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5. If the court concludes that the tire salesman-county contract is an agreement by the county to buy its tire requirements from the tire salesman, the tire salesman probably will
In January 1991, the tire salesman learned that the county was buying some of its tires from one of the tire salesman's competitors. Contending that the tire salesman-county agreement was a requirements contract, the tire salesman sued the county for the damages caused by the county buying some of its tires from the competitor.
Responding to the county's written advertisement for bids, a tire salesman was the successful bidder for the sale of tires to the county for the county's vehicles. The tire salesman and the county entered into a signed, written agreement that specified, «It is agreed that the tire salesman will deliver all tires required by this agreement to the county in accordance with the attached bid form and specifications, for a one-year period beginning September 1, 1990.» Attached to the agreement was a copy of the bid form and specifications. In the written advertisement to which the tire salesman had responded, but not in the bid form, the county had stated, «Multiple awards may be issued if they are in the best interests of the county.» No definite quantity of tires to be bought by the county from the tire salesman was specified in any of these documents.
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Essentially, requirements contracts are a type of sales contract that obligates the buyer to purchase all of its requirements of a good (in this case, tires) exclusively from the seller.
B is correct. Here, if the court concludes that the tire salesman-county contract is a requirements contract, then, the county would be in breach of the requirements contract by buying some of its tires from the salesman's competitor. This breach of the requirements contract would entitle the salesman to damages.
A is incorrect. The Contracts Clause is found in Article I of the United States Constitution. This clause was added to the Constitution in order to prohibit states from interfering with private contracts. As mentioned above, the Contracts Clause is not at issue here.
C is incorrect. Mutuality of obligations refers to the «meeting of the minds» contract formation requirement. Mutuality of obligation requires that everyone signing a contract agree to the specifics outlined in its terms. As discussed above, requirements contracts do not fail for indefiniteness; when parties agree to a requirements contract, the agreement does not fail because of the lack of mutuality of agreement. Mutuality of agreement exists when parties agree to, and enter into, a requirements contract, unless there truly was no «meeting of the minds.»
D is incorrect. Quantity is an essential term in UCC contracts. Contracts that do not specifically contain a quantity term but contain a definite way to ascertain the quantity, like requirements contracts, are valid under the UCC. Requirements contracts do not fail for indefiniteness because they provide an objective, definite way to determine the quantity term: how many units of the good are required by the buyer. Here, the salesman-county contract states that «the tire salesman will deliver all tires required by this agreement to the county in accordance with the attached bid form and specifications, for a one-year period beginning September 1, 1990.» This is sufficiently definite as to quantity for a court to enforce.