Business Law Discussion

Campbell Soup made output contracts with farmers, providing seed and agreeing to purchase the entire crop at a fixed price of $30/ton. The Wentz brothers were farmers who grew Chantenay carrots for Campbell. In 1947, the scarcity of these carrots raised the price per ton to $90. Campbell’s soup needed these particular kinds of carrots for their soup because of their shape, color, and consistency. The contract contained some very lopsided provisions that excused Campbell’s Soup from performing in many cases, but prevented the farmers from selling elsewhere without permission. For each individual grower the agreement was made by filling in names and quantity and price on a printed form furnished by Campbell Soup. The form was quite obviously drawn up by skillful draftsmen with the buyer’s interests in mind. Paragraph 2 provided for the manner of delivery. Carrots were to have their stalks cut off and be in clean sanitary bags or other containers approved by Campbell. This paragraph concluded with a statement that Campbell’s determination of conformance with specifications shall be conclusive. The next paragraph allowed Campbell to refuse carrots in excess of twelve tons to the acre. The next contained a covenant by the grower that he will not sell carrots to anyone else except the carrots rejected by Campbell nor will he permit anyone else to grow carrots on his land. Paragraph 10 provided liquidated damages to the extent of $50 per acre for any breach by the grower. There was no provision for liquidated or any other damages for breach of contract by Campbell. Paragraph 9 stated that Campbell was excused from accepting carrots under certain circumstances. But even under such circumstances the grower, while he could not say Campbell is liable for failure to take the carrots, was also not permitted to sell them elsewhere unless Campbell agreed. What the grower could do with his product under the circumstances set out was not clear. He has covenanted not to store it anywhere except on his own farm and also not to sell to anybody else. Since the contract price was only $30, the Wentz’s sold most of their carrots to Lojeski, who sold half to Campbell. When Campbell’s found out that they were buying “contract carrots” they sued for specific performance. There was no claim by the Wentz brothers that the contract was illegal. Nor was it suggested that there was any excuse for the Wentz brothers who deliberately broke an agreement entered into with Campbell. However, when a party comes to court and asks for an equitable remedy like specific performance (in effect, asking the court to order the Wentz brothers to do exactly what the contract required them to do), the court will not grant this remedy if it is felt that the contract is unconscionable. Is the contract that Campbell Soup entered into with the Wentz brothers unconscionable? Why or why not? What are the ethical issues that are raised here?

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