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<\/figure>\nOn December 13, 2024, an Oakland County, Michigan trial court awarded AirBoss Flexible Products Co. nearly $3.5 million dollars on an unjust enrichment counterclaim asserted against MSSC, Inc., a tier one U.S. automotive supplier.[1]<\/a>\u00a0 The ruling is the latest in a protracted battle between the two companies, which reached its well-known apex in July 2023 when the Michigan Supreme Court reversed a Court of Appeals opinion holding that blanket purchase orders lacking a written quantity term were unenforceable under the UCC Statute of Frauds.[2]<\/a><\/p>\n AirBoss, a supplier of rubber-based products, entered into a contract whereby it would provide MSSC, a supplier of parts for vehicle suspension systems, with components for ultimate use by an OEM.[3]<\/a>\u00a0 The agreement between AirBoss and MSSC was set forth in a blanket purchase order that specified the parts to be supplied and the prices, but not the quantity.[4]<\/a>\u00a0 The purchase order stated, \u201cIf this order is identified as a \u2018blanket order\u2019, [MSSC] shall issue a \u2018Vendor Release and Shipping Schedule\u2019 to [AirBoss] for specific part revisions, quantities, and delivery dates for Products. . . .\u201d\u00a0 MSSC would therefore place orders for specific quantities of products through periodic releases as is common in the automotive industry.[5]<\/a><\/p>\n In mid-2019, AirBoss determined that it was experiencing financial losses on several of the parts it supplied MSSC and requested price increases.[6]<\/a>\u00a0 MSSC did not respond, so AirBoss sent a notice that it was rejecting any future releases unless the parties reached an agreement on revised pricing.[7]<\/a>\u00a0 MSSC, in turn, stated it would not agree and that it expected AirBoss to meet its contractual obligations.[8]<\/a>\u00a0 AirBoss promptly notified MSSC that it was terminating their agreement and would stop supplying parts after the current release was filled.[9]<\/a><\/p>\n Shortly thereafter, in February 2020, MSSC sued AirBoss in Michigan for anticipatory breach of contract and moved for an injunction requiring specific performance by AirBoss.[10]<\/a>\u00a0 The Oakland County Circuit Court granted the injunction and summary disposition in favor of MSSC on the grounds that the term \u201cblanket order\u201d expressed a quantity term sufficient to create an enforceable requirements contract under the Statute of Frauds in Michigan\u2019s Uniform Commercial Code.[11]<\/a>\u00a0 \u00a0The Court of Appeals affirmed.[12]<\/a>\u00a0 \u00a0<\/p>\n The Michigan Supreme Court, however, reversed the decisions in July 2023.[13]<\/a>\u00a0 The Court held that the blanket purchase order did not contain a quantity term and therefore could not satisfy the Statute of Frauds so as to create an enforceable requirements contract.[14]<\/a>\u00a0 MSSC and AirBoss instead had a \u201crelease-by-release\u201d business arrangement whereby AirBoss was bound by the terms of the blanket purchase order only to the extent that MSSC issued releases for specific quantities of products and AirBoss accepted those releases.[15]<\/a>\u00a0 That being so, AirBoss was within its rights to reject future releases when MSSC would not agree to revised pricing.\u00a0 The case was then remanded to the trial court.[16]<\/a><\/p>\n Upon return to the Oakland County Circuit Court, only a counterclaim by AirBoss for unjust enrichment remained for adjudication.[17]<\/a>\u00a0 AirBoss asserted that MSSC was unjustly enriched because the lower courts had erroneously ordered it to supply MSSC with parts at a substantial loss.[18]<\/a>\u00a0 AirBoss sought as damages the difference in sales at prices it wanted to charge MSSC and those ordered by the lower courts\u2014a total of $3,483,899.85.[19]<\/a>\u00a0\u00a0<\/p>\n MSSC argued that AirBoss could not recover damages under an unjust enrichment theory because the sales were governed by contracts between the parties\u2014i.e<\/em>., individual releases under the blanket purchase order.[20]<\/a>\u00a0 The Oakland County Circuit Court dismissed this argument because the releases were not entered voluntarily but rather through coercion of its \u201cpredecessor\u201d court and the Michigan Court of Appeals.[21]<\/a>\u00a0 The court equated the decision of AirBoss to enter the releases to that of Johnny Fontane in The Godfather:<\/em><\/p>\n MICHAEL<\/p>\n Well, when Johnny was first starting out, he was signed to this personal service contract with a big band leader.\u00a0 And as his career got better and better, he wanted to get out of it.\u00a0 Now, Johnny is my father\u2019s godson.\u00a0 And my father went to see this band leader, and he offered him $10,000 to let Johnny go.\u00a0 But the band leader said no.\u00a0 So the next day, my father went to see him; only this time with Luca Brasi.\u00a0 And within an hour, he signed a release, for a certified check for $1,000.<\/p>\n KAY<\/p>\n How\u2019d he do that?<\/p>\n MICHAEL<\/p>\n My father made him an offer he couldn\u2019t refuse.<\/p>\n KAY<\/p>\n What was that?<\/p>\n MICHAEL<\/p>\n Lucas Brasi held a gun to his head, and my father assured him that either his brains \u2013 or his signature \u2013 would be on the contract.<\/p>\n The court then stated that \u201cMSSC is decidedly not a mobster, and Judge Alexander and the Court of Appeals are the furthest things from gunmen.\u201d\u00a0 But the court nevertheless recognized \u201cthe cold hard reality that the Supreme Court found that there was no contract and no obligation to sell parts under the releases\u201d and that AirBoss only supplied MSSC at the prices in the blanket purchase order \u201cunder pain of contempt of court.\u201d[22]<\/a>\u00a0<\/p>\n MSSC further argued that it would be inequitable to apply the Michigan Supreme Court decision retroactively.[23]<\/a>\u00a0 The court found this claim baseless, stating that, \u201cperhaps there is a parallel universe, but traditionally when a party in Michigan wins a lawsuit, they actually win the lawsuit and are awarded the relief requested.\u201d[24]<\/a> \u00a0Thus, AirBoss, in a reversal of fortunes, was awarded full damages.[25]<\/a>\u00a0<\/p>\n The AirBoss<\/em> saga is a cautionary tale about the dangers of a buyer misunderstanding a release-by-release business arrangement with its supplier to be a requirements contract.\u00a0 A supplier in such an arrangement is entitled to stop accepting release orders and demand a price increase.\u00a0 A buyer that stands its ground and seeks court intervention on the mistaken belief it has a requirements contract would be throwing good money after bad.\u00a0 The courts will eventually find in favor of a supplier if a buyer has imposed contract terms at odds with UCC. In fact, AirBoss <\/em>may encourage a supplier that is a party to an unfavorable long-term agreement to test the waters by demanding a price increase.\u00a0 It would therefore be prudent for buyers to conduct audits of their \u201crequirements contracts\u201d to confirm they include a quantity term sufficient to satisfy the Statute of Frauds, and any other requirements under the applicable governing law.\u00a0<\/p>\n [1]<\/a> MSSC, Inc. v. AirBoss Flexible Products Co.<\/em>, No. 20-179620-CB, at *16 (Mich. Cir. Ct., Dec. 13, 2024).<\/p>\n [2]<\/a> MSSC, Inc. v. AirBoss Flexible Products Co.<\/em>, 511 Mich. 176, 180, 999 N.W.2d 335 (Mich. 2023).<\/p>\n [3]<\/a> MSSC, Inc. v. AirBoss Flexible Products Co.<\/em>, 338 Mich. App. 187, 979 N.W.2d 718 (Mich. Ct. App. 2021).<\/p>\n [4]<\/a> MSSC, Inc. v. AirBoss Flexible Products Co.<\/em>, No. 20-179620-CB, 2020 WL 10964218, at *1-3 (Mich. Cir. Ct., July 17, 2020).<\/p>\n [5]<\/a> Id. <\/em>at *3.<\/p>\n [6]<\/a> Id.<\/em><\/p>\n [7]<\/a> Id.<\/em><\/p>\n [8]<\/a> Id.<\/em> at *1.<\/p>\n [9]<\/a> Id.<\/em><\/p>\n [10]<\/a> Id.<\/em><\/p>\n [11]<\/a> Id. <\/em>at *6.<\/p>\n [12]<\/a> MSSC, Inc. v. AirBoss Flexible Products Co.<\/em>, 338 Mich. App. 187, 979 N.W.2d 718 (Mich. Ct. App. 2021).<\/p>\n [13]<\/a> MSSC, Inc. v. AirBoss Flexible Products Co.<\/em>, 511 Mich. 176, 180, 999 N.W.2d 335 (Mich. 2023).<\/p>\n [14]<\/a> Id. <\/em>at 198.<\/p>\n [15]<\/a> Id.<\/em><\/p>\n [16]<\/a> Id. <\/em>at 180.<\/p>\n [17]<\/a> MSSC, Inc. v. AirBoss Flexible Products Co.<\/em>, No. 20-179620-CB, at 3 (Mich. Cir. Ct., Dec. 13, 2024).<\/p>\n [18]<\/a> Id.<\/em><\/p>\n [19]<\/a> Id. <\/em>at 3-4.<\/p>\n [20]<\/a> Id. <\/em>at 9.<\/p>\n [21]<\/a> Id. <\/em>at 9-10.<\/p>\n [22]<\/a> Id.<\/em> .<\/p>\n [23]<\/a> Id.<\/em> at 14.<\/p>\n
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