Foley & Lardner LLP partner Vanessa Miller commented on a series of recent Michigan court decisions impacting the automotive supply chain in the Law360 article, “Biggest Transportation Decisions: Midyear 2024 Review.”
“The bottom line is the automotive industry primarily operates on requirements contracts, and we need clear case law from…the Michigan Supreme Court that is going to explain what is and is not valid, what makes something a valid requirements contract or not,” said Miller, who is chair of Foley’s Automotive Team – Manufacturing Sector. “Where companies have stubbed their toe is by saying, ‘we’ll order our requirements from you, but we’re not obligated to order anything from you.’ Well, wait a minute. Where’s the quantity term? Where is the number there, if you’re saying you could actually order 0% from me?”
“What’s been happening in the industry over the last decade-plus is companies have started to erode language to try and give themselves — on the buy side — more flexibility,” Miller explained. “Anyone looking to get out of or to enforce what was traditionally deemed a requirements contract is looking at what they can do and what their leverage points can be.”
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