Contracts and Sales Multistate Bar Practice Exam

What principle allows for the assignment of a requirements contract under the UCC without alteration to the terms?

1. Good faith action by the assignee

2. Consent from all parties involved

3. Notice provided ahead of time

4. Binding arbitration of terms

The correct answer is: Good faith action by the assignee

The principle that allows for the assignment of a requirements contract under the UCC without alteration to the terms is based on the concept of good faith action by the assignee. In a requirements contract, the buyer agrees to purchase all of their needs for a particular good from the seller, which creates an obligation for the seller to fulfill those needs without specific quantities being stated. Under the UCC, while assignments of rights are generally permitted, certain limitations apply to requirements and output contracts. The UCC mandates that any assignment not materially change the nature of the contract must be performed in good faith. This notion of good faith is crucial because it establishes that the assignee must act honestly and fairly in fulfilling the contract terms, ensuring that the original intent and functionality of the requirements contract remain intact. This principle allows the assignment to occur without formal modifications to the contract terms, provided that these actions do not create disproportionate burdens or lead to an unjust outcome for the parties involved. By maintaining good faith, the assignee can exercise rights under the contract while respecting the obligations established between the original parties.