## Facts

- James C. Leibel and Raynor Manufacturing Company entered an oral agreement (about March 1, 1974) for Leibel to be Raynor’s exclusive dealer-distributor within a 50-mile radius of Lexington, Kentucky.
- Raynor supplied garage doors, operators, and parts to Leibel at the factory distributor price; Leibel agreed to sell, install, and service Raynor products exclusively.
- The agreement contained no stated duration and contemplated continuing, successive performance.
- Leibel made substantial business investments in reliance on the distributorship, including borrowing money for inventory, facilities, employees, and service equipment.
- After roughly two years and decreasing area sales, Raynor notified Leibel on or about June 30, 1976 that the relationship was terminated effective that date.
- Raynor appointed Helton Overhead Door Sales as the new dealer-distributor and required Leibel to order future Raynor products through Helton.
- Leibel sued; the trial court entered summary judgment dismissing the contract count, ruling the indefinite oral agreement was terminable at will without reasonable notice and that UCC Article 2 did not apply.

## Issues

1. Whether an oral, indefinite-duration manufacturer–dealer distributorship centered on the sale of goods is governed by UCC Article 2.
2. Whether UCC § 2-309 (KRS 355.2-309) requires reasonable notification before terminating such an ongoing, indefinite contract, rather than mere immediate “actual” notice.

## Decision

- The Kentucky Court of Appeals held that the distributorship relationship was essentially a transaction in goods and was governed by UCC Article 2.
- The court held that, under KRS 355.2-309, an indefinite-duration contract involving successive performance may be terminated, but termination requires reasonable notification to the other party unless the parties agreed otherwise.
- The court rejected the trial court’s view that only immediate actual notice was required and that the UCC was inapplicable.
- The court vacated the summary judgment on the contract count and remanded for further proceedings, including whether Raynor provided reasonable notification under the circumstances.

## Legal Principles

- A manufacturer–dealer distributorship primarily involving the sale and resale of goods is generally within UCC Article 2.
- Under UCC § 2-309, an agreement calling for successive performances but indefinite in duration is terminable by either party, but termination (absent an agreed terminating event) requires reasonable notification.
- “Reasonable notification” concerns the timing and adequacy of advance warning in light of the commercial setting, not merely whether notice was communicated.
- The reasonable-notification requirement functions to reduce unfairness from abrupt termination where the dealer has made reliance expenditures tied to the ongoing supply relationship.

## Conclusion

The court treated the oral, indefinite distributorship as a UCC-governed sales arrangement and held that, even though it could be terminated, the terminating party had to give reasonable advance notification; the case was remanded to determine whether the notice given met that standard.


Leibel v. Raynor Mfg. Co., 571 S.W.2d 640 (Ky. Ct. App. 1978)