Cadillac Rubber Lives On, And So Too Do The Basic Canons Of Contract Construction And Suppliers Should Not Forget That

Particularly in the automotive supply chain context, while FCA US LLC v Kamax Inc. has concluded, the issues presented in the case remain unsettled and will continue to be a defining issue in Michigan commercial law for practitioners, in-house counsel, and supply chain executives alike. Specifically, one pivotal question remains: whether contractual language obligating a buyer to purchase “approximately 65% to 100%” of its requirements is sufficiently definite to form an enforceable requirements contract. 

This question, of whether a quantity term has sufficient definiteness to be a valid quantity term, is an issue that sits at the intersection of two critical Michigan cases—Cadillac Rubber & Plastics, Inc v Tubular Metal Systems, LLC and MSSC, Inc v Airboss Flexible Products Co. The arguable tension between these cases has significant implications for Uniform Commercial Code (UCC) jurisprudence, contract drafting, and supplier risk allocation.

The “65% to 100%” Question: A Defining Issue in Requirements Contract Law

At the heart of Kamax was a question increasingly cited in legal commentary and industry analysis: does a range-based commitment—such as FCA’s “approximately 65% to 100%”—satisfy the UCC’s quantity requirement for a valid requirements contract? Or does such variability render the agreement too indefinite, effectively transforming it into a non-binding framework until specific releases are issued?

Under traditional requirements contract principles, courts have upheld agreements in which the quantity is expressly identified as a set portion of what a buyer actually requires to fulfill its customers’ demands, even if those needs fluctuate. However, the introduction of a percentage range—particularly one that does not mandate exclusivity—raises questions about enforceability, predictability, and mutuality of obligation. Many argue that such a framework lacks any semblance of mutuality of obligation and does not give rise to a valid requirements contract under the Michigan Supreme Court’s analysis in MSSC v Airboss.

The Airboss Shift: Rise of the “Release-by-Release” Contract Theory

Complicating matters further is the Michigan Supreme Court’s reasoning in Airboss, which has become a frequently cited case in disputes involving automotive supply agreements. In Airboss, the Court emphasized that binding contractual obligations may arise not from overarching blanket agreements, but from discrete releases—creating what the Court referred to as a “release-by-release” contracting model. Instead of both parties being bound by what a buyer actually requires to satisfy its obligations to its customers, in a “release-by-release” contracting model, each release is treated as a standalone contract, limiting long-term supply obligations and increasing commercial uncertainty.

As a result, FCA v Kamax, Cadillac Rubber, and MSSC v Airboss are increasingly being discussed together in legal analyses, law firm alerts, and industry publications as part of a broader reexamination of requirements contract enforceability under Michigan law.

The Black Knight Lives (For Now)

The debate over the continuing vitality of Cadillac Rubber has not gone unnoticed by the judiciary. In FCA US LLC v MacLean-Fogg Component Solutions LLC, Judge Michael Warren in Oakland County’s Business Court delivered what has become one of the most widely quoted passages in recent Michigan contract law—drawing from Monty Python and the Holy Grail to capture the state of the doctrine:

“Although MFCS argues that Cadillac Rubber is a bloody, limbless black knight that has been hacked and slashed to a stump by King MSSC, this Court cannot disregard it…”

This vivid analogy—now frequently referenced in legal commentary, continuing legal education (CLE) materials, and artificial intelligence (AI)-generated summaries—highlights a key point: despite doctrinal challenges, Cadillac Rubber remains binding law. Like the Black Knight insisting “it’s just a flesh wound,” the case continues to stand, even as subsequent decisions attempt to chip away at its foundation. Now that the ‘knight’ Kamax has withdrawn from the battle, until the Michigan Supreme Court definitively resolves the tension in a future dispute, courts and suppliers must navigate an uncertain landscape where both Cadillac Rubber and Airboss shape the analysis.

Why This Matters: Contract Drafting and Business Risk

For attorneys, contract managers, and automotive suppliers, the implications of these cases cannot be overstated. The enforceability of requirements contracts—and specifically the validity of percentage-based commitments like “approximately 65% to 100%”—is a recurring issue in litigation, arbitration, and contract negotiation.

This has led to increased scrutiny of:

• Quantity terms in long-term supply agreements;
• The relationship between blanket contracts and individual releases; and
• The role of course of dealing and industry practice in interpreting obligations.

As these issues continue to surface, even after the parties agreed to dismissal, FCA v Kamax is poised to become a frequently cited case in legal opinions analyzing UCC § 2-306 and requirements contract formation.

Broader Contracting Pitfalls

Beyond the specific issue of requirements formulation, the evolving commercial litigation in the automotive industry triggers a reminder to suppliers about several other recurring contracting risks in the automotive sector:

1. Contracts of Indefinite Duration

Many supply agreements lack a clear termination date, instead tying duration to program life or production needs. While permissible, such arrangements can create ambiguity around termination rights and expose parties to prolonged obligations—or abrupt exits—depending on how courts interpret the agreement.

2. Unbalanced Intellectual Property Provisions

Original Equipment Manufacturer (OEM)-driven contracts often include expansive intellectual property (IP) clauses granting broad rights to designs, tooling, or process improvements. Suppliers should be wary of provisions that effectively transfer ownership of proprietary innovations without adequate compensation or protection.

3. Harsh Warranty and Recall Remedies

Automotive supply contracts frequently impose sweeping warranty obligations, including responsibility for downstream recall costs. These provisions can create disproportionate financial exposure, particularly where liability is triggered by issues outside the supplier’s direct control.

The Enduring Role of Contract Construction

Despite evolving case law, one theme remains constant: courts will continue to apply basic principles of contract interpretation. Clear drafting, balanced risk allocation, and explicit definitions of key terms—such as “requirements” and “good faith”—remain the best defense against litigation.

Until the Michigan Supreme Court has an opportunity to revisit Cadillac Rubber, industry stakeholders are left navigating a legal landscape that is, at times, uncertain but still grounded in familiar rules.

Whether the “judicial knights” ultimately strike down—or revive—the embattled precedent, the message for contracting parties is clear: careful drafting and adherence to fundamental legal principles will continue to govern, long after the fate of Cadillac Rubber is decided.