Family Snacks Of North Carolina, Inc. v. Prepared Products Co.

295 F.3d 864 (8th Cir. 2002)

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Nature of the Case

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Facts

D entered into an agreement with P to buy $10 million of products during the first year of a supply agreement. These products were to be produced at a snack processing facility in North Carolina previously owned by D and sold to P in February 1998. The agreement would reduce the purchase price of the facility and would recoup the difference through the implementation of a low-cost manufacturing arrangement with P. P would sell to D on a 'cost-plus' basis, designed to yield a purchase price lower than the market price for wholesale snack foods. It is undisputed that during the first year of the supply agreement, D bought nothing from P. P filed this suit for breach of contract seeking to collect $1.5 million in liquidated damages. Do claims that the supply agreement is not an enforceable contract because it is illusory. D alleges that P hindered performance under the contract by failing to provide necessary pricing information, thereby limiting D's ability to solicit orders, and by refusing to acknowledge that D's purchase of any product other than kettle chips and canister nuts would reduce its minimum purchase obligations under the agreement. The district court entered summary judgment in favor of P on its motion for summary judgment, concluding that under the Uniform Commercial Code and general principles of usage of trade, it was reasonable to require D to first identify the products it wished to buy. D breached its duty in this regard. D appealed.