In an output contract, the seller can operate a factory on a 24-hour-a-day schedule and insist that the buyer take all of the output when that buyer had operated only eight hours a day at the time the contract was made and the buyer had knowledge only of the eight-hours-a-day operating schedule.

Question

Quizplus · Accepted Answer

In an output contract, the quantity of goods to be purchased is determined by the seller's output, but the seller cannot unreasonably increase their output to force the buyer to purchase more than could be expected based on the circumstances at the time the contract was made. Operating a factory 24 hours a day when the buyer was aware of and based their agreement on an 8-hour operating schedule would likely be considered an unreasonable increase in output.

In an Output Contract, the Seller Can Operate a Factory