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Michigan practitioners Vanessa L. Miller from Foley & Lardner LLP and Andrew B. Fromm from Brooks Wilkins Sharkey & Turco PLLC joined us in studio to share their expertise in your “Business Law Update 2025” on-demand seminar.
In case you missed it, here are some key takeaways from their segment on requirements contracts in Michigan.
These excerpts have been edited for length and clarity.
Key Takeaways on Requirements Contracts in Michigan
Let’s Talk MSSC v Airboss
“This opinion came out in July of 2023, and we're still talking about it today because there's been a series of cases that have been filed and that are pending that relate to this decision that required additional rulings probably from ultimately the Michigan Supreme Court,” Vanessa says. MSSC, Inc v Airboss Flexible Prods Co highlights the necessity for a precise quantity term in requirements contracts under the Uniform Commercial Code as interpreted by Michigan courts. The decision emphasized that a mere label of "blanket order" or standard industry practices are not sufficient to establish a binding requirements contract. This signals the importance of clear contractual language that specifies a definitive quantity or an exclusive percentage of requirements to satisfy the statute of frauds.
Why Is This Caselaw So Important?
“It's important to note that the automotive industry really drives a lot of caselaw on requirements contracts, and due to the large automotive presence in Michigan, we are frontrunners on these cases,” Vanessa says. The unique nature of the automotive industry, with its reliance on highly specialized components, results in lengthy validation processes. Consequently, Michigan's judicial decisions in this area are watched closely and often serve as persuasive authority in other jurisdictions.
Three More Cases
“Courts and really people all over the country and the world are watching,” Andrew says. “There are three cases that have happened since Airboss that give you an indication of at least what some courts are thinking on this topic.”
- Ultra Mfg (USA) Inc v ER Wagner Mfg Co.
This case illustrates that courts are requiring a precise quantity term for a contract to qualify as a requirements contract under Michigan law. The phrase "some portion or all of Purchaser's requirements" was found insufficient, indicating a stricter standard for defining quantity than previously accepted in similar contexts, potentially conflicting with the earlier Cadillac Rubber case.
- Higuchi Int'l Corp v Autoliv ASP, Inc.
This case further reinforces the Airboss precedent by rejecting the idea that a purchase order could imply a sufficient quantity term simply by using the word "requirements." The Sixth Circuit's reversal of the lower court’s decision underscores that implication alone is not adequate to ascertain a quantity term, emphasizing the importance of explicit language in contracts to establish binding obligations.
- FCA US LLC v KAMAX Inc.
This case indicates ongoing legal uncertainty regarding the specificity required for quantity terms in requirements contracts post-Airboss. The case is currently under appeal, showing that Michigan courts continue to grapple with the application of these principles. The preliminary injunction's focus on irreparable harm rather than a clear interpretation of the contract’s terms highlights the complexity and unsettled nature of this legal area in Michigan, pending further appellate clarification.