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Cherwell-Ralli, Inc. v. Rytman Grain Co. | 433 A.2d 984 (1980)
The failure to perform an obligation under a contract has very different consequences depending on whether a party was justified in refusing to perform. Cherwell-Ralli, Incorporated versus Rytman Grain Company explains when failing to meet contractual obligations is justified and when it constitutes a breach of the contract.
Rytman Grain Company and Cherwell-Ralli entered into an installment contract under which Cherwell-Ralli would make weekly shipments of grain, and Rytman would pay for shipments within ten days of delivery. Rytman quickly fell behind in payments, and Cherwell-Ralli brought this to Rytman’s attention but continued to make deliveries.
Rytman later became concerned that Cherwell-Ralli might not complete performance because the market price of grain had risen significantly above the contract price. The president of Cherwell-Ralli assured Rytman that deliveries would continue if Rytman paid its balance. Rytman sent a check to pay for the completed deliveries but stopped payment several days later when a truck driver, who wasn’t employed by Cherwell-Ralli, delivered a shipment to Rytman and said it would be his last load.
Cherwell-Ralli sent Rytman a letter demanding payment, and Rytman replied demanding adequate assurance of further deliveries. When Cherwell- Ralli learned about the stopped check, it discontinued deliveries and was forced to close its plant because the inability to deliver goods caused stockpiling of excess material.
Cherwell-Ralli sued Rytman for nonpayment, and Rytman countersued for failure to deliver the remaining installments under the contract.
The trial court found that Rytman breached the contract by failing to pay and that Cherwell-Ralli was entitled to recover the balance owed. Rytman appealed to the Connecticut Supreme Court.
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