Question

A small processor of specialized steel agreed in writing with a small manufacturer of children's toys that it would supply, and the manufacturer would buy, all of the manufacturer's specialized steel requirements over a period of years at a set price per ton of steel. Their contract did not include a nonassignment clause. Recently, the toy manufacturer decided to abandon its line of steel toys, so it made an assignment of its rights and delegation of its duties under the contract to a toymaker many times larger. The large toymaker notified the steel processor of the assignment and relayed to the processor its good faith belief that its requirements will approximate those of the assignor.

Must the steel processor supply the requirements of the large toymaker?
A. Yes, because there was no nonassignment clause in the contract.
B. Yes, because the large toymaker acted in good faith to assure the steel processor that its requirements will approximate those of the small manufacturer into whose shoes it stepped.
C. No, because requirements contracts are not assignable under the UCC
D. No, because the steel processor did not give prior approval of the assignment.

Answer 1

B. Yes, because the large toymaker acted in good faith to assure the steel processor that its requirements will approximate those of the small manufacturer into whose shoes it stepped.

Step-by-step explanation:

This is to be noted that the right to receive goods under a requirements k is not assignable because the obligor's duties could change significantly. The significant change possible here is that the large toymaker been a larger company and its needs would be greater.