When Seller failed to do so, Buyer sent several additional requests for confirmation, but Seller still did not confirm the order. Explain whether either party has breached the contract.
Seller manufactures furnace-grade carbon black, a filler used in tires and other rubber and plastic products. Buyer was a longtime customer of Seller, purchasing three grades of carbon black for use in numerous rubber products it supplies to customers. Buyer and Seller entered into a supply agreement as of January 1, in which Seller agreed to supply all of Buyer’s requirements for carbon black. When the demand for carbon black subsequently increased and its market price began to rise, Seller notified Buyer on April 14 of the following year that Seller was implementing a two-cents-per-pound base price increase to Buyer effective June 1. Buyer rejected Seller’s request for a price increase and insisted that Seller provide adequate assurance that Seller would fill Buyer’s orders under the contract. On April 26, Buyer sent Seller a purchase order for carbon black and requested that Seller confirm the order. When Seller failed to do so, Buyer sent several additional requests for confirmation, but Seller still did not confirm the order. Explain whether either party has breached the contract.
A contract of sale is an obligation for both parties to provide adequate assurance of the performance without any impairment in the performance.
In this case, the seller has repudiated the contract by failing to provide timely assurance of the performance.
Here, the seller fails to provide adequate assurance for the performance. This is a case of repudiation of contract.