer for the sale of 6000 bushels of soybeans satisfied the statute of frauds, and the farmer was liable for failure to deliver 6000 bushels of soybeans). These rules can apply to transactions between farmers and grain elevators or other purchasers of a farmer’s goods. The Missouri UCC also requires a party to a contract to act in good faith, which “in the case of a merchant means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.” Section 400.2-103(1)(b), RSMo Supp. 2005.

(§1.5) Special Warranty Rules for Livestock

Although, under §§ 400.2-314 and 400.2-315, RSMo 2000, the Missouri UCC...