In this case, the buyer of a tractor issued a check for $22,000 to the seller in 1997. The parties agreed, orally, that the seller would not cash the check for 30-60 days and that if the funds were not available within 30 days the buyer would owe 15% interest compounded annually. Ultimately, the check was not honored. Two years later, the parties entered into a written agreement that allowed the buyer to purchase the tractor at the same purchase price plus interest. Further, the seller agreed to fix the air conditioner in the tractor. Several years later, the tractor purchase remained incomplete, and the buyers returned the tractor. The sellers sued, claiming that the total amount due was nearly $89,000, less the amount of the tractor.
At trial, the court found that the buyer presented a check for the tractor, took possession of the tractor and used it for nearly ten years, without making any payments, and the seller allowed this to occur without demanding payment until they filed suit. Thus, the court concluded that awarding the seller the full amount would be inequitable. So, the court awarded the sellers the sale price of the tractor minus the tractor’s current value of $11,000, plus the statutory amount of interest.
Unhappy with the result, the sellers appealed, contending that the contract was never waived. The buyer responded, claiming that the seller sat idle for almost ten years without enforcing their rights under the contract and, therefore, impliedly waived their right to collect interest. The Iowa Court of Appeals reversed, finding that the evidence demonstrated that the sellers attempted to collect several times over the years and that the buyers failed to show that a waiver of the rights to interest were waived by the seller. The language under the contract dictating the interest rate owed to the seller was the agreement of the parties and the buyer must pay what they owe. Smith v. Meadows, No. 9-744/08-1872 (Iowa Ct. App., Oct. 21, 2009).