## Facts

- BRC Rubber & Plastics, Inc. manufactured rubber and plastic products and purchased carbon black as a key input.
- Continental Carbon Company manufactured and supplied carbon black to BRC under a written five-year agreement effective January 1, 2010, through December 31, 2014.
- The agreement contemplated Continental supplying “approximately 1.8 million pounds” annually in roughly equal monthly amounts.
- Pricing combined baseline prices by grade plus a feedstock-based adjustment formula.
- The contract included a “meet-or-release” provision requiring BRC to give Continental a chance to match a competitor’s better offer before BRC could buy elsewhere.
- In 2010, BRC purchased about 2.6 million pounds, exceeding the approximate annual figure.
- In 2011, amid supply constraints, Continental sought to raise baseline prices above contract levels and failed to timely confirm or ship at least one order.
- BRC objected to the proposed price increase, continued ordering at contract prices, and later bought substitute product from another supplier at higher prices when Continental did not timely deliver.
- BRC sued in federal court for breach of contract and anticipatory repudiation.
- After an earlier appellate ruling that the agreement was not a UCC requirements contract, BRC pursued an alternative theory that the agreement was a fixed-quantity (or minimum-quantity) supply contract.
- The district court granted summary judgment for Continental, holding the agreement unenforceable for lack of mutuality/consideration and rejecting BRC’s alternative theory.

## Issues

1. Whether the five-year supply agreement was unenforceable as illusory for lack of mutuality and consideration under the UCC and Indiana law.
2. Whether BRC could proceed on an alternative characterization of the same written agreement as a fixed-quantity (or minimum-quantity) contract, despite earlier rejection of a requirements-contract theory.
3. Whether BRC’s allegations and record could support an anticipatory repudiation claim based on Continental’s demands for higher prices, missed shipments, and failure to provide adequate assurance.

## Decision

- The Seventh Circuit reversed the grant of summary judgment and remanded.
- The court held the agreement was enforceable and not illusory; it imposed definite obligations and included consideration on both sides.
- The court held BRC could advance a fixed-quantity (or minimum-quantity) theory because the case rested on the same contract and factual allegations, not on a new transaction.
- The court held BRC presented a viable anticipatory repudiation theory based on alleged nonperformance, noncontractual price demands, and failure to provide adequate assurance after a demand.

## Legal Principles

- A supply agreement may be enforceable despite flexible purchasing patterns if it contains objective terms (duration, pricing structure, and an ascertainable quantity benchmark) showing intent to be bound.
- A meet-or-release/right-of-first-refusal clause that restricts a buyer’s ability to source elsewhere can constitute consideration and supply mutuality by conferring a commercial benefit on the seller and a legal detriment on the buyer.
- A quantity term stated as “approximately” a specified annual amount can satisfy the UCC’s quantity requirement when it provides a reasonable, objective basis for enforcement, informed by course of performance.
- Federal pleading permits reliance on alternative legal theories; a plaintiff is not confined to an initial contract label when the operative facts and the written agreement remain the same.
- Under UCC principles applied through Indiana law, missed performance combined with demands to perform on noncontractual terms and failure to provide adequate assurance after a proper demand can support anticipatory repudiation.

## Conclusion

The Seventh Circuit held the parties’ five-year carbon-black supply agreement was enforceable, allowed BRC to proceed on a fixed-quantity (or minimum-quantity) theory notwithstanding earlier rejection of a requirements-contract characterization, and ruled that BRC’s evidence and allegations supported sending its anticipatory repudiation claim forward on remand.


BRC Rubber & Plastics, Inc. v. Continental Carbon Co., 900 F.3d 529 (7th Cir. 2018)