Question

TXST entered into a written agreement with Chartwells to buy all their food from there for the whole year. Chartwells agreed to supply TXST will all the food they needed. TXST's need for food grew and they requested for 20% more food than in the beginning of the year. Chartwells wouldn't deliver unless TXST paid a higher price per truck delivering the food, which TXST wouldn't do. TXST sued.

What kind of contract, requirement or output?

Answer 1

The disagreement between TXST and Chartwells revolves around a requirements contract, where Chartwells is to provide as much food as TXST needs. Chartwells' refusal to deliver additional food without higher payment led to legal action by TXST. The core issue is the definition of 'reasonable increase' in the context of the contract.

Step-by-step explanation:

The contract in question between TXST and Chartwells appears to be a requirements contract. Such a contract obligates Chartwells to supply as much food as TXST needs, and in turn, TXST agrees to buy exclusively from Chartwells. However, when TXST requested 20% more food and Chartwells demanded a higher price for the additional deliveries, they were effectively attempting to renegotiate the contract terms. TXST's legal action is likely based on Chartwells' refusal to honor the original agreement terms. The main point of contention here is whether the increase in need by 20% falls within a reasonable increase that should be covered by the existing contract pricing, or if it is substantial enough to justify renegotiation.