BRC Rubber & Plastics, Incorpo v. Continental Carbon Company
804 F.3d 1229
7th Cir.2015Background
- Continental Carbon and BRC Rubber & Plastics entered a supply agreement dated Jan. 1, 2010 concerning carbon black; the contract stated Continental intended to sell approximately 1.8 million pounds annually.
- Continental shipped substantial quantities in 2010 and early 2011 but by April 2011, due to supply constraints, declined to confirm or ship some BRC orders.
- BRC sued, alleging Continental breached and repudiated a "requirements contract" obligating Continental to fill all orders and BRC to buy exclusively from Continental.
- The district court held as a matter of law the agreement was a requirements contract and entered judgment for BRC after a bench trial on damages.
- On appeal, the Seventh Circuit reviewed de novo whether the agreement was a requirements contract under Indiana law and found the agreement did not obligate BRC to buy any or all of its carbon black exclusively from Continental.
- Because the requirements-contract finding was dispositive of liability, the court vacated the judgment and remanded; it did not reach BRC’s cross-appeal on damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the contract was a requirements contract | BRC: language and provisions (e.g., "quantity of material", "meet or release") show parties intended a requirements contract obligating BRC to buy from Continental | Continental: contract language is not a firm-quantity or exclusivity obligation; "approximately 1.8 million" is an estimate and "meet or release" is a right of first refusal | No — the agreement was not a requirements contract |
| Whether BRC was obligated to buy any amount from Continental | BRC: the intent/quantity language shows BRC would purchase expected volumes | Continental: no fixed-quantity term; precedent holds lack of fixed quantity means no obligation to buy | No — BRC was not obligated to purchase any amount |
| Whether BRC was required to buy exclusively from Continental | BRC: "meet or release" implies exclusivity | Continental: "meet or release" only lets Continental match a better offer; it does not bar BRC from using other suppliers or self-producing | No — no exclusivity; BRC could contract with others |
| Effect on damages cross-appeal | BRC: damages award upheld; exclusion of certain testimony erroneous (cross-appeal) | Continental: liability dispositive issue undermines damages inquiry | Court remanded after vacating liability judgment and did not reach the damages cross-appeal |
Key Cases Cited
- Zemco Mfg., Inc. v. Navistar Int’l Transp. Corp., 186 F.3d 815 (7th Cir. 1999) (definition and elements of a requirements contract)
- Lawson v. Sun Microsystems, Inc., 791 F.3d 754 (7th Cir. 2015) (interpretation of unambiguous contracts under Indiana law)
- BKCAP, LLC v. Captec Franchise Tr. 2000-1, 572 F.3d 353 (7th Cir. 2009) (de novo review of certain contract determinations)
- Brooklyn Bagel Boys v. Earthgrains Refrigerated Dough Prods., 212 F.3d 373 (7th Cir. 2000) (absence of fixed quantity term means no obligation to buy)
- Agfa-Gevaert, A.G. v. A.B. Dick Co., 879 F.2d 1518 (7th Cir. 1989) (usage of the word "requirements" does not itself create a requirements contract)