BRC Rubber & Plastics, Inc. v. Continental Carbon Co.
United States Court of Appeals for the Seventh Circuit
804 F.3d 1229 (2015)
Continental Carbon (Continental) (defendant) sold a material used in rubber products. BRC Rubber & Plastics (BRC) (plaintiff) made rubber products. The companies contracted for Continental to supply its material to BRC. The agreement stated that Continental would sell BRC approximately 1.8 million pounds of material annually. The agreement also gave Continental a right of first refusal: if BRC sought to buy the product from another seller at a lower price, Continental had to be given the chance to meet that price. During the first year of the contract, Continental shipped 2.6 million pounds of material to BRC. For a variety of reasons, however, Continental was struggling to keep up with demand the following year. BRC placed an order, but Continental neither confirmed nor shipped that order. Continental believed that as long as it shipped approximately 1.8 million pounds of material, it did not have to accept and fill every BRC order. BRC believed that Continental had to fill every order. BRC pointed to a provision of the agreement that stated that BRC would pay a lower price per pound if it bought much more than 1.8 million pounds annually. BRC argued that this demonstrated that 1.8 million pounds was merely an estimate of what BRC would require annually, rather than a fixed quantity that Continental was obligated to sell. BRC thus argued that its agreement with Continental was a requirements contract. BRC brought suit, alleging that Continental had breached the contract by not providing BRC with all of the material it required. The trial court sided with BRC. Continental appealed.
Rule of Law
Holding and Reasoning (Williams, J.)
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