Eastern Air Lines, Inc. v. Gulf Oil Corporation

1975 Southern District of Florida

• Requirements/outputs contracts. UCC 2-306(1).
• Output contract: obligates buyer to purchase all seller’s output.
• Requirements contract: obligates seller to purchase what the buyer needs.
• Relates to doctrines of indefiniteness and that promise cannot be illusory. These contracts don’t fail for mutuality of obligation, because we are implying good faith obligation on both sides (in setting requirements or output).
• Requirements/output contracts can help deal with uncertainty in markets.
• Contract must be determined in context of course of dealing, course of performance, and usage of trade. 1-205, 2-208 ? Usage of Trade: industry-wide practice
? Course of Dealing: practice in prior contracts between parties
? Course of Performance: dealings within history of contract (almost always present in requirements/output contracts).
? Hierarchy: course of dealing takes precedence over usage of trade. Course of performance takes precedence over both.

• In these case, fuel freighting (filling up where it is advantageous) was common in industry, thus not bad faith.

Author: international