On July 11, 2023, the Michigan Supreme Court issued a decision in MSSC, Inc. v. Airboss Flexible Products Co., ruling that the term “blanket” in a purchase order – standing alone – does not obligate a buyer to purchase any specific quantity of its requirements from a seller.
A blanket purchase order is a long-term agreement to supply particular products at a fixed price over time. In Michigan, it had become commonplace for companies to enter into blanket supply agreements, with the buyer subsequently issuing releases specifying quantities needed at various times. For decades, Michigan courts recognized blanket purchase orders as enforceable “requirements contracts” obligating a seller to supply all goods needed by a buyer and the buyer to purchase exclusively from that seller, even where no quantity of goods was specified. The MSSC decision overrules years of Michigan precedent by holding that without more, the term “blanket” in a purchase order does not obligate a buyer to purchase a specific quantity of products and a seller is free to stop accepting releases at any time.
Buyers and sellers alike should review existing supply agreements to determine whether they may be impacted by the MSSC ruling. If you have questions, call us today at 248.477.6300.