UCC Obligation of Good Faith and Fair Dealing

Good Faith and the Party Entitled to Determine the Particular Quantity of Goods to be Sold

Under the UCC, such party - either the buyer demanding delivery of his requirements or seller demanding purchase of his output - must make such determination in good faith.

Open Quantity Term: Requirements Contracts

A contract in which the SELLER agrees to supply the buyer with all of the buyer's requirements for a particular good.

Open Quantity Term: Output Contract

An output contract is a contract in which the BUYER agrees to purchase all of a seller's output for a particular good.

Definition of Good Faith

Generally, good faith is defined as "honesty in fact in the conduct or transaction concerned." In the case of a merchant, good faith means "honesty in fact AND the 'observance of reasonable commercial standards' of fair dealing in the trade."

Open Price Term

If a contract leaves the price to be fixed by one of the parties, then the specified party must fix the price in good faith.

UCC Requirement of Good Faith and Fair Dealing

The UCC imposes an obligation of good faith in the performance and enforcement of contracts.

An Unreasonably Disproportionate Demand or Tender

The UCC prohibits any unreasonably disproportionate demand or tender, if there was either: 1. a stated estimate; or 2. any comparable prior outputs or requirements.