Zoltek v Strc Poly Gp

Struc Poly v Zoltek

Procedural Posture:

in trial jury gave dam for lost profits

district court reduced award

circuit court affirms distrct cort

Issue:

1 does having no requiremenhts for a rpoduct invalidate supply contract

2 does a price protection clause preclude consideration

3 does interchangeability w/ a third-party product  preculde consideration?

In other words, is promise illusory if buyer can 1) have no requirements, 2) look elsewehere if lower price, and 3) buy another product instead

Holding:

1 Having no reqs at signing is not a problem.

Reasoning: contract implies good faith, will buy in future, if bad faith -> breach; not illusory promise

2 Price protection clause ok

Reason: as long as exclusive supplier has first right of refusal @ third party price

3 Interchangeability ok

Reason: buying an interchangeable item in bad faith (deliberately to avoid buying promised requirements

Class notes:

If sale of goods see

UCC - 2 - 306(1)  - implied good faith

- 1 - 201(20) - definition

UCC requires implication of "reasonable commercial standards of fair dealing"

Good faith in UCC (goods) requires BOTH

A) subjective honesty in fact

B) obj. reasonable commercial standard of fair dealing

HOWEVER, some states split requirements like OLD UCC: subjective for non-merchants, objective for merchants

In Zoltec, Wood, Mattei:

When seller tries to back out of the contract by abusing doctrine of consideration, alleging an illusory promise, the court portects the contract by reading an implied promise in that theoretically portects seller, but actually saves the contract because the seller is the one trying to abuse consideration, thus actually saving the buyer

In Mattei vs Hopper, good faith can be either subjective or objective (kind of like old UCC)

but in Zoltec, sale of goods, so use UCC

UCC's reading of good faith allows a lot of flexibility in amounts, but floors and ceilings can be absolute.

NOTE:

In general, this is a predicate question: Where do I look for law?

If mixed contract use predominant factor test

Of course when using a statute, always get the definitions

Remember in UCC if some matter not covered by the statute, Section 1-103 says you can use common law.

General note: Courts may spend a lot of time talking about mutuality of agreement, but remember that this is old view. Modern view under second restatement of contracts says that if there is a bargain, mutuality of agreement not necessary.

Louisiana Civil Law State, no UCC (GET LOCAL COUNSEL)

HYPO, what if there is a requirements contract with an estimate of 1000 things needed, but buyer comes and says, I need like thirty times that much. And seller is like, Umm, no can do.

Has buyer breached? Has seller breached?

Nobody has breached. Buyercan ask for too much, but if it's way too much, seller not obligated to provide that much under contract.

However, seller IS OBLIGATED to do as much as it reasonably can to meet the increased requirements, so if the seller were to only provide 80 percent of the 1000 thing estimate when buyer desperately needed 30,000, maybe would be in breach based on UCC's implied good faith condition.

HYPO Say buyer is evil, requirements contract at fixed price, but now rising market. Buyer says, "Oh, my requirements are skyrocketing." Please produce infinite goods for me at the afreed upon low price so I can make a fortune now that the demand and price for these things is going up.

Buyer trying to use reqs. contract to exploit seller.

Courts found that in this case there was no consideration ASK WHY?? This is why consideration sometimes gets bad name. Courts will use it to "police" contracts/abuse.