Matrix Corporation, a computer manufacturer, agrees to purchase from Chipmaster, Inc. all the computer chips that Chipmaster can produce during the next 12 months, at cost plus a twelve-percent markup. Matrix later does not purchase any computer chips during the 12 months year. Can Chipmaster enforce the agreement made with it?

Question

Quizplus · Accepted Answer

An output contract is an agreement in which one party consents to sell to a second party all of the goods that party makes in a given period of time. Matrix will defend that the prices were not agreed to, but since this has a cost-plus provision, the court can determine the actual damages incurred.

Matrix Corporation, a Computer Manufacturer, Agrees to Purchase from Chipmaster