1. What effect does the maintenance shut-down have on the impracticability defense?

2. When BRC did not get confirmation of delivery, was there a breach?

3. What does the court discuss about Continental’s delivery and pricing?

Continental manufactures furnace-grade carbon black, a raw material filler used in tires and other rubber and plastic products. BRC Rubber & Plastics (BRC) was a longtime customer of Continental, purchasing carbon black for its rubber products it supplies to customers. Continental was BRC’s exclusive supplier of carbon black at least back to 1997. From 2005 to 2008, Continental annually supplied BRC between 1.89 and 2.43 million pounds of carbon black. Continental supplied about 40 customers, and its potential annual capacity for carbon black was approximately 500 million pounds.

Thomas Nunley, a salesperson for Continental, handled the BRC account from 1997 to May 2011. Continental had instructed its sales team “to negotiate as many long-term contracts that we could convince our customer base to take” and to “get as much as we could committed long term in volume[.]”

Nunley negotiated a five-year contract to sell approximately 1.8 million pounds of carbon black to BRC, and BRC agreed to provide accurate forecasts of its needs to assist Continental in meeting BRC requirements. If BRC purchased between 1.5 and 2.1 million pounds of carbon black a year, the price was two cents per pound. If BRC purchased more than 2.1 million pounds a year, it would receive a half-cent rebate on each pound purchased that year, and if it purchased less than 1.5 million, it would pay an additional half-cent per pound penalty. The rebate or penalty increased to one cent per pound if BRC purchased more than 2.2 million pounds or less than 1.4 million pounds.

In late 2009, Continental internally classified BRC as a “Tier 1” customer that would get its orders “filled first” if Continental faced a shortage of supply, and Continental and BRC clicked along on their contract until 2011. The economy improved during late 2010 and early 2011, the demand for carbon black increased, and its market price began to rise. Despite this high demand, Continental was operating at a loss and had to choose between going out of business or seeking price increases from its customers.

Nunley notified BRC on April 14, 2011, that Continental was raising its two cents per pound base price to BRC effective June 1, 2011. But BRC rejected Continental’s request for a price increase, first by e-mail and then by letter, and insisted that Continental provide adequate assurance that it would fill BRC’s orders under the Agreement and “hold up its end of the bargain.” All of Continental’s other customers, however, agreed to a price increase, most ranging from four to five cents per pound.

Continental told BRC that the price was increased and “if they did not like it, they could get their carbon black someplace else.” On April 29, 2011, Continental employees were instructed not to ship to 14 customers, including BRC, due to a “negative GP [gross profit].” Continental internally downgraded BRC from a “Tier 1” to a “Tier 3” customer. On April 26, 2011, BRC sent Continental a purchase order for black carbon and asked that Continental confirm the order. When Continental failed to do so, BRC sent …………….