Peace River Seed Co-Operative v. Proseeds Marketing

An ambiguous contractual provision requires the court to determine the parties' intent and use extrinsic evidence, if necessary. If the provision is still ambiguous, the court should use the appropriate maxims of construction.

Peace River, a Canadian company, appealed the trial court’s decision based on five assignments of error. Proseeds, an Oregon company, entered into a contract with Peace River requiring Peace River to supply them with a specified amount of seeds. Peace River tried to deliver and Proseeds refused to accept the order. The trial court awarded Peace River damages. Peace River contended the court used the wrong exchange rate, miscalculated damages, refused to award direct damages, failed to award out-of-pocket expenses, and failed to explain that decision. For the exchange rate, Peace River argued and the Court agreed that the conversion rate should have been paid according to the rate of the day prior to the transaction, pursuant to ORS 24.290 and ORS 24.260. It should not have been paid at the 2002 rate. Next, Peace River asserted damages were calculated using the wrong conversion rate. This issue was not brought to the trial court and was an “invited” issue and was not considered in the appeal. Third, Peace River contended direct damages should be calculated pursuant to ORS 72.7080(1). Using statutory interpretation, the Court agreed that Peace River may recover damages pursuant to the statute. Lastly, Peace River argued the Court erred by not awarding reasonable attorney fees and costs. The Court held that Oregon law applied because of the “significant contacts” of the parties and their transactions. Accordingly, the trial court did not correctly interpret the contract's provisions under Oregon law. Reversed and remanded.