Opinion ID: 748192
Heading Depth: 3
Heading Rank: 3

Heading: The Validity of the Oral Contract Between OMI and Golden Seed

Text: 28 Next, the Trustee challenges the validity of the oral contract between OMI and Golden Seed, contending that the bankruptcy court and the district court erred in their conclusion that the oral contract between OMI and Golden Seed is valid and enforceable. The Trustee argues that the oral seed contract is illegal and unenforceable because it violates the Illinois Seed Law. See 505 ILCS 110/11.1. The Illinois Seed Law states in pertinent part: 29 Any seed permit holder who acquires agricultural seed for resale and conditioning from Illinois producers thereof shall document acquisitions through their use of a seed contract. 30 505 ILCS 110/11.1. Under this provision, the Trustee contends that an oral contract for soybean seed is not valid. The bankruptcy court, however, rejected this argument. The bankruptcy court found that because Golden Seed was acquiring seed for resale and not resale and conditioning, the statute did not apply. In re Ostrom-Martin, 191 B.R. at 130 n. 8. The bankruptcy court alternatively held that even if the statute did apply and required a written contract, the statute does not provide that a contract which does not comply with the statutory requirements is unenforceable and void. Id. at 131. It concluded that [t]here was not a shred of evidence that the contract between Golden Seed and OMI was a bad deal. Id. 31 The bankruptcy court also recognized that even a contract which is unenforceable because it fails to comply with a statutory writing requirement is enforceable if one side has fully performed. Id. See also City of Chicago v. Reliable Truck Parts Co., Inc., 822 F.Supp. 1288 (N.D.Ill.1993). Accordingly, the bankruptcy court concluded the contract between OMI and Golden Seed is valid, and the subsequent delivery of the seed pursuant to contract provisions was proper and price determined by market value plus the premium was consistent with the terms of the contract. The district court agreed with the bankruptcy court and rejected the Trustee's contention that the bankruptcy court made an error of law. In re Ostrom-Martin, Inc., No. 96-1118, Slip Op. at p. 12. The district court also agreed that Illinois Seed Law did not apply and that the oral contract between OMI and Golden Seed is valid and enforceable. Id.