Explain what output and requirements contracts are.
What will be an ideal response?
In some cases, the parties may state the quantity of goods covered by their sales contract in an indefinite way. Contracts that obligate a buyer to purchase a seller's output of a certain item or all the buyer's requirements of a certain item are commonly encountered. These contracts caused frequent problems under the common law because of the indefiniteness of the parties' obligations. If the seller decided to double its output, did the buyer have to accept the entire amount? If the market price of the item soared much higher than the contract price, could the buyer double or triple its demands?
The Uniform Commercial Code (UCC) limits quantity in such cases to "such actual output or requirements as may occur in good faith." Even good faith amounts may not be tendered or demanded if they are "unreasonably disproportionate" to any stated estimate in the contract or to "normal" prior output or requirements if no estimate is stated.
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