Michigan Court of Appeals Reaffirms Enforceability of Percentage-Based Requirements Contracts—Supreme Court to Review

On May 14, 2025, the Michigan Court of Appeals issued an important decision for OEMs and suppliers navigating long-term automotive supply agreements. In FCA U.S. LLC v. Kamax Inc., the Court held that a supply contract stating that orders will cover “approximately 65%–100% of our requirements” satisfies the UCC’s statute of frauds and supports an enforceable requirements contract under Michigan law.

The decision reinforces the Court’s earlier ruling in Cadillac Rubber & Plastics, Inc. v. Tubular Metal Systems, LLC and confirms that the Michigan Supreme Court’s decision in MSSC, Inc. v. Airboss Flexible Products Co. did not silently overrule that precedent. Instead, Airboss is distinguished because the contract there contained no quantity term at all.

With the Michigan Supreme Court now granting leave to review Kamax, the case has significant implications for standard supplier terms and purchasing practices across the automotive industry.

Background: FCA–Kamax Supply Relationship

FCA (now Stellantis) and Kamax had a long-standing supplier relationship governed by global terms and nearly 180 individual purchase orders. Each purchase order:

The purchase orders were effective “through the life of the program.” FCA contended that Kamax was, in practice, its sole supplier for the fasteners at issue.

In 2023, Kamax sought to impose unilateral price increases and announced it would cease deliveries under the existing agreements as of February 20, 2023. FCA filed suit for breach of contract and obtained a preliminary injunction requiring Kamax to continue shipping parts while the dispute was litigated.

Kamax moved for summary disposition and to dissolve the injunction, arguing that:

The trial court denied both motions. Kamax appealed.

The Legal Question: Can a Quantity Range Satisfy the UCC Statute of Frauds?

Michigan’s UCC statute of frauds requires that a contract for the sale of goods over $1,000 contain a written quantity term.

At the same time, Michigan law recognizes that a requirements contract can measure quantity by the buyer’s good-faith needs rather than a fixed number of units. MCL 440.2306(1) provides that a term measuring quantity by the buyer’s “requirements” means such actual requirements as occur in good faith, subject to limits on unreasonably disproportionate variations.

In Cadillac Rubber, the Court of Appeals held that a range—“between one part and 100% of [the buyer’s] requirements”—was sufficiently definite to constitute a quantity term. The contract there was enforceable as a requirements contract, and course-of-performance evidence was properly used to flesh out the parties’ obligations.

Kamax argued that MSSC v. Airboss implicitly undercut that reasoning. But Airboss involved a very different contract: the Supreme Court emphasized that there was no quantity term at all in the purchase order or related documents, and it expressly distinguished Cadillac Rubber on that basis.

The Court of Appeals’ Decision in Kamax

The Court of Appeals affirmed the trial court’s rulings and made several key points:

1. The 65%–100% range is a valid quantity term.
Relying on Cadillac Rubber, the Court held that a written commitment to purchase between 65% and 100% of FCA’s requirements for each part satisfies the statute of frauds and supports a requirements contract, even though the precise volume is not fixed.

2. Cadillac Rubber remains controlling law.
The Court rejected Kamax’s argument that Airboss overruled Cadillac Rubber. The Supreme Court in Airboss acknowledged Cadillac Rubber, but distinguished it because that case involved a written quantity range, and expressly declined to decide whether Cadillac Rubber was correct.

3. Airboss is limited to contracts with no quantity term.
The Court stressed that Airboss stands for the proposition that you cannot use course-of-dealing or other parol evidence to supply a quantity term where the writing has none. It does not hold that a flexible or percentage-based quantity term is invalid.

4. Injunction properly left in place.
Because FCA demonstrated a likelihood of success on the merits under Cadillac Rubber, and Kamax’s arguments were “entirely based upon the premise that Cadillac Rubber is no longer binding authority,” the Court held that the trial court did not abuse its discretion in refusing to dissolve the preliminary injunction.

Why Kamax Matters for Automotive Contracts

The Kamax decision reinforces that defined quantity ranges—such as a commitment to purchase “approximately 65%–100% of our requirements”—remain enforceable under Michigan’s UCC. As long as the range appears in a signed writing and is tied to the buyer’s good-faith requirements, it satisfies the statute of frauds.

The opinion also confirms that Cadillac Rubber continues to govern range-based quantity terms, despite the uncertainty that followed the Michigan Supreme Court’s decision in Airboss. While Airboss remains an important warning for contracts that omit any quantity term at all, its holding is limited to those cases where the writing is completely silent on quantity and therefore cannot be cured through course-of-dealing or parol evidence.

Taken together, Kamax underscores the importance of reviewing long-term supply agreements to ensure that quantity commitments are expressed in the contract itself, drafted with reasonable certainty—even if stated as a range—and supported by consistent performance. For OEMs and suppliers alike, those details remain essential to drafting supply terms that can withstand scrutiny under either Airboss or Cadillac Rubber.

Because the Michigan Supreme Court has agreed to take up the case, the legal landscape surrounding requirements contracts may shift. We will continue to monitor developments and provide updates as the Supreme Court appeal progresses.