Alerts7.21.23
Auto Supply Chain Rocked: Michigan Supreme Court’s Decision Impacts Enforceability of Blanket Purchase Orders
Highlights
Blanket purchase orders that fail to obligate a buyer to purchase at least some quantity of parts from the supplier are unenforceable on their own, the Michigan Supreme Court ruled
Release-by-release contracts are only enforceable once a firm quantity is stated in future releases or purchase orders
A requirements contract assures the seller that the buyer will be a customer for the life of the contract, but the seller cannot reject future orders for the life of the contract
On July 11, 2023, the Michigan Supreme Court distinguished blanket purchase orders from requirements contracts, and held that blanket purchase orders that fail to obligate the buyer to purchase some quantity of parts are, standing alone, unenforceable.
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