Requirements Contracts, Stop-Shipment Threats, and Pricing Disputes: Recent Legal Developments in Supply Chain Agreements
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Commercial Law
- event Date
Tuesday, December 10, 2024
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE webinar will discuss requirements contracts, pricing disputes, and stop-shipment threats, as well as recent legal developments on requirements contracts and the anticipated impacts of these developments on buyers and suppliers going forward.
Ms. Miller’s practice focuses on general manufacturing breach of contract and warranty disputes, automotive supply chain disputes, product liability lawsuits, trade secret claims, and business torts. Ms. Miller defends consumer class actions involving claims of breach of contract, breach of warranty, fraud, negligence, and unjust enrichment. Ms. Miller also routinely counsels clients on various commercial contract documents and supply chain issues. She is a member of the firm’s Business Litigation & Dispute Resolution Practice, Automotive Industry Team and Manufacturing Industry Team.
Ms. Imbrogno assists corporate clients, specifically manufacturing and automotive companies, throughout all phases of complex commercial litigation, mediation, arbitration, and international arbitration. She has successfully litigated and tried cases in state and federal courts, the American Arbitration Association and the Singapore International Arbitration Centre. Ms. Imbrogno has substantial experience in breach of contract, supply chain, warranty, recall and products liability litigation, as well as in defending manufacturers against class actions and managing trade secret claims and shareholder disputes. She is a frequent author and presenter on supply chain and other contract issues.
Requirements contracts allow a buyer to secure a stable supply of goods without specifying the exact quantities upfront. These contracts offer benefits such as flexibility and inventory risk management for the buyer. They also benefit sellers by providing for a promise of future sales, contingent upon the continued need for the goods.
However, these contracts also pose risks to the parties if market conditions change or demand shifts drastically. Factors like supply chain disruptions and inflation often put pressure on market conditions and can lead to pricing disputes if prices become unfavorable for either party. If a supplier finds an agreed price to be unsustainable, the disputes can escalate into stop-shipment threats, which a supplier may use as leverage to renegotiate.
In the 2023 Michigan Supreme Court decision MSSC Inc. v. Airboss Flexible Prods. Co., the court held that "blanket" order language incorporated by purchasers into the contracts at issue did not supply a valid quantity term as required under the UCC. In the year since Airboss, there has been a spate of supplier challenges to unfavorable long-term agreements, and the state of the law of requirements contracts is in flux.
Listen as our expert panel discusses requirements contracts, pricing disputes, and stop-shipment threats. The panel will also review recent legal developments and cases in this area and discuss the potential future direction of the law of requirements contracts and the Statute of Frauds.
- Requirements contracts
- UCC Article 2
- Key features and benefits for buyers and suppliers
- Impacts of demand fluctuation; importance of good faith in performance
- Stop-shipment threats as negotiation tactics
- Legal and strategic considerations
- Impact of pricing disputes on stop-shipment scenarios
- Recent legal developments on requirements contracts: Airboss and progeny
- Description of Airboss decision and interpretation of Statute of Frauds
- "Blanket" orders and quantity terms
- Shift to "release-by-release" contracts
- Subsequent cases
- Anticipated future developments
- Practical guidance for contract drafting and negotiation
The panel will review these and other key issues:
- The status of the law of requirements contracts after Airboss and subsequent cases
- Strategies for drafting enforceable requirements contracts
- Dispute resolution options and renegotiation tips in volatile market conditions
