Airboss: A Practical Guide To Where Things Stand

Note that the Table identifies (in italics) published opinions of the Michigan Court of Appeals as only persuasive authority in federal court. Although a federal court is not acting unlawfully if it declines to follow a published Michigan Court of Appeals decision, it is quite unusual for a federal court to do so. However, the Airboss question is one of those unusual situations. Also, the list and ”ranking” of persuasive authorities is neither official nor complete. At most, it gives a rough sense from experience of what a court is most likely to find persuasive. Finally, most Michigan law contract cases can only be brought in State Court.² If a case cannot be brought in federal court,³ federal court decisions are never more than persuasive authority.

As indicated in the prior Table, the Michigan Supreme Court is always the boss. However, courts have not agreed on what the Michigan Supreme Court said in Airboss, other than that the specific contract language at issue there did not create an enforceable requirements contract. Further, a split has developed between the state and federal courts on that question, so separate state and federal discussions are needed.

With that context, in addition to Airboss there are three decisions that are key to understanding where things stand:

• Cadillac Rubber v. Tubular Metal Systems, a published 2020 (pre-Airboss) Michigan Court of Appeals
• Higuchi Int'l. v. Autoliv, a published 2024 Federal Court of Appeals decision interpreting Airboss and Cadillac Rubber
• FCA v. Kamax an unpublished 2025 Michigan Court of Appeals decision

Cadillac Rubber held that a buyer’s promise to purchase between 1 part and 100% of its requirements was sufficient to create a requirements contract. In Airboss, the Michigan Supreme Court mentioned Cadillac Rubber, but expressly declined to decide whether it remained good law.

In Higuchi the Federal Court of Appeals declined to follow Cadillac Rubber because, it believed, it was inconsistent with the Michigan Supreme Court’s Airboss decision and thus did not reflect Michigan law. The specific contract language in Higuchi said, in oversimplified form, that the contract “was issued to cover” Autoliv’s requirements. The court concluded that was not sufficient to create a requirements contract because Airboss required that the buyer’s purchase promise must be “precise and explicit.” and that “issued to cover” requirements was not, especially in light of other portions of the promise that created ambiguity. Since then, lower federal courts interpreting Higuchi disagree as to what is required to create an enforceable requirements contract beyond the specific contract language at issue there.

In Kamax the Michigan Court of Appeals addressed FCA’s standard promise to purchase between approximately 65 and 100% of its requirements. It held that Airboss could be reconciled with Cadillac Rubber, so that the published Cadillac Rubber decision was binding authority. Since Cadillac Rubber held that between 1 and 100% was sufficient, so too was FCA’s 65%-100% promise. Kamax thus disagrees with Higuchi as to whether Cadillac Rubber remains good law. However, as noted, Kamax is not a published opinion, so it is not binding authority in either state or federal court.

In light of the above, under Michigan law:

• A buyer’s promise to purchase 100% or other specific percentage of requirements creates a requirements contract.
• A buyer’s promise only to pay for any goods for which it chooses to issue a release does not create a requirements contract.
• A promise that buyer will purchase “between 1 and 100%” or “between 65 [or some other meaningful share] and 100%” of requirements, is likely enforceable in state court, although there are good faith arguments to the contrary.
• Those same promises are less likely to be found enforceable in federal court, but again, good faith arguments to the contrary are possible.
• Contract language that does not fit those two templates is more difficult to assess, at best, and all but impossible without reviewing the specific contract language.
• The whole contract matters, not just the sentence which includes the word “requirements”. Even if a sentence in the contract says “buyer promises to purchase 100% of its requirements from seller,” a different provision might be read as “what the right hand giveth, the left hand taketh away,” or at least a judge (who is not a supply chain expert) may think it so. Sometimes this is deliberate, but probably more often it is due to imprecise or confused drafting.
• As a very inexact starting point, federal courts are more seller-friendly. However, federal court may not be possible and, even if it is possible, that does not mean that federal court is always the best forum for sellers.

Given the current state of the law, early and expert legal analysis is crucial. It is unwise and often harmful to consider the law for the first time only after commercial discussions have begun, positions have been staked out and “threats” have been made.

Footnotes

1 The same question could arise under any state’s contract law. However, it has not, at least in the automotive supply chain, arisen under other state’s law, so this analysis focuses on Michigan law.

2 With gross over-simplification, businesses may be able to litigate in federal court if they are from different states and otherwise may not.

3 It is possible that a Michigan contract law case could be in another state’s court. For example, a contract between a Michigan and Idaho business may specify that Michigan law applies, but not specify where a lawsuit must be filed. If the lawsuit is filed in Idaho court (state or federal) that court would apply Michigan contract law. Airboss has not been addressed outside of Michigan, so the additional legal complexities in that scenario are not addressed here.