Opinion ID: 3016904
Heading Depth: 3
Heading Rank: 5

Heading: Annual Quantity Term for the 1065 Valves

Text: The Magistrate Judge also erred in calculating damages for the 1065 valves based on an annual production figure of 25,000 valves. The contract states that Superior “agrees to purchase all of its requirements for Valves from Specialty.” Exhibit A to the contract states the “Annual Usage” is 25,000. Yet this figure is an estimate of expected requirements, not a minimum takings obligation. Under Pennsylvania law, the quantity term for a requirements contract is the “actual . . . requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate . . . may be tendered or demanded.” 13 Pa. Cons. Stat. § 2306(a). “In a requirements contract, ‘[t]he seller assumes the risk of all good faith variations in the buyer’s requirements, even to the extent of a determination to discontinue the business.’” U&W Indus. Supply, Inc. v. Martin Marietta Alumina, Inc., 34 F.3d 180, 188 (3d Cir. 1994) (citation omitted). But a “buyer purchasing less than its forecasts may still be found in breach if it acted in bad faith.” 28 Reilly Foam Corp. v. Rubbermaid Corp., 206 F. Supp. 2d 643, 657 (E.D. Pa. 2002) (citing James J. White & Robert S. Summers, Uniform Commercial Code § 3-9, at 141 (5th ed. 2000)). Once again, the M agistrate Judge awarded lost profits without making the requisite findings. The uncontroverted testimony at trial was that Superior revised the annual estimate for 1065 valves downward from 25,000 to 8,000–10,000. While the Magistrate Judge concluded Superior acted in bad faith in canceling the contracts, no such finding was made regarding the downward estimate. Indeed, neither the Magistrate Judge nor the parties have even discussed the issue. This too should be addressed on remand.