Title: Royster-Clark, Inc. v. Olsen's Mill, Inc.
Citation: N/A
Docket Number: 2003AP001534
State: Wisconsin
Issuer: Wisconsin Supreme Court
Date: May 18, 2006

2006 WI 46 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2003AP1534 
 
 
COMPLETE TITLE: 
 
 
Royster-Clark, Inc., 
          Plaintiff-Appellant, 
     v. 
Olsen's Mill, Inc., 
          Defendant-Respondent-Petitioner. 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
Reported at:  285 Wis. 2d 804, 701 N.W.2d 652 
(Ct. App. 2005-Unpublished) 
 
 
OPINION FILED: 
May 18, 2006   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
February 21, 2006   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Waushara   
 
JUDGE: 
Lewis Murach 
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
ABRAHAMSON, C.J., dissents (opinion filed). 
BRADLEY, J., joins the dissent. 
PROSSER, J., dissents (opinion filed).   
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For the defendant-respondent-petitioner there were briefs 
by John B. Selsing, James D. Peebles, and Selsing Law Office, 
Berlin, and oral argument by James D. Peebles. 
 
For the plaintiff-appellant there was a brief by Brian D. 
Hamill and Dempsey, Williamson, Young, Kelly & Hertel, LLP, 
Oshkosh, and oral argument by Brian D. Hamill. 
 
 
2006 WI 46
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2003AP1534  
(L.C. No. 
2002CV113) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Royster-Clark, Inc., 
 
          Plaintiff-Appellant, 
 
     v. 
 
Olsen's Mill, Inc., 
 
          Defendant-Respondent-Petitioner. 
 
 
 
FILED 
 
MAY 18, 2006 
 
Cornelia G. Clark 
Clerk of Supreme Court 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Reversed and 
cause remanded.   
 
¶1 
N. PATRICK CROOKS, J.   Petitioner, Olsen's Mill, Inc. 
(Olsen's Mill), seeks review of an unpublished court of appeals' 
decision1 that reversed and remanded the decision of the circuit 
court in a contract dispute.  We address two principal issues on 
appeal.  First, whether the circuit court's finding that there 
was an oral agreement to modify a contract between Royster-
Clark, Inc. (Royster) and Olsen's Mill was clearly erroneous.  
                                                 
1 Royster Clark, Inc. v. Olsen's Mill, Inc., No. 2003AP1534, 
unpublished slip op., (Wis. Ct. App. June 30, 2005).  
No. 
2003AP1534   
 
2 
 
Second, whether Olsen's Mill owes Royster interest for late 
payment on a second, oral, contract.   
¶2 
We reverse the decision of the court of appeals.  
Doing so, we hold that the circuit court's finding of fact 
regarding the oral modification was not clearly erroneous, as 
there was sufficient evidence in the record from which the 
circuit 
court 
could 
reasonably 
find 
that 
a 
valid 
oral 
modification had occurred.  Because we determine that the 
circuit court's finding of an oral modification was not clearly 
erroneous, and because we determine that the circuit court was 
legally correct in its conclusion that Olsen's Mill was entitled 
to a setoff against the money it owed Royster on the second 
contract, we are satisfied that Royster has no basis for its 
claim of interest due. 
I 
¶3 
In 2001, Royster and Olsen's Mill entered into two 
contracts with one another.  The first was a written contract, 
dated January 21, 2001, for Olsen's Mill to purchase 2000 tons 
of 32 percent nitrogen fertilizer from Royster at $192 per ton.  
This product is principally used to fertilize corn, and is 
applied at the time of planting.  Olsen's Mill had sufficient 
storage capacity to take the entire product at any time.  Under 
the terms of the contract, Olsen's Mill prepaid Royster for the 
entire order, which came to $384,000.  Payment was made on the 
nitrogen fertilizer on January 29, 2001.  The contract expressly 
provided that it was subject to the provisions of the Uniform 
Commercial Code (UCC), and contained language that prohibited 
No. 
2003AP1534   
 
3 
 
oral modification of the contract.2   The contract further called 
for delivery3 by June 30, 2001.  Both parties regarded this date 
as the end of the fertilizer "crop year," as it was unlikely to 
be used by farmers after that date.  The nitrogen contract also 
reserved the right for Royster to impose a storage fee upon 
fertilizer that was not removed from Royster's facility by that 
date.   
                                                 
2 The nitrogen contract provides, in relevant part: 
 
3. INTERPRETATION——Except to the extent inconsistent 
with the expressed terms of this contract, this 
contract shall be governed by and interpreted 
pursuant 
to 
the 
provisions 
of 
the 
Uniform 
Commercial Code as enacted in the State of 
Illinois, USA, and embodies the entire agreement 
between seller and buyer relative to the sale and 
purchase of the goods described herein.  No 
additional or different terms shall be binding on 
seller unless specifically accepted by seller in 
writing.   
 
The court of appeals noted that, "[d]espite this unambiguous 
provision, both parties stipulate we should apply the UCC as 
interpreted by Wisconsin law."  Royster, unpublished slip op., 
¶2 n.3.  Furthermore, in its brief to this court, Royster 
explicitly acknowledges that the "parties have agreed that 
Wisconsin law governs."  While making no similar statement, 
Olsen's Mill's brief implicitly concedes that Wisconsin law 
applies, arguing, among other things, that the court of appeals 
did not follow Wisconsin law in rendering its decision. 
 
3 The contract provided the sale was free on board (FOB).  
"FOB is a delivery term requiring a seller (here Royster) to 
ship goods to a designated point and bear the expense and risk 
of putting them into the possession of the carrier."  Royster, 
unpublished slip op., ¶2 n.2 (citation omitted).  However, as 
the court 
of 
appeals 
noted, apparently this 
was 
not a 
"vigorously enforced" term of the contract.  Id.  "Delivery" 
took place when Olsen's Mill sent its own trucks to be filled at 
Royster's plant in East Dubuque. 
No. 
2003AP1534   
 
4 
 
¶4 
When the crop year began, the supply of 32 percent 
nitrogen fertilizer was scarce.  Olsen's Mill cooperated with 
Roger Ralston (Ralston), a Royster sales agent, in his efforts 
to coordinate distribution of the fertilizer to various buyers 
so that no buyer would come up short.  During this time, Royster 
provided approximately 700 of the contracted 2000 tons of 
nitrogen fertilizer to Olsen's Mill.  Because of Royster's 
rationing, Olsen's Mill was forced to purchase an additional 
1,000 tons of the same nitrogen fertilizer from a Royster 
competitor, in order to fulfill its obligations to its own 
customers. 
¶5 
The second contract between the companies was an oral 
contract in which Olsen's Mill agreed to purchase from Royster a 
batch of Super Rainbow, a different type of fertilizer used 
mainly on potato crops.  Although Olsen's Mill did not need a 
full batch, because this product was mixed in batches, it was 
not feasible for Royster to mix the additional small quantity 
Olsen's Mill needed.  The agreement, therefore, called for 
Olsen's Mill to take a full batch, sell what it could in 2001, 
and store the remainder until it could be sold in 2002.  Payment 
to Royster was to be based upon Olsen's Mill's sales of the 
product that year, which would be determined at the end of the 
crop year, when Royster could assess how much Super Rainbow 
Olsen's Mill sold in 2001.   
¶6 
Beginning April 28, 2001, excessive rain interrupted 
regular agricultural activity, causing farmers to delay planting 
corn.  As a result, the demand for nitrogen fertilizer dropped 
No. 
2003AP1534   
 
5 
 
precipitously, as did the fertilizer price.  Paul Olsen (Olsen), 
president of Olsen's Mill, contacted Ralston to discuss the 
situation.  Olsen's Mill sought to terminate or buy out its 
contract with Royster, as did many other Royster customers.  
Instead of terminating the contract, Royster wanted Olsen's Mill 
to take all of Royster's remaining nitrogen fertilizer.  In 
return for doing so, concessions on the nitrogen contract were 
discussed, in the form of either a rebate or a credit for the 
remaining prepaid 1300 tons based upon the current market price.  
Following these discussions, Olsen's Mill retracted its buyout 
request, took all the remaining nitrogen fertilizer, amounting 
to the remaining 1300 tons on the contract, plus an additional 
34.6 extra tons, and sold it at a loss.   
¶7 
Royster 
demanded 
full 
payment 
for 
its 
invoice.  
Olsen's Mill responded by claiming offsets for the Super 
Rainbow, as well as a refund on part of its prepayment of the 
nitrogen contract based upon the oral modification.   
¶8 
Royster then sued Olsen's Mill, seeking to collect the 
outstanding balance owed on the 34.6 tons of the nitrogen 
fertilizer, as well as payment for the Super Rainbow fertilizer.  
Olsen's Mill counterclaimed, alleging an overpayment on the 
original nitrogen contract.   
¶9 
The issues at trial, after the parties had stipulated 
to or settled certain issues, were Olsen's Mill's counterclaim 
alleging the contract for nitrogen fertilizer had been orally 
modified and Royster's claim for interest owed on the unpaid 
Super Rainbow contract.   
No. 
2003AP1534   
 
6 
 
¶10 The circuit court, Judge Lewis R. Murach presiding, 
after hearing testimony from Olsen, Ralston, and a Royster 
executive, Roger Rainey (Rainey), determined that the nitrogen 
contract had been orally modified the second week of June 2001 
when Olsen agreed to take the balance of Royster's nitrogen 
fertilizer in return for either an offsetting credit or free 
future product.  Therefore, the circuit court held that Olsen's 
Mill was entitled to a rebate of $83,000 on the 1300 tons of 
nitrogen fertilizer.4  The circuit court used the $83,000 owed to 
Olsen's Mill to offset the $54,278.31 Olsen's Mill stipulated it 
owed Royster on the Super Rainbow contract, awarding Olsen's 
Mill $28,721.69, and also determined that Royster was not 
entitled to interest on the Super Rainbow contract.   
II 
¶11 The standard of review we apply to a circuit court's 
findings of fact is highly deferential.  Wisconsin statutes 
require that a circuit court's "[f]indings of fact shall not be 
set 
aside 
unless 
clearly 
erroneous 
. 
. 
. 
."  
Wis. Stat. § 805.17(2)(2003-04)5; see also State v. Van Camp, 213 
Wis. 2d 131, 140, 569 N.W.2d 577 (1997).  In other words, this 
court defers to the circuit court's findings of fact unless they 
are unsupported by the record and are, therefore, clearly 
                                                 
4 The circuit court calculated the $83,000 as follows:  
contract price of $192/ton less the market price for the product 
on July 1, 2001, of $115.00/ton, times 1300 tons delivered after 
July 1, 2001 = $83,000.   
5 All subsequent references to the Wisconsin Statutes are to 
the 2003-04 version unless otherwise indicated. 
No. 
2003AP1534   
 
7 
 
erroneous.  Mentzel v. City of Oshkosh, 146 Wis. 2d 804, 808, 
432 N.W.2d 609 (Ct. App. 1988)(citing Wis. Stat. § 805.17(2)).   
¶12 A circuit court's findings of fact are clearly 
erroneous when the finding is against the great weight and clear 
preponderance of the evidence.  Wassenaar v. Panos, 111 Wis. 2d 
518, 525, 331 N.W.2d 357 (1983).  Under the clearly erroneous 
standard, "even though the evidence would permit a contrary 
finding, findings of fact will be affirmed on appeal as long as 
the evidence would permit a reasonable person to make the same 
finding."  Reusch v. Roob, 2000 WI App 76, ¶8, 234 Wis. 2d 270, 
610 N.W.2d 168 (citation omitted).  Moreover, we search the 
record not for evidence opposing the circuit court's decision, 
but for evidence supporting it.  See Mentzel, 146 Wis. 2d at 
808.   
¶13 "This court reviews conclusions of law independently 
and without deference to the decision of the circuit court."  
Hillegass v. Landwehr, 176 Wis. 2d 76, 79, 499 N.W.2d 652 (1993) 
(citation omitted).  Statutory interpretation is an issue of law 
which we review independently of lower court decisions.  While 
our review is de novo, this court benefits from the analyses of 
the circuit court and the court of appeals.  State v. Anderson, 
2005 WI 54, ¶23, 280 Wis. 2d 104, 695 N.W.2d 731 (citing State 
v. Waushara County Bd. of Adjustment, 2004 WI 56, ¶14, 271 
Wis. 2d 547, 679 N.W.2d 514). 
¶14 Given the high level of deference we must afford the 
circuit court's findings of fact, and for the further reasons 
discussed herein, we determine that its finding that Royster and 
No. 
2003AP1534   
 
8 
 
Olsen's Mill entered into an oral contract in mid-June 2001 to 
modify their written agreement for the nitrogen fertilizer, was 
not clearly erroneous.   
III 
¶15 Royster maintains that the UCC governs the contract, 
and that both the UCC statute of frauds and the contract itself 
require that modifications must be in writing.  The nitrogen 
contract between Royster and Olsen's Mill expressly provides for 
such, 
stating 
"this 
contract 
shall 
be 
governed 
by 
and 
interpreted pursuant to the provisions of the Uniform Commercial 
Code. . . ."   The contract additionally provides that "[n]o 
additional or different terms shall be binding on seller unless 
specifically accepted by seller in writing."  See, e.g., 
Wis. Stat. § 402.209(2); see also 810 ILCS 5/2-209(2)(2005). 
¶16 Olsen's Mill acknowledges the applicability of the 
UCC.  However, Olsen's Mill argues that there are recognized 
exceptions to the statute of frauds requirement that a contract 
for goods in excess of $500 be in writing, and that this 
modification falls within two of those exceptions to wit: that 
Royster had waived its writing requirement by its course of 
No. 
2003AP1534   
 
9 
 
conduct, and that Olsen's Mill and Royster had partly performed 
the modified contract.6   
¶17 The UCC statute of frauds provides that "a contract 
for the sale of goods for the price of $500 or more is not 
enforceable . . . unless there is some writing sufficient to 
indicate that a contract for sale has been made between the 
parties. . . ."  Wis. Stat. § 402.201(1).  We agree with both 
the court of appeals and the circuit court that the UCC governs 
the nitrogen contract, as it is a contract for the sale of 
goods, and that the contract is required to satisfy the terms of 
the statute of frauds, since the price of the goods exceeds 
$500.   
¶18 The UCC further requires agreements to modify a 
contract, subject to the UCC, to be in writing.  Wisconsin 
Stats. § 402.209(3) provides that "[t]he requirements of s. 
402.201 must be satisfied if the contract as modified is within 
                                                 
6 In addition to its arguments concerning waiver and 
performance, Olsen's Mill also maintains that the court of 
appeals did not follow proper appellate procedure in that it 
failed to examine the entire record when ruling on the circuit 
court's decision.  As evidence of this fact, Olsen's Mill cites 
a footnote in the court of appeals' decision, which states "[w]e 
review only Paul Olsen's testimony to determine whether there 
was an oral agreement to modify the nitrogen contract because 
the trial court found Olsen to be the more credible witness at 
trial."  Royster, No. 2003AP1534, unpublished slip op., ¶7 n.7.  
However, it seems debatable whether the court of appeals did 
review the record beyond the testimony of Olsen; its opinion 
appears to have been based on a more extensive review than what 
was indicated in the footnote.  It is clear, however, that the 
circuit court listened to and considered the testimony of 
Ralston, Olsen, and Rainey.   
No. 
2003AP1534   
 
10 
 
its provisions."  Wis. Stat. § 402.209(3).  In addition, the 
statute 
allows 
parties 
to 
require 
in 
the 
contract 
that 
modifications be in writing.  Wis. Stat. § 402.209(2).7   
¶19 In reality, however, not every contract for the sale 
of goods over $500, nor every modification thereof, strictly 
complies with the requirements of the statute of frauds, and it 
would 
be 
unreasonable 
to 
declare 
categorically 
all 
such 
contracts unenforceable.  In recognition of this fact, both the 
UCC and Wisconsin case law have recognized exceptions to the 
statute of frauds.  Two exceptions to the requirement that 
modifications be in writing are relevant to this case:  waiver 
and performance.  We will next consider whether the dealings 
between Royster and Olsen's Mill can satisfy either of the 
exceptions that the modification be in writing, and whether 
there is evidence to support the circuit court's finding that an 
oral modification of the nitrogen contract took place. 
A 
¶20 The first exception to the statute of frauds is waiver 
of the writing requirement.  Wis. Stat. § 402.209(4); see also 
Allen O'Hara, Inc. v. Barrett Wrecking, 898 F.2d 512 (7th Cir. 
1990).  Section 402.209(4) states that "[a]lthough an attempt at 
modification or rescission does not satisfy the requirements of 
sub. (2) [clauses requiring that modifications be in writing are 
                                                 
7 "A 
signed 
agreement 
which 
excludes 
modification 
or 
rescission except by a signed writing cannot be otherwise 
modified or rescinded. . . ."  Wis. Stat. § 402.209(2).   
No. 
2003AP1534   
 
11 
 
enforceable] or (3) [statute of frauds] it can operate as a 
waiver."  Wis. Stat. § 402.209(4).8   
¶21 "Waiver involves an inquiry into the intent of the 
parties. . . ."  Allen, 898 F.2d at 518.  Moreover, "the intent 
to waive may be inferred as a matter of law from the conduct of 
the parties. . . ."  Christensen v. Equity Livestock Sale, 134 
Wis. 2d 300, 303, 396 N.W.2d 762 (1986)(citing Hanz Trucking, 
Inc. v. Harris Bros. Co., 29 Wis. 2d 254, 265, 138 N.W.2d 238, 
244 (1965)).9  Waiver "is to be determined as a question of fact 
where the inference does not conclusively arise as a matter of 
law."  Id.   
¶22 The court of appeals in Royster Clark, Inc. v. Olsen's 
Mill, Inc. reasoned that an "'attempt at modification' . . . 
contemplates a completed oral modification of a written contract 
                                                 
8 We note that in analyzing Wis. Stat. § 402.209, the 
Seventh Circuit Court of Appeals concluded "[a]n attempted 
modification by words or conduct . . . operates as a waiver only 
if the party seeking to enforce the attempted modification, 
reasonably relied on the attempted modification." Am. Suzuzki 
Motor Corp. v. Kummer, Inc., 65 F.3d 1381, 1386 (7th Cir. 1995) 
(citing Wisconsin Knife Works v. Nat'l Metal Crafters, 781 F.2d 
1280, 1286-87 (7th Cir. 1986)) (additional citation omitted).  
While this court has not held that reliance is necessary to 
effect a waiver, clearly Olsen's Mill relied on the oral 
modification to its detriment.   
9 This 
court 
has 
"'recognized 
that 
a 
provision 
in 
construction contracts requiring written change orders may be 
avoided where the parties evidence by their words or conduct an 
intent to waive or modify such a provision.'"  Allen O'Hara, 
Inc. v. Barrett Wrecking, 898 F.2d 512, 518 (7th Cir. 1990) 
(citing S&M Rotogravure Serv. Inc. v. Baer, 77 Wis. 2d 454, 468, 
252 N.W.2d 913 (1977)).   
 
No. 
2003AP1534   
 
12 
 
which prohibits oral modification."  Royster-Clark, Inc. v. 
Olsen's Mill, Inc., No. 2003AP1534, unpublished slip op., ¶12 
(Wis. Ct. App. June 30, 2005).  The court of appeals then 
concluded that there was no evidence in the record of such an 
agreement, and as a result the court decided it need not further 
consider Wis. Stat. § 402.209.  Id., ¶13. 
¶23 The inquiry into whether there has been an "attempt at 
modification" sufficient to operate as a waiver of the statute 
of frauds is closely related to the inquiry to determine whether 
there 
was 
a 
valid 
oral 
modification.10 
 
See 
Wis. Stat. § 402.209(4); see also Allen, 898 F.2d at 518.  
Generally speaking, if the record supports the inference that 
the parties intended to modify the contract, then a waiver 
pursuant to § 402.209 (4) has occurred.11  We will address the 
two issues together. 
¶24 As we noted previously, the standard of review we 
apply to a circuit court's findings of fact is that such 
findings 
will 
be 
upheld 
unless 
clearly 
erroneous. 
 
We, 
                                                 
10 See also Albany Roller Mills, Inc. v. N. United Feeds & 
Seeds, Inc., 397 N.W.2d 430, 433 (Minn. Ct. App. 1986) (The UCC 
§ 2-209(4) requirement of a writing may be waived and result in 
an effective oral modification); Double-E Sportswear Corp. v. 
Girard Trust Bank, 55 F.R.D. 297, 301 (ED PA 1972) (An attempted 
modification of a written contract which does not satisfy the 
statute of frauds can operate as a waiver). 
11 See also Linear Corp. v. Standard Hardware Co., 423 So.2d 
966, 968 (Fla. Dist. Ct. App. 1982)("[T]he evidence as to the 
parties' 
conduct 
supports 
finding 
both 
a 
waiver 
of 
the 
requirement that subsequent modifications be in a writing signed 
by both parties, and that a subsequent modification occurred.") 
No. 
2003AP1534   
 
13 
 
therefore, next examine whether there is sufficient evidence in 
the record from which the circuit court could have reasonably 
determined that the parties intended to waive the writing 
requirement. 
¶25 There are at least five factors in the record to 
support the finding of 
the 
circuit 
court 
that an 
oral 
modification between Olsen's Mill and Royster took place.   
¶26 First, the circuit court heard testimony from three 
witnesses: Olsen, Ralston, and Rainey.  The circuit court judged 
Olsen to be forthcoming and his testimony the most credible of 
the three, and, thus, reasonably gave greater weight to Olsen's 
testimony on the events in question.  Because "due regard shall 
be given to the opportunity of the trial court to judge the 
credibility of the witnesses," we do not second-guess the trier 
of 
fact 
in 
its 
credibility 
determinations.  
Wis. Stat. § 805.17(2).   
¶27 Second, there is ample evidence in the record to 
support the circuit court's finding that Ralston had the 
apparent authority to bind his principal, Royster, to such an 
agreement.  Ralston and Olsen both testified that, through 
Ralston,  Royster entered into an oral contract for Super 
Rainbow with Olsen's Mill, during the same timeframe as the 
modification to the nitrogen contract was occurring.  There was 
also testimony from Ralston and Olsen that Ralston had orally 
modified the standard invoice terms of the Super Rainbow 
contract.  In addition, Ralston testified that he had the 
No. 
2003AP1534   
 
14 
 
authority to make similar deals with other customers.  As Olsen 
testified: 
Q:  Describe your normal dealings with Royster-Clark 
and Mr. Ralston in this business. 
[Olsen Answering] A:  We typically in the fertilizer 
industry, as we need product, no matter what supplier 
it is, it is virtually a [sic] verbal.  We look at how 
many tons we need at what time of year, and we 
negotiate 
prices 
with 
the 
sales 
reps 
from 
the 
different fertilizer companies. 
Q:  And was this situation or practice specific to 
you, or is this the standard in the industry for 
companies that sell fertilizers? 
A:  Pretty much standard in the industry. 
Q:  And why is it that it has to work this way? 
A:  A lot of things happen on a very fast track.  You 
can have a customer come in and wanting [sic] a quote 
on certain type of fertilizer for whatever the 
immediate shipment, and most of the time it's done on 
a phone call.  . . . 
Q:  You heard Mr. Ralston also testify that at times 
adjustments have to be made or changes in the 
agreement.  Is that true? 
A:  Yes, it is. 
¶28 This testimony is also relevant to the third factor 
that supports the finding of an oral modification——the parties' 
long-standing relationship.  Olsen testified at trial that 
Olsen's Mill had been conducting business with Royster for more 
than 40 years.  Furthermore, Olsen and Ralston both testified to 
the fact that the two men had been dealing with one another for 
18 years.  Wisconsin Stat. 401.205(1) defines a course of 
dealing as "a sequence of previous conduct between the parties 
No. 
2003AP1534   
 
15 
 
to a particular transaction which is fairly to be regarded as 
establishing a common basis of understanding for interpreting 
their expressions and other conduct."  Wis. Stat. § 401.205(1).  
While 
not 
conclusive 
on 
this 
point, 
the 
long-standing 
relationship between both the individuals and the companies 
supported a strong inference that the circuit court could use in 
finding 
that 
strict 
formalities 
concerning 
contracts 
and 
modifications were not always followed.  This inference is also 
buttressed by Olsen's testimony that contracts and modifications 
thereof are frequently oral in the fertilizer industry. 
¶29 When Ralston was asked "Is it safe to say this is one 
of the first times that you have made representations to your 
customers that your company did not back you on?" he responded 
"I think it was the only time."  This statement supported the 
testimony of Olsen that an agreement was reached to modify the 
contract.  It is also inconsistent with Rainey's testimony that 
no assurances were made.   
¶30 Fourth, conduct by both of the parties evidences a 
course of performance at variance with the terms of the written 
contract.  "The code itself recognizes the relevance of 
conduct." 
 
Christensen, 
134 
Wis. 
2d 
at 
304.  
Wisconsin Stat. § 402.208 "provides that a course of performance 
inconsistent with any terms of an agreement shall be 'relevant 
to show a waiver or modification' of that term."  Id. (quoting 
Wis. Stat. § 402.208(3)).  Therefore, if Royster or Olsen's Mill 
acted in a manner inconsistent with the terms called for in the 
No. 
2003AP1534   
 
16 
 
written agreement, the circuit court certainly could infer from 
those inconsistent actions that a modification took place.12   
¶31 Olsen and Ralston both testified that in mid-June 
2001, Olsen sought a buyout or a refund from Royster on the yet 
undelivered 1300 tons of nitrogen fertilizer.  After discussions 
with Ralston, Olsen agreed to retract its buyout request, take 
all of Royster's remaining nitrogen fertilizer——in an amount 
exceeding that in its original contract——and sell it at a loss.  
It is difficult to believe that Olsen would have accepted not 
only the amount of fertilizer contracted for and prepaid, but in 
addition to that, 34.6 additional tons, which would be sold at a 
loss, if there had not been an oral agreement to modify the 
contract.  It is reasonable to draw the inference that Royster 
would expect Olsen's Mill to agree to such terms only if 
incentives had been given in return.   
¶32 Finally, the circuit court found that there was 
evidence in the record of a lack of good faith on Royster's part 
in its dealings with Olsen's Mill.  Regarding the mid-June 
conversation between Ralston and Olsen about the possibility of 
terminating the nitrogen contract, Ralston was asked the 
following question:  "And also when Olsen's Mill talked to you 
about the rebates or getting the money, do I understand the 
response from Royster-Clark through you [Ralston] was, [w]e have 
                                                 
12 See also id.; Etheridge Oil Co. v. Panciera, 818 
F.Supp. 480, 483 (D. RI, 1993)("North Carolina courts have 
recognized that the intent of [UCC § 2-209(4)] is to give 
legal effect to the parties' actual later conduct." 
(citation omitted)). 
No. 
2003AP1534   
 
17 
 
your money, we have your product, and we are not giving back 
your money?"  Ralston responded "That's right."   
¶33 Olsen's 
testimony 
confirmed 
this 
conversation.  
Question:  "What type of agreement or representations did Roger 
[Ralston] make in terms of modifying this contract?"  Olsen 
answered:  "We asked if there was going to be concession (sic) 
or we could buy out of the contract or cancel a contract, and 
Roger virtually pleaded with us, as he's testified, [w]e have 
the money; we have the product."  As the circuit court noted, if 
Olsen had unilaterally rescinded the contract, Royster would 
have a duty to mitigate.  See Wis. Stat. §§ 402.708(1) and 
402.709(1)(b).  Neither the contract nor the UCC would have 
entitled Royster to retain both product and payment.   
¶34 Furthermore, the circuit court did not find the 
testimony of Rainey to be credible, as he testified to matters 
outside the scope of his firsthand knowledge, and because his 
testimony directly contradicted the testimony of both Olsen and 
Ralston.  The circuit court inferred from this a lack of good 
faith on the part of Royster.13   
¶35 Olsen's testimony then continued:   
He wanted us to make sure we took the product and we 
had some negotiation, talking, and at that time it was 
still raining and we made——I should say I believe I 
                                                 
13 See also Allapattah Servs. Inc. v. Exxon Corp., 61 
F.Supp.2d 1308, 1319 (SD FL 1999)("The duty of good faith is 
especially applicable in situations when the contract confers 
one party with the discretion to determine certain terms of a 
contract, such as an open price term agreed to be unilaterally 
set." (citations omitted)). 
No. 
2003AP1534   
 
18 
 
had an agreement with Roger——we put three of our bins 
of trucks on and hauled product from East Dubuque 
[Royster's plant], and he was going to inform us if 
the price went down.  My commitment to him was I would 
take 
and 
move 
that 
product 
to 
the 
farmer 
and 
personally at this time it was going to simply be 
going out on ground through your agent's systems, and 
whatever price it was from what we purchased it to 
what we sold it to the farmer, was what he was going 
to try to get a credit when we refilled in the fall of 
either material or price concession on the number of 
times we bought – 
THE COURT:  Now, let me——Could you cover that one 
more time?  I just want to——All right.  You agreed to 
put on three trucks to get the product out of there, 
and in return for that Roger did what? 
A:  He was going to work to either give us free 
product or reduce the price per ton of product we 
would have purchased in our fall fill.  . . .  
Q:  I think also the Court's asking what was your 
agreement with the owner, with the property owners, 
the farmers? 
A:  Well, we went out and our goal was to move Roger's 
product, and the commitment and whatever the price 
was——Let's say that the price at the farm was $140 a 
ton.  We would sell it at the farm for 140 bucks, and 
the price difference between the $140 and $192 or $52 
a ton was the difference.  I told Roger then you have 
to make ten cents on the product.  I would haul it and 
eat this cost, which is about $20 a ton, but I didn't 
want to lose a penny on the nitrogen so I didn't make 
a margin, but we needed to work through this, and 
that's what we did.  
Based on Olsen's testimony, the circuit court's finding of fact 
that there had been a valid oral modification of the contract 
cannot be said to be clearly erroneous.  See Gerner v. Vasby, 75 
Wis. 2d 660, 664, 250 N.W.2d 319 (1977).   
¶36 The court of appeals made much of Olsen's statement 
that "He [Ralston] was going to work to either give us free 
No. 
2003AP1534   
 
19 
 
product or reduce the price per ton of product we would have 
purchased in our fall fill."  Although Olsen's statement does 
not unambiguously reference a completed deal, there certainly is 
no difficulty in reading this statement as a reflection of 
Olsen's understanding that, although the particulars of the 
concessions had not been finalized, Ralston had agreed to do 
something for Olsen in regard to one of the two alternatives.  
It appears to be self-evident that a contract may legitimately 
allow its terms to be met by fulfilling either of two 
alternative 
terms. 
 
See 
Wis. Stat. § 402.201(1); 
Official 
Comment 3, Wis. Stat. Ann. § 402.201 (West 2003).  "[S]uch 
material terms as are stated need not be precisely stated."  
Official Comment 3, Wis. Stat. Ann. § 402.201 (West 2003).14  The 
fact of this alternative provision is further buttressed by 
Olsen's next statement:  "I told Roger then you have to make ten 
cents on the product.  I would haul it and eat this cost, which 
is about $20 a ton, but I didn't want to lose a penny on the 
nitrogen so I didn't make a margin, but we needed to work 
through this, and that's what we did."  The attempt at 
modification 
here 
operated 
as 
a 
waiver 
in 
accord 
with 
Wis. Stat. § 402.209(4), even though the requirement of sub. 2 
that the modification must be in writing was not satisfied. 
 
 
                                                 
14 See also id., discussing the duty of good faith in 
relation to an open price term which the parties agreed could be 
set unilaterally. 
No. 
2003AP1534   
 
20 
 
B 
¶37  The second exception to the statute of frauds writing 
requirement is performance of the terms of the contract.  
Wisconsin Stat. § 402.201(3) provides, in relevant part, that 
"[a] contract which does not satisfy the requirements of sub. 
(1) but which is valid in other respects is enforceable . . . 
[w]ith respect to goods for which payment has been made and 
accepted or which have been received and accepted. . . ."  
Wis. Stat. § 402.201(3).   
¶38 It is undisputed that the nitrogen contract between 
Royster and Olsen's Mill was prepaid in full on January 29, 
2001.  Both parties also acknowledge that, before the disputed 
mid-June 
2001 
oral 
modification, 
Royster 
had 
delivered 
approximately 700 tons of nitrogen fertilizer to Olsen's Mill.  
Although Olsen's Mill prepaid the original nitrogen contract in 
full, it did not pay Royster for the additional 34.6 tons of 
fertilizer it agreed to buy as a result of the mid-June 2001 
discussions.  Therefore, the modification cannot evade the 
statute of frauds requirement based upon the exception with 
regard to "goods for which payment has been made and accepted. . 
. 
." 
 
Wis. Stat. § 402.201(3)(c). 
 
Performance, 
however, 
encompasses more than prepayment.  Because the original contract 
had been paid in full, but only delivered in part, the modified 
contract was partly performed.   
¶39 Two Wisconsin cases have analyzed the performance 
exception to the statute of frauds.  The first is Hilkert v. 
Zimmer, in which this court considered the efficacy of an oral 
No. 
2003AP1534   
 
21 
 
variation to a written contract, and the effect of full 
performance.  Hilkert v. Zimmer, 90 Wis. 2d 340, 343, 280 N.W.2d 
116 
(1979). 
 
The 
Hilkert 
court 
reasoned 
that 
an 
oral 
modification to a written contract is not invalid per se.  "Even 
where it is clear as a matter of law that an oral variation to a 
written contract is within the strictures of the statute of 
frauds, the oral contract may be enforceable in equity under 
Wisconsin law."  Id.  In Hilkert, however, the contract had been 
fully performed, so the court did not need to consider an 
equitable resolution, because "the fully performed contract is 
completely beyond the scope and operation of the statute of 
frauds. . . ."  Id.  
¶40 Regardless of the fact that the disputed modification 
in this case was not fully performed, Hilkert is still relevant 
to the resolution of this case.  Hilkert stands for the 
proposition that the statute of frauds does not automatically 
negate an oral modification and that such a modification may be 
enforceable in equity.   
¶41 Even though the parties had not fully performed the 
modified 
contract, 
part 
performance 
had 
occurred. 
 
Part 
performance under Wis. Stat. § 402.201(3)(c) occurs when a buyer 
accepts the product and the seller participates in, or expresses 
assent to, the change in possession and control of the product.  
See Gerner, 75 Wis. 2d at 667-68.  In Gerner, this court 
examined the parameters of this performance exception.  Gerner 
involved a dispute between a buyer and a seller of 10,000 
bushels of corn, as to whether an enforceable contract with 
No. 
2003AP1534   
 
22 
 
respect to the price per bushel had been made.  The issue in 
that case was "whether a telephone conversation between Gerner 
and Vasby on April 4, 1973, constituted an oral contract which 
would be enforceable but for its failure to comply with the 
statute of frauds."  Id. at 661.   
¶42 The 
Gerner 
court 
acknowledged 
that 
Wis. Stat. § 402.201(3) delineates "what part performance will 
be sufficient to make enforceable an oral contract not in 
compliance with the statute of frauds. . . ."  Id. at 666.  As 
Gerner had delivered the corn in approximately the quantity 
called for in the oral contract, and Vasby had accepted and 
tendered payment for the corn, the court had to determine 
whether this constituted part performance pursuant to the 
statute.  Id.   
¶43 Concluding that performance was not unilateral, as 
Gerner had delivered and Vasby had accepted the corn, this court 
upheld the decision of the circuit court that there was part 
performance consistent with Wis. Stat. § 402.201(3).  Id. at 
667.  Such part performance "made the contract enforceable even 
though it did not satisfy the 'writing' requirements of sub. (1) 
of sec. 402.201, Stats., the statute of frauds."  Id. at 670.  
Because the circuit court concluded that Vasby's testimony was 
the more credible of the two, it was able to determine that a 
valid contract had been created, despite failing the statute of 
frauds requirement.   
It seems clear, therefore, that, in circumstances such 
as this, where the conduct which is relied upon for 
No. 
2003AP1534   
 
23 
 
part performance is consistent with the contract, such 
conduct is sufficient to take the contract out of the 
statute of frauds even though such conduct is not 
inconsistent with some other dealings arguably had 
between the parties. 
Id.15   
¶44 The 
facts 
of 
this 
case 
fall 
within 
this 
part 
performance exception.  Olsen's Mill sought a buyout of the 
undelivered portion of its original nitrogen contract.  After 
discussions with Ralston, Olsen's Mill retracted the request and 
accepted not only the balance of the product pursuant to the 
contract, but an additional 34.6 tons of nitrogen fertilizer.  
Assent by Royster is found in that it allowed Olsen's Mill to 
come to Royster’s plant and load its trucks with the additional 
34.6 tons.   
¶45 Royster contends Hilkert and Gerner are factually 
distinguishable, and therefore, inapplicable to the case at bar.  
We disagree.  Although both Hilkert and Gerner present different 
facts than this case, the legal principles regarding the 
creation and modification of oral contracts are applicable to 
facts present here.   
                                                 
15 See also Fendley v. Dozier Hardware Co., Inc., 449 So.2d 
1236 (Ala. 1984): 
Under [UCC § 2-201], no writing is required with 
respect to goods which have been received or accepted.  
The 
official 
comment 
to 
[§ 2-201] 
includes 
the 
following statement pertaining to partial performance: 
"Receipt and acceptance either of goods or of the 
price constitutes an unambiguous overt admission by 
both parties that a contract actually exists." 
Id. at 1239.   
No. 
2003AP1534   
 
24 
 
¶46 We, therefore, conclude that the actions of both 
Royster and Olsen's Mill comprise part performance of the 
disputed modification of the nitrogen contract sufficient to 
take it out of the statute of frauds.  Because we conclude that 
the dealing between the parties meets the performance exception 
to the statute of frauds, a written modification was not 
necessary to execute an enforceable modification of the nitrogen 
contract.   
C 
¶47 We are satisfied, after considering the totality of 
the circumstances, as did the circuit court, examining the 
entire 
record, 
and 
giving 
deference 
to 
the 
credibility 
determinations of the circuit court, that the finding that 
Royster and Olsen's Mill had agreed to an oral modification of 
the nitrogen contract is not clearly erroneous. 
¶48 Since we agree with the circuit court's finding that 
the nitrogen contract was orally modified, we further hold, as 
did the circuit court, that Royster owed Olsen's Mill a rebate 
on the prepaid contract.  Since a rebate was due in an amount in 
excess of the $50,472.31, stipulated to as owed by Olsen's Mill 
on the Super Rainbow contract, and since the amount due to 
Olsen's Mill was found to be $28,721.69, Royster has no basis 
upon which it may claim interest due for late payment on the 
Super Rainbow contract.   
IV 
¶49 We reverse the decision of the court of appeals.  
Doing so, we hold that the circuit court's finding of fact 
No. 
2003AP1534   
 
25 
 
regarding the oral modification of the nitrogen contract was not 
clearly erroneous, as there was sufficient evidence in the 
record from which the circuit court could reasonably find that a 
valid oral modification had occurred.  Because we determine that 
the circuit court's finding of an oral modification was not 
clearly erroneous, and because we determine that the circuit 
court was legally correct in its conclusion that Olsen's Mill 
was entitled to a setoff against the money it owed Royster on 
the second contract, we are satisfied that Royster has no basis 
for its claim of interest due. 
By the Court. —— The decision of the court of appeals is 
reversed, and the matter is remanded to the circuit court in 
order to reinstate its judgment. 
 
 
No.  2003AP1534.ssa 
 
1 
 
 
¶50 SHIRLEY S. ABRAHAMSON, C.J.   (dissenting).  I agree 
with the majority opinion and the opinion of the court of 
appeals that an oral modification of a written agreement may be 
valid if one of the exceptions to the writing requirement is 
met.          
¶51 Whether there was an attempt at modification under 
Wis. Stat. § 402.209 to operate as a waiver of the statute of 
frauds or whether there was part performance under Wis. Stat. 
§ 402.201(3)(c) sufficient to satisfy the statute of frauds, a 
party claiming an oral modification cannot succeed unless it 
proves that the parties agreed to an oral modification.  
¶52 The court of appeals got it right; the circuit court's 
finding of an oral modification of the contract is clearly 
erroneous.  I do not agree with the majority opinion that the 
circuit court's finding of an oral modification of the price 
terms 
of 
the 
original 
written 
contract 
was 
not 
clearly 
erroneous, that is, that the circuit court's finding of an oral 
modification of the contract is not against the great weight and 
clear preponderance of the evidence.1   
¶53 The majority opinion's review of the evidence to 
support a valid oral modification of the contract is no more 
                                                 
1 Robertson-Ryan & Assocs. v. Pohlhammer, 112 Wis. 2d 583, 
592, n.*, 334 N.W.2d 246 (1983) (Abrahamson, J., dissenting) 
(under Wis. Stat. § 805.17(2) (2003-04) the "clearly erroneous" 
test applicable to the findings of fact of a circuit judge 
sitting without a jury is the same as the "against the great 
weight and clear preponderance of the evidence" test); Noll v. 
Dimiceli's, Inc., 115 Wis. 2d 641, 643, 340 N.W.2d 575 (Ct. App. 
1983) (same). 
No.  2003AP1534.ssa 
 
2 
 
persuasive than the circuit court's.  Because the finding of an 
oral modification of the price terms of the original written 
contract is clearly erroneous, there cannot have been waiver by 
an attempt to modify orally the written contract.  Further, even 
if the part performance exception to the writing requirement has 
been met, the record conclusively shows that there was no oral 
modification to the price terms of the original contract. 
I 
¶54 I agree with the majority opinion that a waiver of the 
statute of frauds is closely related to the inquiry whether a 
valid oral modification exists.2  
¶55 The record does not support a finding that an oral 
modification was made.  The testimony of Roger Ralston and Paul 
Olsen was consistent:  Ralston told Olsen that if Olsen 
increased the quantity of his purchase, Ralston would work to 
modify the original contract regarding price, not that the 
original contract was hereby modified between the parties.3  
Olsen testified that Ralston said he was going to work "to 
either give us free product or reduce the price per ton."  
Ralston needed corporate approval from Royster-Clark before the 
contract could be modified.  This testimony should end this case 
in favor of Royster-Clark, as the court of appeals held.    
¶56 Nevertheless, the circuit court found that Ralston had 
apparent authority to bind his principal (Royster-Clark) to an 
oral modification regarding price.  Apparent authority is 
                                                 
2 Majority op., ¶22. 
3 Id., ¶35. 
No.  2003AP1534.ssa 
 
3 
 
generally a question of fact.  Apparent authority results from 
the conduct of the principal (here Royster-Clark) that causes a 
third person (here Olsen's Mill) to reasonably believe that the 
agent (here Ralston) has authority to act (here to modify the 
contract).4     
¶57 The circuit court's finding of apparent authority 
(affirmed by the majority opinion) to modify the original 
contract without approval by Royster-Clark is not supported by 
the record.  
¶58 The majority opinion and circuit court apparently 
infer from Royster-Clark's having previously gone along with 
Ralston's proposed contract modifications that either Royster-
Clark's approval was not really necessary or that Royster-
Clark's approval of any modification was automatic and that 
Olsen's Mill could therefore act with the assurance that 
Royster-Clark would approve any modifications Ralston proposed.  
None of these inferences is supported by the record.   
                                                 
4 Iowa Nat'l Mut. Ins. Co. v. Backens, 51 Wis. 2d 26, 33-34, 
186 N.W.2d 196 (1971); Ivers & Pond Piano Co. v. Peckham, 29 
Wis. 2d 364, 139 N.W.2d 57 (1966); Wis. Cent. Ry. Co. v. Phoenix 
Ins. Co., 123 Wis. 313, 101 N.W. 703 (1904). 
The Wisconsin cases adopt 1 Restatement of Agency § 8 
(1933), relating to apparent authority.  These cases are still 
good law in this state.  For similar statements about apparent 
authority, see 1 Restatement of Agency 2d § 8 (1957); 1 
Restatement of Agency 3d § 2.03 (Tent. Draft No. 2 2006); Harold 
Gill Reuschlein & William A. Gregory, The Law of Agency and 
Partnership § 23, at 57-64 (2d ed. 1990); 1 Floyd A. Meechem, A 
Treatise on the Law of Agency §§ 720-26, at 5081-83 (1914); and 
Warren A. Seavey, Law of Agency § 22, at 43-45 (1964).  
No.  2003AP1534.ssa 
 
4 
 
¶59 The majority opinion relies on the parties' course of 
conduct to override Ralston's and Olsen's testimony that Ralston 
needed corporate (Royster-Clark's) approval of a modification of 
the contract.  Course of conduct, sometimes referred to as 
custom, is a factor that may support the presence of apparent 
authority.   
¶60 Yet the course of conduct in the instant case supports 
the conclusion that Royster-Clark's approval was required for 
any modification, that Royster-Clark did not always approve 
Ralston's 
proposed 
modifications, 
that 
Royster-Clark 
never 
expressly or impliedly waived the approval requirement, and that 
Olsen's Mill could not reasonably have relied on Royster-Clark's 
automatically approving Ralston's proposals.   
¶61 Ralston 
answered 
affirmatively, 
as 
the 
majority 
opinion states, on cross-examination by Olsen's Mill's attorney 
that it was "safe to say this is one of the first times that 
[he] made representations to [his] customers that [his] company 
did not back [him] on."5  However, Ralston's entire testimony at 
that point in the questioning makes clear that Ralston attempted 
to negotiate with Royster-Clark on behalf of his customers, that 
he did not always get what he wanted for his customers, and that 
Olsen's Mill would have every reason to expect him to "try" to 
get some type of rebate.  Ralston's examination was as follows: 
Q. Is it safe to say that this is one of the first 
times that you have made representations to your 
customers that your company did not back you on? 
                                                 
5 Majority op., ¶28. 
No.  2003AP1534.ssa 
 
5 
 
A. I think it was the only time. 
Q. And I believe you testified that over the years 
numerous times you would go back on behalf of your 
customers and try to make things right for them and 
for your company? 
A. It was an effort in every negotiation, yes. 
Q. And it was something that Olsen's Mill had done 
with you numerous times again over the years? 
A. Yes. 
Q. And would have every reason to believe that you 
were in fact going to try to get them or would get 
them some type of rebate considering the situation 
everybody was in?   
A. I think they knew I was going to try. 
Q. And you'd always been successful before, correct? 
A. 
No. 
I 
didn't 
get——I 
haven't 
always 
gotten 
everything I wanted—— 
Q. But for the most part? 
A. ——but I always tried. 
¶62 In addition, Olsen's examination shows that he knew 
that Ralston could not bind Royster-Clark on the modified 
contract price and that Ralston had to seek approval.  Olsen 
testified as follows: 
[Ralston] wanted us to make sure we took the product 
and we had some negotiation, talking, and at that time 
it was still raining and we made——I should say I 
believe I had an agreement with [Ralston]——we put 
three of our bins of trucks on and hauled product from 
[Royster's plant], and he was going to inform us if 
the price went down. . . . [W]hatever price it was 
from what we purchased it to what we sold it to the 
farmer, was what he was going to try to get a 
credit . . . .  He was going to work to either give us 
free product or reduce the price per ton of product we 
would 
have 
purchased 
in 
our 
fall 
fill. . . .  
(Emphasis added.) 
No.  2003AP1534.ssa 
 
6 
 
¶63 Olsen's testimony is clear.  He agreed to take more 
products, Ralston agreed to seek two possible concessions and 
then inform Olsen which, if either, of these concessions was 
granted. 
¶64 This record shows a course of conduct that Ralston 
needed to get corporate approval for any modification of a 
written contract and Olsen's Mill knew of Ralston's need to get 
corporate approval.  Accordingly, the circuit court's finding 
that the parties orally modified the original contract was 
clearly erroneous. 
II 
¶65 I also agree with the majority opinion that part 
performance may satisfy the statute of frauds.  See Wis. Stat. 
§ 402.201(3)(c).  Part performance may be made by payment and 
acceptance of such payment or by receipt and acceptance of the 
goods.  Id.  The majority is correct that the contract 
modification was partially performed because there was receipt 
and acceptance of the 34.6 tons of nitrogen fertilizer. 
¶66 This 
part 
performance 
exception 
to 
the 
writing 
requirement cannot be used in the present case to support any 
conclusion 
about 
the 
content 
of 
the 
oral 
contract.  
Section 402.201(3)(c) states that "[a] contract which does not 
satisfy the requirements of sub. (1) [namely a writing] but 
which is valid in other respects is enforceable: . . . [w]ith 
respect to goods . . . which have been received and accepted" 
(emphasis added).  In other words, part performance can be used 
to establish the existence of a contract, even one that should 
No.  2003AP1534.ssa 
 
7 
 
have been in writing.  The parties may then prove the terms of 
that oral contract by oral testimony.   
¶67 As I have already discussed, the content of the oral 
contract claimed by Olsen's Mill did not include a promise by 
Royster-Clark to rebate the price of the 2,000 tons of nitrogen 
fertilizer from the original contract.  On the contrary, the 
testimony is unequivocal that Ralston would only try to get a 
rebate; that he did not have authority to modify the price of 
the original contract; and that he had to get approval from 
somebody else at Royster-Clark for any modification.   
¶68 I conclude that part performance of the oral contract 
for 34.6 tons, and part performance of the original contract, 
though taking into account any oral agreement outside the 
writing requirement, do not, on this record, support a finding 
of an oral change in the price terms of the original written 
contract.  
¶69 Because the circuit court was clearly erroneous in 
determining that there was an oral agreement to change the price 
terms of the original written contract, I dissent. 
¶70 I am authorized to state that Justice ANN WALSH 
BRADLEY joins this dissent.          
 
No.  2003AP1534.dtp 
 
1 
 
¶71 DAVID T. PROSSER, J.   (dissenting).  Chapter 402 of 
the Wisconsin Statutes creates a regulatory framework for 
commercial sales transactions in Wisconsin.  The chapter is 
Wisconsin's codification of Article 2 of the Uniform Commercial 
Code (UCC). 
¶72 Section 402.201(1) embodies Article 2's statute of 
frauds.  It reads in part: "[A] contract for the sale of goods 
for the price of $500 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."  Wis. Stat. § 402.201(1). 
¶73 Section 402.209 addresses "Modification, rescission 
and waiver."  Subsection (2) reinforces § 402.201(1): "A signed 
agreement which excludes modification or rescission except by a 
signed writing cannot be otherwise modified or rescinded."  
Wis. Stat. § 402.209(2).  Subsection (3) adds: "The requirements 
of § 402.201 must be satisfied if the contract as modified is 
within its provisions."  Wis. Stat. § 402.209(3). 
¶74 These provisions establish the basic "rule" about 
written sales contracts.  As indicated, parties are entitled to 
supplement the basic rule with specific contractual language 
prohibiting 
modifications 
that 
are 
not 
in 
writing.  
Wis. Stat. § 402.209(2). 
¶75 The "PREPAY SALES AGREEMENT" for nitrogen fertilizer 
between Royster-Clark and Olsen's Mill states that "this 
contract shall be governed by and interpreted pursuant to the 
No.  2003AP1534.dtp 
 
2 
 
provisions of the Uniform Commercial Code."  The contract also 
provides that "[n]o additional or different terms shall be 
binding on seller unless specifically accepted by seller in 
writing." 
¶76 Royster-Clark maintains that both Chapter 402 and the 
contract itself require that any modifications to the nitrogen 
contract be in writing before they are binding upon Royster-
Clark. 
¶77 Olsen's Mill acknowledges the applicability of the UCC 
to the contractual agreement.  However, it emphasizes that there 
are recognized exceptions to the UCC's statute of frauds and to 
contractual no oral modification clauses. 
¶78 In particular, subsection (4) of § 402.209 creates a 
waiver exception: "Although an attempt at modification or 
rescission does not satisfy the requirements of sub. (2) or (3) 
it can operate as a waiver."  Wis. Stat. § 402.209(4). 
¶79 Subsection (5) then provides: "A party who has made a 
waiver affecting an executory portion of the contract may 
retract the waiver by reasonable notification received by the 
other party that strict performance will be required of any term 
waived, unless the retraction would be unjust in view of a 
material change of position in reliance on the waiver."  
Wis. Stat. § 402.209(5). 
¶80 The 
meaning 
of 
the 
waiver 
language 
in 
Wis. Stat. § 402.209 was carefully considered in Wisconsin Knife 
Works v. National Metal Crafters, 781 F.2d 1280 (7th Cir. 1986) 
(rehearing and rehearing en banc denied Feb. 19, 1986).  The 
No.  2003AP1534.dtp 
 
3 
 
majority opinion, written by Judge Richard Posner, held that an 
attempted oral modification of a written contract that precludes 
modifications except in writing operates as a waiver only if 
there is reliance on the attempted modification.  Judge Posner's 
discussion is exceptionally helpful in putting the provisions of 
§ 402.209 in context.  Wis. Knife Works, 781 F.2d at 1286-87. 
¶81 Judge Posner acknowledged that not all decisions and 
commentators insist that reliance is a necessary condition of an 
unwritten waiver.  For instance, he quoted Hawkland, "if clear 
factual evidence other than mere parol points to that conclusion 
[that an oral agreement was made altering a term of the 
contract], a waiver may be found.  In the normal case, however, 
courts should be careful not to allow the protective features of 
sections 2-209(2) and (3) to be nullified by contested parol 
evidence."  Id. at 1287 (quoting 2 Hawkland, Uniform Commercial 
Code Series § 2-209:05 at 138 (1985)). 
¶82 Judge Frank Easterbrook dissented.  He explained: 
"'Waiver' is not a term the UCC defines.  At common law waiver 
means an intentional relinquishment of a known right.  A person 
may relinquish a right by engaging in conduct inconsistent with 
the right or by a verbal or written declaration."  Id. at 1290 
(Easterbrook, J., dissenting). 
¶83 The legal issue presented in this case is whether the 
acts of Royster-Clark in the circumstances before us constitute 
a valid waiver under § 402.209(4).  Regardless of how this court 
might choose to interpret § 402.209(4), we must do our best to 
No.  2003AP1534.dtp 
 
4 
 
maintain the integrity and uniformity of the UCC in applying the 
law. 
¶84 In essence, Olsen's Mill contends that Royster-Clark 
waived two critical provisions of the nitrogen fertilizer 
contract.  First, it allegedly waived the "no modification 
except in writing" provision.  Second, it allegedly waived the 
price provision, so as to allow Olsen's Mill a rebate or a 
credit on future purchases. 
¶85 To recap: The parties entered into a written contract 
for the sale to Olsen's Mill of 2000 tons of nitrogen 
fertilizer.  The price agreed upon was $384,000.  Olsen's Mill 
paid the $384,000 to Royster-Clark before obtaining a single 
pound of fertilizer under the contract. 
¶86 Paul Olsen testified that Olsen's Mill had been doing 
business with Royster-Clark since the early 1960s and that he 
had worked with Roger Ralston in different capacities for 18 
years.  During most of this relationship between Royster-Clark 
and Olsen's Mill, their agreements had been "verbal."  This 
practice continued with an oral agreement in mid-May 2001 to 
purchase an additional batch (about 300 tons) of "Super Rainbow" 
fertilizer. 
¶87 With respect to the nitrogen fertilizer contract, 
Olsen testified that Olsen's Mill intended to purchase 500 tons 
on a prepay agreement in January 2001 but Roger Ralston "asked 
if we would purchase the total lot of 2000 ton from him. . . .  
[I]n order to [re]start the plant and get product, he needed to 
No.  2003AP1534.dtp 
 
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sell the 2000 ton, so we agreed to purchase 2000 ton of product 
so we had it for sale to our customers." 
¶88 Robert Rainey acknowledged that "[w]e did have a plant 
shut down from . . . about the middle of December I think until 
around the end of January." 
¶89 Olsen testified in response to questions: 
Q: 
When 
did 
you actually need 
this 
[nitrogen] 
product? 
A: 
We needed the product very shortly.  Royster-
Clark wasn't producing any product and the plant 
wasn't running at the time of this agreement and 
we were selling product. 
 
. . . .  
Q: 
So was the product available in February or March 
or even April? 
A: 
No.  We went out and purchased an additional 1000 
ton . . . off of the Illinois River, and that was 
trucked up during the months of February-March to 
fill ours. 
Q: 
So . . . Royster-Clark was not able to fulfill 
the 
contract 
earlier 
in 
the 
year 
as 
you 
requested? 
A: 
Correct.  Roger -- We knew when Roger came to us, 
he was getting spread pretty thin and he didn't 
want us to pull it all at one time.  He was 
trying to spread his inventory production out to 
take care of as many people as he could. 
¶90 Ralston testified that Olsen's Mill was "concerned in 
April; I know that."  He confirmed that in April, the demand for 
the nitrogen product was greater than the supply. 
¶91 Olsen's Mill made the first pickup of the nitrogen 
product on May 17, 2001.  No doubt, some of the delay resulted 
from a precipitous change in the weather.  As Olsen testified, 
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6 
 
"We had a very good April until the 28th of April when it 
started to rain for 40 days." 
¶92 About the middle of June, Olsen talked to Ralston 
about the situation and told him that a lot of farmers had 
decided not to plant crops because of the bad weather.  By this 
time, supply of the nitrogen product had gone up, while the 
price and demand for the product had plummeted.  Olsen asked 
Ralston for price concessions, or to allow Olsen's Mill to buy 
out the contract, or to cancel the contract.  Ralston, however, 
pleaded with Olsen to take the full 2000 tons. 
¶93 There is no dispute that "concessions on the nitrogen 
contract were discussed."  Majority op., ¶6.  It is also true 
that Olsen's Mill did not pursue the option of a buyout.  
Instead, it accepted delivery of the remaining 1300 tons on the 
contract, and even more. 
¶94 It is entirely reasonable to believe that Olsen's Mill 
expected some significant price concessions on the nitrogen 
contract because of the longstanding relationship and course of 
dealing with Royster-Clark; the fact that it ordered more 
product than originally intended at the request of Royster-
Clark; the fact that it prepaid $384,000 for the product; the 
fact that Royster-Clark failed to timely perform the contract; 
the fact that Royster-Clark's failure of performance required 
Olsen's Mill to go out and buy 1000 tons of nitrogen fertilizer 
from another vendor; the fact that Ralston had negotiated a 
mutually beneficial oral contract for Super Rainbow less than a 
month before the talk of concessions; the willingness of Olsen's 
No.  2003AP1534.dtp 
 
7 
 
Mill to make accommodations with Royster-Clark in not demanding 
nitrogen product in March and April when the supply was short; 
and the usage of trade in the industry.  It is reasonable to 
believe that Olsen's Mill acted on this expectation. 
¶95 There is not much evidence, however, that Roger 
Ralston made a commitment to modify the price on the written 
contract, or that Ralston would have had authority to do so.  
Even Olsen's testimony as to a firm "promise" is equivocal. 
¶96 There is no evidence that Olsen's Mill took an 
additional 34.6 tons in return for a price concession on the 
January contract. 
¶97 Olsen's Mill's responsibility to pick up product and 
bear shipping costs from East Dubuque was anticipated in the 
contract.  Consequently, the timing of the pickups was entirely 
the responsibility of Olsen's Mill once the nitrogen product 
became available. 
¶98 The Super Rainbow contract was negotiated separately 
about a month before the discussion of concessions, so that it 
was not a direct factor. 
¶99 In other words, Olsen's Mill abandoned the option of 
trying to buy out the contract and accepted the product on a 
mere promise that Ralston would try to obtain price concessions.  
These facts do not demonstrate an induced reliance in June 2001 
by Olsen's Mill.  These facts do not establish an intentional 
relinquishment of a known right by Royster-Clark.  There is no 
"clear factual evidence" of an attempted modification by the two 
parties. 
No.  2003AP1534.dtp 
 
8 
 
¶100 Much as I am tempted to rely on historical course of 
dealing and trade usage, I do not see these factors overcoming 
the strict terms of the contract.  See Wis. Stat. § 402.208(3). 
¶101 My vote to affirm the court of appeals does not signal 
my approval of Royster-Clark.  On the contrary, in my view, 
Royster-Clark breached the contract by failing to make the 
nitrogen product timely available for Olsen's Mill to pick up, 
thereby causing real hardship to a good and faithful customer.  
Unfortunately, the question of breach is not the question before 
us. 
 
 
 
 
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