requirements contract
requirements contract, defined:
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.
requirements contract, as it might be used:
The court ruled that there was sufficient evidence of a requirements contract, indicating the defendant's obligation to supply as much oil as the plaintiff required.
An example of requirements contract:
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.
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Clear-Point Law Dictionary
