Brief Fact Summary.
Brooklyn Bagel Boys, Incorporated (Brooklyn) sued Earthgrains Refrigerated Dough Products, Incorporated (Earthgrains) when Earthgrains decided to manufacture it’s own bagels notwithstanding the contract with Brooklyn.
Synopsis of Rule of Law.
An option contract is a firm offer that requires the seller to supply the buyer’s needs at an agreed upon price.
Under Illinois law, the covenant of good faith and fair dealing is not an independent source of duties for the parties to a contract.View Full Point of Law
Brooklyn Bagel Boys, Incorporated (Brooklyn) entered into a contract to produce bagels for Earthgrains Refrigerated Dough Products, Inc. (Earthgrains) in Earthgrains’ name. The contract did not require Brooklyn to produce a specific number of bagels and required Brooklyn to submit a non-binding estimate of orders every three months. When Earthgrains decided to manufacture it’s own bagels, Brooklyn sued Earthgrains for breach of contract. The district court granted summary judgment to Earthgrains, and Brooklyn appealed.
Whether an option contract is a firm offer that requires the seller to supply the buyer’s needs at an agreed upon price?
Yes, the judgment of the district court is affirmed. Earthgrains did not breach the contract by producing its own bagels because Earthgrains was only required to purchase bagels that they ordered from Brooklyn.
The Uniform Commercial Code §2-205 makes firm offers in an option contract enforceable. The contract between Brooklyn and Earthgrains is not a requirements contract because Earthgrains was not required to purchase all of Brooklyn’s inventory.