Lode Mines enters into a contract with Ajax Photo Labs,whereby Ajax agrees to purchase all its requirements of silver needed for photo finishing during the next year,from Lode,at $4.00 per ounce.Over the last 4 years,Ajax has used an average of 10,000 ounces of silver per year.Lode only produces about 15,000 ounces of silver per year.About 2 months into the contract,the price of silver skyrockets to $50 per ounce.Ajax immediately orders an additional 50,000 ounces from Lode.Lode refuses to deliver,and Ajax sues.What is the most likely outcome?
A) Lode wins;requirements contracts are not enforceable because they do not contain a quantity.
B) Ajax wins;requirements contracts are enforceable.
C) Lode wins;even if requirements contracts are enforceable,the parties must act in "good faith," and Ajax is acting in bad faith.
D) Ajax wins;they are acting in "good faith," and this was a risk that Lode assumed.
Correct Answer:
Verified
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