This section contains the nature of the case and procedural background.

Amerada (D) agreed to supply the requirements of Orange (P) for its fuel oil. The price of the contract was fixed at $2.14 per barrel. Estimates of P's demand were included in the contract, and those estimates reflected the intent of both parties that P wanted to use as much natural gas as possible. Within 5 months of the execution of the agreement, the price of oil began a steady and unanticipated increase. In addition, P notified D that its use of fuel oil would be substantially higher than the estimate given in the contract. Eventually, D agreed only to supply the agreed upon contract estimates and up to a 10% overage. D performed that part of the contract but refused to deliver more. P sued D. The trial court determined that P's requirements were not incurred in good faith. P appealed.

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