Bolin Farms v. American Cotton Shippers

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Bolin Farms v. American Cotton Shippers
Court Western District of Louisiana
Citation 370 F.Supp. 1353
Date decided January 31, 1974

Facts

In 1973, 11 cotton farms including Bolin Farms ("Bolin") entered forward sales contracts with cotton buyers including American Cotton Shippers Association ("American").

The forward contracts contained fixed prices for the purchase of cotton at the harvesting time. However, at the time of harvesting, the market price of cotton had unexpectedly doubled.

Consequently, the farms regretted entering the forward contracts.

Procedural History

Bolin and other cotton farms filed suits against buyers (including American) seeking annulment of the forward contracts.

The buyers ("American") counter-claimed in the United States District Court for the Western District of Louisiana seeking a declaration that the contracts were valid & enforceable.

Issues

Is a forward contract enforceable despite a significant change in market price between the time of contracting & the time of performance?

Holding

Yes. A forward contract is enforceable even if there is a significant change in market price between the time of contracting & the time of performance.

Reasons

Failure to deliver the cotton constituted a breach of contract.

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