Bolin Farms v. American Cotton Shippers Association Case Brief Summary | Law Case Explained

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Bolin Farms v. American Cotton Shippers Association, 370 F.Supp. 1353 (1974)
In a forward contract, a buyer and seller agree to the sale of a particular commodity at a future date for a set price specified at the time of contracting. Fixing the price offers the benefit of predictability. But if a significant market fluctuation occurs between the time of contracting and the agreed sale, one party will likely regret the arrangement. In Bolin Farms versus American Cotton Shippers Association, we explore whether a forward contract is enforceable in the face of such a significant and unanticipated market fluctuation.
In 1973, eleven established cotton farms, including Bolin Farms, entered forward sales contracts with experienced cotton buyers, including American Cotton Shippers Association. The contracts, which were entered before the growing season, stated that the farms agreed to sell, and the buyers agreed to purchase, all the cotton from specified acreage upon harvesting. The contracts contained fixed prices reflecting the market price of cotton at the time of contracting.
But at the time of harvesting, when the farms were to deliver their cotton to the buyers, the market price of cotton had unexpectedly almost doubled. The farms, which would’ve been able to receive significantly more money from sales on the open market, regretted entering the forward contracts.
Consequently, the farms filed suit against the buyers in the United States District Court for the Western District of Louisiana, seeking annulment of the forward contracts, and the buyers counterclaimed, seeking a declaration that the contracts were valid and enforceable.
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