Empire Gas Corp. v. Am. Bakeries Co.

840 F.2d 1333 (7th Cir. 1988)

 

RULE:

Illinois courts allow a buyer to reduce his requirements to zero if he was acting in good faith, even though the contract contained an estimate of those requirements.

FACTS:

A retail distributor of propane also sold converters that enabled gasoline-powered motor vehicles to operate on propane. A corporation had a fleet of over 3,000 vehicles that served its processing plants and bakeries. The retailer and corporation executed a contract for purchase of approximately 3,000 conversion units, more or less depending on requirements. They also agreed to the purchase of propane motor fuel exclusively from the retailer so long as the price remained reasonably competitive. The corporation never ordered any converters or propane from the retailer and a case for breach of contract was filed. The trial court instructed the jury by reading verbatim the Uniform Commercial Code's provision on requirements contracts, U.C.C. § 2-306(1)

ISSUE:

Should the UCC provision have been read literally when the buyer demanded less rather than more than stated estimate?

ANSWER:

No

CONCLUSION:

The court found that § 2-306(1) was inapplicable although good faith requirement was applicable. However, the court concluded that error in instructing the jury on proportionality was harmless. No reasonable jury could have failed to find bad faith where appellant arbitrarily declared its requirements to be zero. The judgment was affirmed except where modified to correct erroneous award of pre-judgment interest. The court held that the corporation breached requirements contract with the retailer by reducing its requirements to zero without any explanation.

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