Opinion ID: 346670
Heading Depth: 2
Heading Rank: 2

Heading: Type of Security Required

Text: 24 Strong offered personally to guarantee Gore that Weathersby would fulfill his contract. When Gore rejected this form of security, he acted within his contractual rights. The usual concept of a performance bond is that a financial institution will make a formal written underwriting covering the risk involved. The proof does not show that Gore had any basis for believing that Strong's personal guarantee was of any different quality than Weathersby's personal obligation. In the absence of proof that the parties intended a unique form of performance bond or that a subsequent modification of the original contract was agreed to, Strong's offer of his personal guarantee to Gore was not compliance. 25 Weathersby argues that even if the bond was required, there was no indication of the type of such security the contract demanded; therefore, the $25,000 letter of credit was sufficient to meet his part of the requirement of mutual performance bonds. The letter of credit itself belies this argument in its statement: This letter of Credit is to be held by Y. B. Gore until performance bond is received. This demonstrates that Weathersby knew the letter of credit was merely a temporary substitute for a $25,000 performance bond. Gore argues that even if a letter of credit would not be per se insufficient, this particular letter of credit was inadequate. Indeed, at oral argument Gore's attorney stated a letter of credit would have been acceptable had it not contained an expiration date of July 1, 1973, a date months in advance of any cotton harvest. What Gore sought in contracting for a bond of $25,000 was to prevent the previous year's financial fiasco of having contracted in the spring to sell his crop at a certain price and then having the purchaser renege at harvest time after the price had fallen below that in the contract. The period of a potential breach by a purchaser was the time the cotton was to be picked. All parties were agreed at trial that for any cotton to be picked by July 1 in northern Mississippi would have been incredible. The security provided by the letter of credit therefore would not have prevented loss to Gore if the purchaser refused to pay the contract price at harvest. 26 Gore's broad right to collect on the letter of credit by presenting to the Union Planters National Bank a statement signed by Y. B. Gore that the amount drawn under this Letter of Credit is the amount due under the terms of contract between buyer and seller, was without substantial meaning. If prior to July 1 Weathersby had failed to post the required bond, Gore's remedy would have been to demand adequate assurances of due performance or to cancel the contract. Miss.Code Ann. § 75-2-609 (1973). There would have been no amount due under the contract. Unless Weathersby had committed some anticipatory breach of contract, a difficult thing to perceive in the case of a forward contract purchaser, there would be no circumstance under which Gore would have been justified in believing he was as secured by this letter of credit as his contract with Weathersby required.