In the

United States Court of Appeals

For the Seventh Circuit ____________________

Nos. 14-1416 & 14-1555

BRC RUBBER & PLASTICS, INCORPORATED,

Plaintiff-Appellee, Cross-Appellant,

v.

CONTINENTAL CARBON COMPANY,

Defendant-Appellant, Cross-Appellee.

____________________

Appeals from the United States District Court for the

Northern District of Indiana, Fort Wayne Division.

No. 1:11-cv-190 — Roger B. Cosbey, Magistrate Judge.

____________________

ARGUED JANUARY 21, 2015 — DECIDED NOVEMBER 5, 2015

____________________

Before BAUER, FLAUM, and WILLIAMS, Circuit Judges.

WILLIAMS, Circuit Judge. Continental Carbon Company 

sells carbon black, a material used in rubber products. BRC 

Rubber & Plastics makes rubber products for the automotive 

industry. The companies contracted for Continental to supply carbon black to BRC. When Continental refused to confirm or ship some of BRC’s orders, BRC sued, alleging that 
2 Nos. 14-1416, 14-1555

Continental had breached and repudiated the contract. The 

district court found as a matter of law that the agreement 

was a “requirements contract,” meaning it obligated Continental to sell as much carbon black as BRC needed, and obligated BRC to buy all its carbon black exclusively from Continental. Based on that view, the district court entered judgment for BRC.

Continental appeals the judgment and BRC cross-appeals 

an issue related to damages. Because we find that the 

agreement did not obligate BRC to buy any—much less all—

of its carbon black from Continental, we hold that the 

agreement was not a requirements contract, so we vacate the 

judgment and remand, without reaching BRC’s cross-appeal.

I. BACKGROUND

On January 1, 2010, the parties entered into the contract 

at issue, which stated: “It is the intent of this agreement that 

Continental Carbon Company agrees to sell to BRC Rubber 

& Plastics approximately 1.8 million pounds of [carbon] 

black annually.” In 2010, Continental shipped 2.6 million 

pounds to BRC, and shipments continued into early 2011. 

But by April 2011, for a variety of reasons, Continental was 

struggling to keep up with the total demand from all its customers. BRC placed an order on April 26, 2011, but Continental neither confirmed nor shipped that order.

That led to a series of communications which, after a 

misunderstanding or two, revealed a point of disagreement: 

Continental believed that as long as it shipped approximately 1.8 million pounds to BRC annually, it did not have to accept and fill each and every BRC order. BRC believed instead 

that Continental had to fill every order. BRC’s belief was 
Nos. 14-1416, 14-1555 3

based on its view that the parties’ agreement was a “requirements contract.” “A requirements contract is one in 

which the purchaser agrees to buy all of its needs of a specified material exclusively from a particular supplier, and the 

supplier agrees, in turn, to fill all of the purchaser’s needs 

during the period of the contract.” Zemco Mfg., Inc. v. Navistar Int’l Transp. Corp., 186 F.3d 815, 817 (7th Cir. 1999) (Indiana law).

When Continental refused to confirm or ship some subsequent orders, BRC filed this suit. The parties and the district court focused on whether the agreement was a requirements contract. The court found as a matter of law that the

agreement was a requirements contract, so Continental’s refusal to confirm and ship some orders was a breach and repudiation of the agreement. After a bench trial on damages, 

the court entered judgment for BRC for nearly $1 million. 

Continental appeals the judgment and BRC cross-appeals 

the exclusion of certain testimony from the damages trial.

II. ANALYSIS

The parties’ agreement is governed by Indiana law, under 

which an unambiguous contract is interpreted as a matter of 

law by reading the contract as a whole. Lawson v. Sun Microsystems, Inc., 791 F.3d 754, 762 (7th Cir. 2015) (Indiana 

law); Brockmann v. Brockmann, 938 N.E.2d 831, 834–35 (Ind. 

Ct. App. 2010). Contract terms are given their ordinary 

meanings, with the ultimate goal of determining the parties’

intent. Brockmann, 938 N.E.2d at 834–35.

The district court’s holding that Continental breached 

and repudiated the agreement was based on the court’s view 

that the agreement was a requirements contract. We review 
4 Nos. 14-1416, 14-1555

that determination de novo. BKCAP, LLC v. Captec Franchise 

Tr. 2000-1, 572 F.3d 353, 358 (7th Cir. 2009). An agreement is 

not a requirements contract unless it: “(1) obligates the buyer 

to buy goods, (2) obligates the buyer to buy goods exclusively from the seller, and (3) obligates the buyer to buy all of its 

requirements for goods of a particular kind from the seller.”

Zemco, 186 F.3d at 817. As applied, the parties’ agreement 

was not a requirements contract unless BRC was both obligated to buy some amount of carbon black from Continental 

and prohibited from buying carbon black from any other 

seller. In our view, neither condition is met, so we hold that 

the parties’ agreement was not a requirements contract.

BRC’s argument to the contrary relies primarily on the 

following contract provision:

Meet or Release

If during the term of this agreement BRC receives an offer that they believe is better tha[n]

the terms offered in this agreement, Continental Carbon will have the right to meet this 

agreement or release BRC from any further obligation. ...

While this provision does refer to an “obligation” on the 

part of BRC, it does not show that BRC was obligated to buy 

carbon black from Continental. The provision is more naturally read as a “right of first refusal,” meaning if BRC sought 

to buy carbon black from another seller at a lower price, 

Continental had to be given the chance to meet that price. 

But nothing in the “Meet or Release” provision prevented 

BRC from manufacturing its own carbon black or abandoning its use of carbon black altogether. In other words, the 
Nos. 14-1416, 14-1555 5

provision did not obligate BRC to buy carbon black from 

Continental.

BRC also argues that the “Quantity of Material” and 

“Rebate/Penalty” provisions obligated BRC to buy carbon 

black from Continental. The “Quantity of Material” provision is: 

Quantity of Material

It is the intent of this Agreement that Continental Carbon Company agrees to sell to BRC 

Rubber and Plastics approximately 1.8 million 

pounds of [carbon] black annually. These volumes are to be taken in approximately equal 

monthly quantities. BRC Rubber and Plastics, 

to the best of their ability, will provide accurate 

forecasts of the future usage at their manufacturing sites which will assist Continental Carbon Company in meeting these and additional 

requirements.1

Under the “Rebate/Penalty” provision, BRC would pay a little less per pound if it bought much more than 1.8 million 

pounds annually, and a little more per pound if it bought 

much less. The thresholds for “much more” and “much less”

were specified, but the parties agreed to renegotiate those 

 

1 The use of the word “requirements” in the Quantity of Material provision does not mean that the agreement was a requirements contract. See

Agfa-Gevaert, A.G. v. A.B. Dick Co., 879 F.2d 1518, 1521 (7th Cir. 1989) 

(“The ... agreement looks like the opposite of a requirements contract, 

despite the presence of the word “requirements”; for it merely assures 

the buyer, Dick, a greater supply, and in exchange Dick agrees to pay a 

premium. It does not seem to obligate Dick to take more than it wants.”).
6 Nos. 14-1416, 14-1555

thresholds “[s]hould the normal annual volume for BRC 

shift significantly.”

BRC argues that these provisions demonstrate that 1.8 

million pounds was merely an estimate of what BRC would 

request annually, rather than a firm fixed quantity that Continental was obligated to sell. That much is true, and is conceded by Continental. But BRC’s conclusion that the provisions therefore obligated BRC to buy some amount of carbon 

black does not follow. The argument is a non sequitur, and is 

contrary to our precedent. See Brooklyn Bagel Boys v. 

Earthgrains Refrigerated Dough Prods., 212 F.3d 373, 376–80

(7th Cir. 2000) (agreement that lacked a fixed quantity term 

did not obligate buyer to buy any bagels at all, and was 

therefore not a requirements contract). In sum, nothing that 

BRC has pointed us to, or that we have found on our own, 

convinces us that the agreement required BRC to buy carbon 

black from Continental.

Further, we find nothing that required BRC to buy all of 

its carbon black exclusively from Continental. For the exclusivity requirement, BRC relies again on the “Meet or Release” provision. But by its plain terms, that provision applies only where a different seller offers BRC terms that are 

“better tha[n] the terms offered” by Continental. In other 

words, BRC had to give Continental the chance to match a 

competitor’s lower price. But price is not the only reason to 

contract with additional sellers. As the facts of this case 

demonstrate, sellers can become over-extended; buyers may 

pursue a diverse group of sellers to protect against the risk 

that a single seller cannot keep up with demand. Nothing in 

the “Meet or Release” provision prevented BRC from doing 
Nos. 14-1416, 14-1555 7

so (and BRC admits in its brief that price is not the only factor it considers when negotiating with suppliers).

BRC was not obligated to buy carbon black from Continental, nor was it obligated to buy all its carbon black from 

Continental, so the agreement was not a requirements contract. Because the judgment against Continental was premised on the agreement being a requirements contract, we vacate the judgment and remand. Discussion of BRC’s damages is premature, so we do not reach BRC’s cross-appeal.

III. CONCLUSION

We VACATE the judgment of the district court and

REMAND the case for further proceedings consistent with this 

opinion.