Output Contract
(Short Form)

Summary

This template is a short form output contract that measures the quantity of goods to be purchased by the output of the seller. This template includes practical guidance, drafting notes, and alternate and optional clauses. Output contracts measure the quantity of goods to be sold by the output of the seller. In an output contract, "output" means the actual good faith production of the seller. This good faith requirement makes an output contract sufficiently definite to be binding. Even though the quantity term may remain indefinite, no quantity unreasonably disproportionate to any stated estimate, or in the absence of a stated estimate, to any normal or otherwise comparable prior output, may be tendered or demanded. If an output agreement calls for the buyer and seller to buy and sell the kind of goods concerned only to and from each other, it imposes an obligation on the seller to use its best efforts to supply the goods and on the buyer to use its best efforts to promote their sale, unless otherwise agreed. U.C.C. § 2-306. This is a short form for use when the parties want a simple output contract covering the basics such as price, term of agreement, and description of goods. For a detailed contract that has clauses covering other points such as ownership of patents and inventions, noncompetition (exclusive dealing) clause, hold harmless (or indemnity) clause, access to records, authority to buy raw materials, spare parts, and designs and specifications, see Output Contract (Long Form). For additional guidance, see Output and Requirement Contracts under Article 2 of the Uniform Commercial Code and Requirements and Output Contracts Stated Estimates.