An Automotive News article “Michigan Supreme Court opinion has ‘wide implications’ for supplier contracts, supply chain” discussed Warner’s victory on behalf of client, AirBoss Flexible Products Co., and all suppliers, on an issue critical to the industry.
In what was called a “key opinion,” the Michigan Supreme Court clarified uncertainty over terms and conditions by indicating that “supply agreements are not requirement agreements by default.” The case was the first to interpret a key provision in the Uniform Commercial Code in nearly 40 years and will reverberate for suppliers up and down the supply chain.
“What it means is that buyers must be explicit in their contracts about what they intended to buy from sellers, rather than keeping the terms vague and therefore more flexible, often to the benefit of the buyer,” said Michael Brady, executive partner at Warner Norcross + Judd LLP in Detroit and lead counsel to AirBoss. “It levels the playing field for buyers and sellers.”
The case arose out of a fairly typical pricing dispute centered on a “blanket” purchase order between AirBoss and its customer, MSSC Inc. MSSC argued that the blanket order was a requirements contract binding AirBoss to fulfill its orders. AirBoss disagreed and successfully argued that because there was no quantity listed, it was a “release-by-release” contract and not binding long-term.
“Every supplier and every OEM will want to take a hard look at their terms and conditions, their purchase order, their contracting documents,” Brady said. “They’ll need to assess based on this opinion.”
Automotive News subscribers can read the complete story here.
Warner’s appellate and litigation teams that represented AirBoss were led by Michael Brady, Gaëtan Gerville-Réache and Adam Ratliff. The firm’s Automotive Industry Group attorneys stand ready to assist suppliers assessing their current contracts and terms to implement this new change to Michigan law.
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