requirements contract

an agreement between a supplier and a buyer in an exclusive contract for a specific period of time. A requirements contract is unique in how it binds the parties. On one side, the supplier must supply all the designated materials required by the buyer, often at a fixed price, for a specific period of time. On the other side, the buyer is obligated to buy exclusively from the supplier for the duration of the agreement.

Ogden works for a large construction firm that builds transportation infrastructure. His company is hired to construct a freeway overpass. The company estimates that the project will require 200,000 cubic yards of concrete. To ensure a supply, the company enters into a requirements contract with a large supplier. The agreement is to last the length of the project.