Requirements Contract

Question 1

Requirements contract

Answer 1

A contract under which a buyer agrees to buy all it will require of a certain product from the other party

Usually not enforceable because it lacks mutuality of obligation. Promise to buy is illusory because they are not bound.

But these contracts are valid under UCC

Question 2

Output contract

Answer 2

A contract under which a seller agrees to sell all it manufacturers of a certain product to the buyer

Question 3

Good Faith

Answer 3

Required under UCC for requirements and output contract

If a buyer, in good faith, legitimately no longer needs the goods, it may cancel the contract

Question 4

Role of estimates in requirements contracts

Answer 4

If requirements are unreasonably disproportionate, on the high end of an estimate, then seller will not be forced to meet those high requirements of the buyer

Disproportionate to estimate matter is not applicable if requirements are on the lower side of estimate as long as in good faith