Contracts Keyed to Farnsworth
Eastern Air Lines, Inc. v. Gulf Oil Corporation
Eastern and Gulf have contracted for years for the purchase and sale of aviation fuel. Under the most recent “requirements” contract, all Eastern aviation fuel purchased at one of the cities covered by the contract must be purchased from Gulf. In return, Gulf must make all necessary arrangements to supply Eastern’s reasonable good faith needs. Eastern has been able to manipulate its requirements through a practice called “fuel freighting.” “Fuel freighting” consists of taking on more or less fuel at certain Gulf stations, regardless of actual operating requirements, depending on the relative prices at the Gulf stations.
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