## Facts

- Vulcan Materials Co. agreed to supply, and Atofina Chemicals, Inc. agreed to buy, all chloroform “requirements” for Atofina’s Kansas facility under a requirements contract governed by Kansas’s enactment of U.C.C. § 2-306.
- Atofina later stopped purchasing chloroform from Vulcan and closed the Kansas plant identified in the agreement.
- Despite the closure, Atofina continued to manufacture and sell essentially the same quantity of the chloroform-containing end product by shifting production and/or sourcing chloroform elsewhere.
- Vulcan alleged Atofina’s reduction of “requirements” to zero was not a genuine reduction in business need, but a supplier substitution motivated by price and convenience, violating the contract’s good-faith limits.
- Atofina argued it had no contractual duty once the Kansas plant was closed because that facility’s requirements were legitimately zero.
- The case proceeded on cross-motions for summary judgment in a diversity action applying Kansas law.

## Issues

1. Under U.C.C. § 2-306, may a buyer reduce requirements to zero by closing the contract-designated facility while continuing the same end-product output using the input obtained from other sources?
2. What constitutes “good faith” for a merchant-buyer reducing requirements under a requirements contract, and does supplier substitution for price reasons satisfy that standard?
3. Whether Vulcan was entitled to summary judgment on liability for breach, and what issues (if any) remained for trial.

## Decision

- The court granted Vulcan’s motion for summary judgment in part and denied it in part.
- The court held Atofina’s reduction of requirements to zero was not made in good faith under U.C.C. § 2-306 because Atofina continued selling essentially the same quantity of the chloroform-based product while merely switching suppliers.
- The court rejected the argument that closing or reorganizing the form of the business automatically eliminated obligations under a requirements contract when the buyer’s underlying need remained materially unchanged.
- The court left damages and other remaining matters for further proceedings.

## Legal Principles

- Under U.C.C. § 2-306(1), a requirements contract measures quantity by the buyer’s requirements as they occur in good faith, and changes may not be unreasonably disproportionate to estimates or prior requirements.
- A merchant’s “good faith” includes honesty in fact and observance of reasonable commercial standards of fair dealing in the trade.  
- A buyer may have no duty to purchase if, in good faith, it has no actual requirements; however, requirements cannot be reduced to avoid the bargain after reassessing the contract’s economic advantages.
- Closing a facility or reorganizing operations does not, by itself, relieve a buyer from a requirements commitment when the buyer continues essentially the same demand for the input through other facilities or sources.

## Conclusion

The court held that a buyer cannot use a facility closure and supplier substitution to reduce requirements to zero under a U.C.C. § 2-306 requirements contract when the buyer’s actual need for the input remains materially unchanged; such conduct is a bad-faith evasion constituting breach, warranting partial summary judgment on liability.


Vulcan Materials Co. v. Atofina Chems., Inc., 355 F. Supp. 2d 1214 (D. Kan. 2005)