Question

The Safe-T Airbag Company manufactures airbags that are used in automobiles. Fly Motor Company manufactures automobiles in which it must place airbags before the automobiles can be sold. Assume that Fly Motor Company enters into a contract with Safe-T Airbag Company in which it agrees to purchase all of the airbags it will need from Safe-T. Safe-T may sell airbags to other purchasers, however. This is an example of which of the following types of contracts?1. Requirements contract2. Output contract3. Accord4. Illegal consideration

Answer 1

Answer:

(A)Requirements Contract

Explanation:

A requirements contract is defined as a contract in which one party agrees to supply as much good/service as desired by the other party. In exchange, the other party implicitly promises that it will obtain its goods or services exclusively from the first party.

Since Fly Motor Company agrees to purchase all the airbags it will need from Safe-T. Airbag company, the requirement of exclusive purchase is satisfied.