This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
In contracts in which A agrees to furnish to B all the goods that B may use in his business or that he may need or require, B, by a fair construction of the contract, agrees not to buy such goods from any one but A. It would seem clear, therefore, that a consideration exists; but whether such contract is so definite that the damage to either party can be determined upon its breach, is a question which is different from that of consideration or lack of consideration, and which has sometimes been invoked as another reason for regarding such contracts as invalid. It is, of course, possible that B may not use any of such goods in his business, and may not need any; and for this reason some authorities have tended to hold that B's promise does not furnish any consideration for A's promise, and that A's promise lacks consideration.1 A's promise to deliver all the ties that
5 Meier Dental Mfg. Co. v. Smith, 23? Fed. 583, 150 C. C. A. 445.
6St. Louis & S. F. R. Co. v. Thirl-well, 88 Kan. 275, 128 Pac. 199.
7Sultan Ry. & Timber Co. v. Great Northern Ry. Co., 58 Wash. 604, 109 Pac. 320 (hearing en banc denied, 109 Pac. 1020).
8See Sec. 122.
9Calanchini v. Branstetter, 84 Cal. 849, 24 Pac. 149. See Sec. 126.
1 United States. Jenkins v. Anaheim Sugar Co., 237 Fed. 278.
Georgia. McCaw Mfg. Co. v. Felder, 115 Ga. 408, 41 S. E. 664.
Iowa. Drake v. Vorse, 52 la. 417, 3 N. W. 465.
Minnesota. Bailey v. Austrian, 19 Minn. 535.
Washington. Brown v. Brew. 99 Wash. 560, 169 Pac. 992.
A could "produce and ship" by a certain time,2 or A's promise to buy certain timber through B, in case he ever bought it,3 have been held to be without consideration. Contracts of this sort have been held invalid where the purchaser was not a manufacturer or otherwise had an established business, the needs of which could be determined with some fair approximation; but was a jobber or retailer, buying only to sell again, his needs being governed primarily by the range of prices, and ceasing altogether when the price at which he can sell comes so close to the price at which he can buy as to eliminate his profit. Where B's business is of such a character that past experience would not be of material assistance in determining the amount of goods that B would use,4 as where B is a broker,5 the uncertainty as to the amount is regarded as indicating that B's promise is not a consideration for A's promise.6 The fact that the parties have engaged in business together for some length of time, so that the experience of past years may indicate fairly what quantity of goods will probably be needed in the business, has been regarded as an important factor in aiding the court to decide that B's promise is a sufficient consideration.7 It has been suggested that such a promise is in legal effect a promise to take a reasonable amount and to pay therefor, and that, accordingly, such contract possesses consideration.8