Eastern Air Lines, Inc. v. Gulf Oil Corporation

415 F.Supp. 429 (1975)

The parties, who had been doing similar business together for decades, entered into a new agreement in 1972 for Gulf Oil (Defendnat) to supply Eastern Air Lines (Plaintiff) with its requirement of aviation fuel through 1977.  The price was determined by the posted price in the Platts publication of West Texas Sour crude oil.

However, the energy crisis of 1974 significantly increased prices of oil. In response, Defendant wanted to increase the price Plaintiff would have to pay or else it would stop supplying fuel. Plaintiff sued asking for an injunction requiring Defendant to perform the contract in accordance with its terms. Defendant countered alleging that the contract was not a binding requirements contract, was void for want of mutuality, and was ‘commercially impracticable’ within the meaning of the UCC (basically, E could buy lots of oil when the prices are low, stock up, and not buy when the prices are high).

The court found that the contract was enforceable and there was consideration because the requirements could be ascertained even if not specified because businesses have records to show average previous usage.

Reference Desk

Uniform Commercial Code § 2-306. Output, Requirements and Exclusive Dealings.

(1) A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded.

(2) A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.

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