MSSC v. AirBoss: Clarifications, changes, and questions


by Jason Killips   |   Michigan Bar Journal

To determine the enforceability and scope of a contract for the sale of goods, the most fundamental question is: “How many?”

Last year, the Michigan Supreme Court issued a rare opinion on the Uniform Commercial Code (UCC), the statutory scheme that governs such contracts.1 In MSSC, Inc. v. AirBoss Flexible Prod Co.,2 the Court explained how different types of quantity terms affect the parties’ obligations. It also overruled a key holding of the Michigan Court of Appeals decision in Great Northern Packaging, Inc. v. General Tire and Rubber Co. in 1986.3

The AirBoss opinion raised another round of questions that will need to be addressed in the future. This article intends to address a couple of them.

The concepts described here apply to any contract for the sale of goods but, for simplicity, this article focuses on the structure common in manufacturing supply chains involving purchase orders and terms and conditions. More complicated supply agreements, which may include capacity limits or complex dual-sourcing structures, are beyond the scope of this article. As always, the analysis and outcome in each case will depend on the specific contract at issue.


UCC statute of frauds

Michigan Supreme Court Justice Elizabeth Welch’s majority opinion in AirBoss begins with an authoritative summary of the law surrounding contracts for the sale of goods and, in particular, the primacy of the quantity term.

The importance of quantity terms comes from the UCC statute of frauds, § 2-201.4 The first sentence of § 2-201(1) “mandates that contracts entered into for the sale of goods worth $1,000 or more must be in writing.”5 The second sentence states that “[a] writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this subsection beyond the quantity of goods shown in the writing.”6 As the AirBoss Court explained, this “allows for some terms to be missing or incorrect but provides that a court can only enforce the contract up to the quantity set forth in writing.”7

Quantity is thus “the only essential term” of contracts for the sale of goods.8 When a contract states a quantity term “but fails to express details sufficient to determine the specific or total quantity,” the term may be clarified with parol evidence.9 When such a contract fails to state a quantity term, parol evidence cannot fill the gap and the contract will be deemed unenforceable.10

Fixed quantity contracts

The most straightforward type of quantity term is so simple that there is almost no case law about it: a fixed number. Whether a quantity term is 20 widgets or 38.75 gallons, there is no question about how many goods the buyer must purchase or the seller must deliver.

Requirements contracts

The UCC, however, envisions two other quantity terms that “lack specificity as to the total of goods agreed upon.”11 In § 2-306(1), it “allows for a contract’s quantity to be measured ‘by the output of the seller or the requirements of the buyer[.]’”12 These contracts are called output or requirements contracts.

In an output contract, “a seller promises to supply and a buyer to buy all the goods or services that a seller produces during a specified period and at a set price.”13 A buyer might use this to buy all the coal a mine produces or all the hay a farm grows in a year. Output contracts are rarely, if ever, used in manufacturing supply chains, so this article will focus exclusively on requirements contracts.

A requirements contract is one “in which a buyer promises to buy, and a seller to supply, all the goods or services that a buyer needs during a specified period.”14 For example, a manufacturer might use such a contract if it doesn’t know how many engines its customers will order but wants to ensure an adequate supply of the pistons it needs to build engines. As the specific needs for pistons arise, the manufacturer communicates to the supplier how many pistons it needs and on which dates; in most supply chains, these communications are often called releases.15

Both of the definitions above — which the AirBoss Court adopted from Black’s Law Dictionary — use the word “all.” But the Court held that under Michigan law, despite the word “all” in the definitions, requirements contracts need not be exclusive to be enforceable.16 In the example above, the engine manufacturer could likely form an enforceable contract with a supplier for 70% of the pistons it needs because such a quantity term, while not exclusive, still “measures the quantity by ... the requirements of the buyer[.]”17

Release-by-release contracts

In AirBoss, the Supreme Court formally recognized a new type of contract — what it called a release-by-release contract.18 It is essentially a series of fixed-quantity contracts to which an overarching set of terms and conditions — with provisions covering topics like price, warranty, and indemnification — apply. Businesspeople often refer to them as spot-buy contracts. Once the parties agree to governing terms, they can enter into one or more fixed-quantity contracts without having to negotiate each one separately. In this arrangement, the buyer does not have to offer any fixed-quantity contracts and the seller does not have to accept those that are offered.19

Whether an agreement forms a requirements contract or a release-by-release contract isn’t new. The U.S. District Court for the Eastern District of Michigan considered the issue more than 30 years ago in Advanced Plastics Corp. v. White Consol Industries, Inc., issuing a ruling which the U.S. Sixth Circuit Court of Appeals affirmed.20

At issue in Advanced Plastics was a contract that said “Seller agrees to furnish Buyer’s requirements for the goods,” language that would in many cases create an enforceable requirements contract.21 But the contract conditioned the “Buyer’s requirements” language by adding “to the extent of and in accordance with” the buyer’s releases.22 This addition changed a contract that would have measured the quantity by the buyer’s requirements into one that measured the quantity by whatever the buyer stated on its releases.23 Nothing in the contract obligated the buyer to issue releases to the seller, so the contract itself contained no quantity term.24 The contract was thus unenforceable on its own and became enforceable only once the buyer offered and the seller accepted a fixed-quantity release.25 The buyer was free to stop offering releases and the seller was free to stop accepting them whenever they chose to do so.26

In AirBoss, the Michigan Supreme Court described such a release-by-release contract as “an umbrella agreement that governs the terms of future contract offers[,]”27 adding that “[a]lthough the seller is not bound to accept future orders in the same manner as with a requirements contract, the seller is bound by the terms agreed to in the [overarching terms] when future releases are issued and accepted.”28


After the Michigan Supreme Court clarified the fundamentals of quantity terms in contracts for the sale of goods, it turned to the central question. Some goods buyers issue purchase orders or contract forms labeled “blanket” (as in a blanket order.) Nearly 40 years ago in Great Northern, the Michigan Court of Appeals held that “blanket,” although an imprecise quantity term, created an enforceable contract.29

AirBoss overruled that holding, concluding that “blanket” is, at best, an imprecise quantity term and contracts with imprecise quantity terms aren’t enforceable.30 The Supreme Court drew a distinction between total quantity and quantity term,31 ruling that total quantity may be imprecise in a requirements contract when the seller won’t know how many widgets it must ultimately deliver until the buyer knows how many it needs.32 The quantity term, however, must be precisely stated and the term “blanket” didn’t pass muster.33

The distinction between total quantity and quantity term is vital to the holding in AirBoss and will be key in resolving future cases. The quantity term must be precise, and it seems clear that 98 widgets or 70% of buyer’s requirements are all precise enough to create enforceable contracts. (Buyer’s requirements, without any stated percentage, is discussed below.) It doesn’t matter that the total quantity under the latter example is imprecise; it is enough to satisfy the UCC that the quantity term is precisely measured by the buyer’s requirements.34


While AirBoss answered some questions, it left others unanswered and raised new ones. Here, we focus on two of them and try to predict how courts may answer them.

Are Cadillac Rubber and AirBoss compatible?

The question most obviously left open in AirBoss is what to make of the Court of Appeals’ split decision in Cadillac Rubber & Plastics, Inc. v. Tubular Metal Systems, LLC in 2020.35 The AirBoss seller urged the Supreme Court to overrule Cadillac Rubber, but the Supreme Court declined because it was not necessary to decide the case.36

In Cadillac Rubber, the Court of Appeals held that a contract stating the buyer had to buy “no less than one piece or unit of each of the Supplies and no more than [100%] of Buyer’s requirements” was “indisputably” a requirements contract.37 That appears to clash with the Court of Appeals’ unpublished decision in Acemco, Inc. v. Olympic Steel Lafayette, Inc., key parts of which were adopted by the Supreme Court in AirBoss.38

In Acemco, the Court of Appeals defined a requirements contract to be an agreement “in which the seller promises to supply all the specific goods or services which the buyer may need during a certain period at an agreed price in exchange for the promise of the buyer to obtain his required goods or services from the seller.”39 This definition highlights the mutuality necessary to a requirements contract — the seller’s obligation to deliver must match the buyer’s obligation to buy. The AirBoss Court emphasized mutuality’s importance, stating that the primary difference between a requirements contract and a release-by-release contract is “the level of mutual obligation between the parties and the risk each party bears.”40

Reconciling Cadillac Rubber with the mutuality described by Acemco and adopted by AirBoss is difficult. How many widgets must a buyer purchase under a contract with language like that in Cadillac Rubber? At least one. This is true even if the buyer requires 1,000 — it has the right to buy up to 1,000 because it can buy up to 100% of its requirements, but it doesn’t have to. It has fulfilled its contractual obligation by buying a single unit. Whether it buys any more is entirely within its discretion.

Under Cadillac Rubber, however, the seller has no similar discretion: it had to deliver all the parts the buyer ordered. Whether measured by the buyer’s requirements or otherwise, there is no mutual obligation to buy and sell the same quantity of parts. Put another way, Cadillac Rubber effectively permits a different quantity term for the buyer (“at least one”) than the seller (“all that the buyer orders”). Nothing in the UCC contemplates the buyer and seller having different quantity terms in this way.

The Supreme Court opted not to overturn Cadillac Rubber because doing so wasn’t necessary to decide AirBoss. But the definition of a requirements contract in Acemco adopted in AirBoss and the principles of mutuality it emphasized suggest that Cadillac Rubber should be overruled.

At least one federal district court has agreed with this analysis. In Ultra Manufacturing Inc. v. ER Wagner Manufacturing Co., the Eastern District of Michigan interpreted a contract provision analogous to that enforced in Cadillac Rubber,41 recognized the conflict between AirBoss and Cadillac Rubber, and held that AirBoss controlled.42 While this decision does not bind state courts, they may find its reasoning persuasive.

Can “buyer’s requirements” be enough to create an enforceable requirements contract?

Many supply chain lawsuits focus on whether the language at issue creates an enforceable requirements contract. Because requirements contracts lock in both parties for its duration while a release-by-release contract provides for either party to rapidly exit the relationship, scenarios will arise in which either the buyer or seller is pushing for each interpretation. After AirBoss, the question is whether the contract “leave[s] both the quantity term and total quantity undefined,” resulting in a release-by-release contract?43

In this context, is “buyer’s requirements” enough? Some parties will likely argue that the AirBoss Court held that a requirements contract is created only if the language “dictate[s] that the buyer will obtain a set share of its total need from the seller (such as ‘all requirements of the buyer.’)”44 Many of the examples in AirBoss use the word “all,”45 so these parties might argue that “buyer’s requirements for the parts” isn’t precise enough and the parties are bound only one release at a time.

Such an argument seems likely to fail. Many courts that have considered similar language have implied that “all” renders the quantity term sufficiently precise — unless the rest of the contract contains a reason to do otherwise. For example, the Eastern District of Michigan recently interpreted a contract saying that “the quantity is for Purchaser’s requirements” to be a requirements contract,46 explaining that “this term means that [the buyer] committed to purchase all of its actual, good-faith requirements from [the seller]. If [the buyer] required a [part at issue], it was contractually obligated to purchase it from [the seller].”47 In 2022, a different judge in the Eastern District reaffirmed that reasoning.48

Last year, another Eastern District judge considered the issue, this time after the Michigan Supreme Court decided AirBoss. In Higuchi International Corp. v. Autoliv ASP, Inc, which is currently on appeal to the Sixth Circuit, the court considered a contract that said it was “issued to cover [buyer’s] requirements of the parts[.]”49 The seller argued that this was an insufficient quantity term because it didn’t “commit [the buyer] to buying a set share of its total need” from the seller.50

The court rejected that argument since “the plain meaning of ‘requirements’ as used in that paragraph is ‘all requirements’”51 while noting that the UCC doesn’t use the word “all” when it defines a quantity term measured by the buyer’s requirements.52 And, the court explained, “[c]ommon sense teaches that, when someone refers to their ‘requirements’ or ‘actual requirements’ without any further qualification, that person is referring to all of their requirements.”53 Finally, the court noted that while AirBoss used “all” in its example, the Supreme Court “did not state that the word ‘all’ cannot be implied from an unqualified use of the word ‘requirements.’ Nor did it state that the word ‘all’ — or any other share-related modifier — is necessary to render ‘requirements’ an enforceable quantity term.”54

The Higuchi court recognized that interpreting “requirements” without further qualification to mean “all requirements” is logical. If a guitar collector contracted “to sell my guitars for $50,000,” he could not argue later that he was obligated to sell only some of his instruments. Without qualification, the “all” should be implied in this context.

Necessitating “all requirements” to create an enforceable requirements contract would run contrary to the spirit of the UCC, which generally avoids the invocation of “magic words” to trigger its provisions. For example, when a party wishes to perform without prejudicing its rights, it must explicitly reserve its rights.55 But § 1-308 of the UCC states that any language will do so long as the meaning is clear: “Words such as ‘without prejudice,’ ‘under protest,’ or the like are sufficient.”56

It seems likely that courts will continue to interpret “buyer’s requirements” without other qualification to mean “all buyer’s requirements” and either statement creates an enforceable requirements contract.


The Michigan Supreme Court’s AirBoss decision will likely serve as a handbook for judges and lawyers determining the scope and enforceability of contracts for the sale of the goods. It explained in clear terms basic contract structures under the UCC and overruled Great Northern, making Michigan’s case law in this area more consistent. And while it leaves unanswered questions for the next round of cases, it provides hints about how those issues should be resolved.

The author thanks Dan Sharkey and Andrew Fromm for their assistance with this article.


1. MCL 440.1101 et seq; MSSC, Inc v AirBoss Flexible Prod Co, 511 Mich 176; 999 NW2d 335 (2023).

2. Airboss, 511 Mich at 181.

3. Great Northern Packaging, Inc v Gen Tire and Rubber Co, 154 Mich App 777; 399 NW2d 408 (1986), overruled Airboss, 511 Mich 176 (2023).

4. MCL 440.2201.

5. AirBoss, 511 Mich at 181.

6. MCL 440.2201(1).

7. AirBoss, 511 Mich at 181.

8. Id.

9. Id.

10. Id.; MCL 440.2201(1).

11. AirBoss, 511 Mich at 182.

12. Id.

13. Black’s Law Dictionary (11th ed); AirBoss, 511 Mich at 182.

14. Id.

15. AirBoss, 511 Mich at 183.

16. Id. at 194 (“A seller can agree to provide a nonexclusive part of the buyer’s total need.”)

17. MCL 440.2306(1).

18. AirBoss, 511 Mich at 182.

19. Id. at 184.

20. Advanced Plastics Corp v White Consol Indus, Inc., 828 F Supp 484 (ED Mich, 1993) (Advanced Plastics I), aff’d, 47 F3d 1167 (CA 6, 1995) (Advanced Plastics II).

21. Advanced Plastics I, 828 F Supp at 486.

22. Id.

23. Advanced Plastics II, at *3.

24. Id.

25. Id.

26. Advanced Plastics I, 828 F Supp at 487.

27. AirBoss, 511 Mich at 184.

28. Id.

29. Great Northern, 154 Mich App 777.

30. AirBoss, 511 Mich at 188-189.

31. Id.

32. Id.

33. Id. at 189.

34. UCC § 2-306(1), MCL 440.2306(1).

35. Cadillac Rubber & Plastics, Inc v Tubular Metal Sys, LLC, 331 Mich App 416; 952 NW2d 576 (2020).

36. AirBoss, 511 Mich 194, n 4.

37. Cadillac Rubber, 331 Mich App at 420, 429.

38. The conflict in Michigan caselaw regarding exclusivity in requirements contracts was discussed in detail in Exclusivity and Requirements Contracts: Michigan’s Muddled Law, the Majority Rule of Other States, and their Impact on Automotive Suppliers, 91 Michigan Bar Journal 3 (March 2012), D. Sharkey and B. Warner. The article notes something that Cadillac Rubber did not discuss: that nearly all of the other jurisdictions to consider the issue have held that requirements contract must be exclusive.

39. Acemco Inc v Olympic Steel Lafayette, Inc, unpublished per curiam opinion of the Court of Appeals, issued Oct. 27, 2005 (Docket No. 256638), p 8; see AirBoss, 511 at 182 (adopting this definition).

40. AirBoss, 511 at 185.

41. Ultra Mfg Inc v ER Wagner Mfg Co., ___ F Supp ___ (EDMI, 2024), slip op at 3.

42. Id. at 4.

43. Id. at 9.

44. Id.; AirBoss, 511 Mich at 183.

45. See AirBoss, 511 Mich at 190-193.

46. Dayco v Thistle Molded Group, unpublished opinion of the United States District Court, issued 2019 (ED Mich 2019).

47. Id. at *5.

48. BAE Indus v Agrarian-Medina, unpublished opinion of the United States District Court, issued 2022 (ED Mich 2022).

49. Higuchi Int’l Corp v Autoliv ASP, Inc, ___ F Supp 3d ___, (ED Mich, 2023). (Note: The author represents Autoliv in this action.)

50. Id. at *6 (cleaned up).

51. Id.

52. Id.

53. Id.

54. Id.; see also Empire Gas Corp v American Bakeries Co, 840 F2d 1333, 1335– 1336, 1339 (7th Cir 1988) (interpreting “Approximately 3,000 units, more or less depending on requirements of Buyer” to be a requirements contract).

55. UCC § 1-308(1), MCL 440.1308(1).

56. Id.