## Facts

- Zemco Manufacturing, Inc. supplied machined parts to Navistar International Transportation Corp. from 1968 to 1995.
- In 1983, the parties executed a written sales contract, renewable annually; written addenda extended it through 1987.
- After 1987, the parties stopped executing written extensions, but Navistar continued purchasing the relevant parts from Zemco for years.
- Zemco alleged that, through oral extension and course of performance, Navistar remained bound to buy its requirements for certain parts exclusively from Zemco.
- In 1995, Zemco’s co-owners split; Joel Pecoraro sold his interest and formed a competing supplier, Pecoraro Manufacturing, Inc. (PMI).
- Navistar began shifting purchases from Zemco to PMI and phased out its purchases from Zemco.
- Zemco sued for (i) breach of contract based on an alleged exclusive requirements arrangement (Count I) and (ii) conspiracy to intentionally interfere with contractual rights based on Navistar’s dealings with PMI (Count III).
- The district court granted summary judgment to Navistar on Counts I and III; Zemco appealed.

## Issues

1. Whether the contract language and course of performance created an exclusive requirements contract obligating Navistar to buy all of its requirements for specified parts from Zemco.
2. Whether alleged post-1987 oral renewals or extensions were unenforceable under UCC § 2-201 (and UCC § 2-209(3)) or could be enforced based on the parties’ conduct and related writings.
3. Whether Navistar could be liable for conspiracy to interfere with Zemco’s contractual rights where Pecoraro had an agreement permitting him to compete with Zemco.

## Decision

- Reversed summary judgment for Navistar on the breach-of-contract claim (Count I) and remanded.
- Held there was a triable factual dispute as to whether an exclusive requirements contract existed, given contract language and a lengthy course of exclusive purchasing.
- Held the statute-of-frauds and modification/extension questions required a fact-sensitive analysis; the district court erred by resolving them categorically on summary judgment.
- Affirmed summary judgment for Navistar on the conspiracy/interference claim (Count III) because Zemco had agreed that Pecoraro could compete, undermining any claim of wrongful interference based solely on Navistar’s purchasing decision.

## Legal Principles

- A requirements contract under Indiana law generally involves (i) a buyer’s obligation to buy goods, (ii) exclusively from the seller, and (iii) in an amount equal to the buyer’s actual requirements during the contract period.
- Whether a requirements contract exists may depend on contract language together with course of performance; long-term exclusive purchasing can create a fact question that cannot be resolved as a matter of law on summary judgment.
- Under UCC § 2-209(3), statute-of-frauds compliance may be required for modifications when the contract as modified falls within UCC § 2-201; application to alleged time extensions and related writings can be fact-dependent.
- A conspiracy-to-interfere claim fails where the allegedly interfered-with rights are limited by an agreement permitting the third party to compete, and the record shows only lawful competitive sourcing.

## Conclusion

The Seventh Circuit held that evidence of prolonged exclusive dealing created a fact question on whether the parties had an enforceable requirements contract and that statute-of-frauds issues tied to claimed oral extensions could not be disposed of categorically on summary judgment, but it rejected a conspiracy-to-interfere theory where the former co-owner was contractually free to compete and Navistar’s supplier switch was not independently wrongful.


Zemco Mfg., Inc. v. Navistar Int'l Transp. Corp., 186 F.3d 815 (7th Cir. 1999)