Last week, the US District Court for Eastern District of Texas ruled on reporting under the Corporate Transparency Act, issuing a nationwide injunction against its enforcement. The CTA otherwise required entities to report Beneficial Ownership Information on or before January 1, 2025. While this injunction is not permanent, we will suspend filings for companies until the injunction is overturned on appeal.
Kotz Sangster Wysocki P.C., a leading business law firm based in Detroit, has announced that attorney Douglas Eyre has joined the firm in its Detroit office. Eyre is a seasoned attorney, bringing over 20 years of experience in construction law and commercial litigation to the firm.
On July 11, 2023, the Michigan Supreme Court overruled the lower court’s ruling in the case of MSSC Inc. v. AirBoss Flexible Products Co. By doing so, the Supreme Court has established a precedent that blanket purchase orders are not automatically considered requirements contracts. This implies that buyers must now explicitly state the intended nature of their business relationships and related details, using specific language that does not carry biases in favor of buyers.
The case began as a local pricing dispute between tier one buyer, MSSC, and tier 2 supplier, AirBoss. AirBoss requested a pricing adjustment, and when MSSC refused, AirBoss decided to stop accepting material releases. MSSC sued seeking emergency injunction on the claim that their agreement with AirBoss was a binding requirements contract, despite neither the purchase order nor the terms and conditions of their agreement including a buying requirement for MSSC. The trial court ruled in favor of MSSC because their written agreement with AirBoss insinuated that the agreement was to last for the life of the program.
AirBoss appealed the ruling, claiming a purchase order that does not commit to purchasing anything or state the buyer’s requirement for parts is not a requirements contract. The Michigan Supreme Court reversed the ruling in their favor. This re-established that parties are only bound by their written agreements.
Industrial suppliers and buyers alike should take immediate action to review their existing contracts, paying close attention to the language and clarifications, to determine whether they are bound in a requirements contract.
Should you have any questions regarding supply chains or requirements contracts, please contact attorney Jack Ulrich (julrich@kotzsangster.com) or your Kotz Sangster relationship attorney.
