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D produced metal headrest stays for DaimlerChrysler vehicles. D sought to outsource aspects of the stay-manufacturing operation to P: bending the metal rods into a staple shape and chamfering (rounding) the ends. The parties agreed orally that P would prepare tooling for the job at its own expense and that it would receive 50¢ per part and maintain a manufacturing capacity of approximately 4000 parts per day. The life of the part was at least four years. About six months after beginning production, D told P that it soon would be terminating orders of part 684F. At the same time, D asked P to take over the finishing functions for part 684F, formerly performed by D, so that P would also have to notch and finish them, creating a finished part referred to as 684B. The older part was no longer used, and the newer Grand Cherokee’s headrest used part 611, a metal rod that is 40 millimeters, has two additional notches and is chamfered to pointed rather than rounded ends. Part 611 was made by Guelph Tool and Die. P sued D in Kentucky state court and D removed to federal court based on diversity jurisdiction. The district court granted partial summary judgment for P, ruling that P and D had formed an oral requirements contract under 2-306(1). Eventually, the District Court granted summary judgment to D concluding that D purchased all of its requirements from P and did not breach the contract. P appealed.

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