BRC Rubber & Plastics, Incorpo v. Continental Carbon Company
900 F.3d 529
7th Cir.2018Background
- BRC and Continental entered a five‑year supply Agreement (Jan 1, 2010) under which Continental agreed to sell BRC "approximately 1.8 million pounds" of carbon black annually at prices stated to "remain firm," and Continental obtained a "Meet or Release" right to match better offers.
- In 2011 Continental faced production shortfalls, informed buyers N762 grade would be unavailable, and did not confirm/fulfill a late‑April BRC order; BRC bought substitute product at higher prices and sued for breach and anticipatory repudiation under Indiana law and UCC provisions.
- The district court originally treated the Agreement as a requirements contract and entered judgment for BRC; this court vacated that judgment, holding the Agreement was not a requirements contract, and remanded.
- On remand BRC pursued an alternative theory that the Agreement obligates Continental to supply a fixed approximate annual quantity (1.8 million lbs). The district court granted summary judgment to Continental, holding (1) BRC’s complaint pleaded only a requirements‑contract theory and (2) the Agreement was an unenforceable buyer’s option lacking mutuality/consideration.
- The Seventh Circuit reversed: it held the Agreement is enforceable (mutuality and consideration exist via Continental’s obligation to supply approx. 1.8M lbs and BRC’s right‑of‑first‑refusal), and BRC’s complaint sufficiently alleged anticipatory repudiation under its revised legal theory; fact issues remain for trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability (mutuality/consideration) | Agreement obligates Continental to make available ~1.8M lbs annually; BRC gave up right to buy below contract terms without letting Continental match (meet‑or‑release) — creates consideration | Agreement is an unenforceable "buyer's option" (open offer) because BRC is not required to buy and quantity/grades are indefinite | Reversed district court: Agreement is enforceable; mutuality and consideration exist (right of first refusal is valuable; seller’s promise is definite enough) |
| Definiteness (quantity/grade terms) | "Approximately 1.8 million pounds" and flexible grade allocation are commercially realistic and sufficiently definite under UCC/Indiana law | Lack of precise totals and per‑grade quantities renders contract indefinite and unenforceable | Rejected defendant: UCC/Indiana law tolerates approximate quantity; missing per‑grade specificity is acceptable in supply contracts; contract sufficiently definite |
| Pleading adequacy after prior remand | Complaint’s factual allegations (missed shipments, price increases, equivocal assurances) support anticipatory repudiation under alternative fixed‑quantity theory; legal theory may be altered without amending facts | Complaint pleaded a requirements contract; changing to fixed‑quantity theory at summary judgment amends the facts and prejudices Continental | Rejected district court: BRC only changed legal theory, not the factual allegations; pleading is adequate under Twombly/Iqbal and Seventh Circuit precedent; no unfair prejudice shown |
| Anticipatory repudiation as a matter of law | BRC alleged reasonable grounds for insecurity and inadequate assurances (missed order, price demands, equivocal statements) sufficient to survive summary judgment | Continental argues it fulfilled obligations or gave adequate assurances; repudiation determination is legal question for the court | Court declined to decide repudiation as a matter of law — issues of reasonable grounds and adequacy of assurances are fact‑specific and reserved for factfinder |
Key Cases Cited
- BRC Rubber & Plastics, Inc. v. Cont’l Carbon Co., 804 F.3d 1229 (7th Cir. 2015) (prior appeal holding Agreement was not a requirements contract)
- Chessie Logistics Co. v. Krinos Holdings, Inc., 867 F.3d 852 (7th Cir. 2017) (distinguishing changes of legal theory from changes of factual theory at summary judgment)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility pleading standard applied)
- E.C. Styberg Eng’g Co. v. Eaton Corp., 492 F.3d 912 (7th Cir. 2007) (UCC embraces liberal formation and gap‑filling principles for sale of goods)
- Penn v. Ryan’s Family Steak Houses, Inc., 269 F.3d 753 (7th Cir. 2001) (indefiniteness can render contract unenforceable, but material terms need not be precise)
- AMF, Inc. v. McDonald’s Corp., 536 F.2d 1167 (7th Cir. 1976) (reasonableness of buyer’s insecurity under UCC is a question of fact)