Michigan Supreme Court Decision – A Reminder On Requirements Contracts

Michigan law requires contracts for the sale of goods worth $1,000 or more to be in writing and provide a quantity term. On July 11, 2023, the Michigan Supreme Court ruled in MSSC, Inc. v. Airboss Flexible Products Co. (Docket No. 163523) that a "blanket" purchase order—setting forth the terms of forthcoming sales—did not constitute a requirements contract because a quantity term was lacking (more simply, the term "blanket" was undefined). As a refresher, a requirements contract is a contract in which a buyer promises to buy, and a seller to supply, a set amount or percentage of the goods that a buyer needs during a specified period (for example, 100% of buyer's requirements). By contrast, a blanket purchase order lacking an express quantity term is now recognized as a "release-by-release" contract.