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Michigan Supreme Court Decision May Affect Contract Drafting Between Suppliers and Buyers

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Foster Swift Second Wednesday Lunch Break
August 9, 2023

Boxes on Conveyor Belt in FactoryOn July 11, 2023, the Michigan Supreme Court issued a significant opinion in MSSC, Inc. v. AirBoss Flexible Products Co., that alters the contractual agreements between parties using “release” contracts–agreements where parties fix price and terms for goods but are silent as to quantity (instead deferring to separate releases in the future as to quantities to be shipped). These types of “release” contracts are very common in the automotive and manufacturing industries and may undermine decades of contractual relationships.

Join us next week as we explore the potential fallout following this decision.

When: August 9, 2023 from 12:00-12:30 pm
Registration: https://bit.ly/2ndWeds2023

In the opinion, the Court held that, under Michigan’s enactment of the Uniform Commercial Code, commonly used “release” contracts which do not have a quantity (or a lawful method to determine it), do not establish an obligation to perform beyond the duration of any mutually accepted release. Said another way, release contracts which do not have a predefined quantity (or lawful method to determine it) are only enforceable against the seller if the seller chooses to accept the release in the future. As such, a party may be able to force the renegotiation of previously-agreed terms on each and every release.

During this session, corporate counsel and contract attorney Rob Hamor will discuss:

  • This case and its implications in both the supply chain and other industries.
  • What the future may hold for businesses using “release” contracts.
  • What businesses will have to consider in future contract drafting including the critical requirement of "quantity term" and the importance of clearly defining terms in a contract.