Court Certifies Question about Requirements Contracts to the Michigan Supreme Court

Detroit Diesel Corporation (DDC) supplies Daimler Truck North America (Daimler) with parts for heavy-duty trucks. Martinrea Honsel Mexico SA de CV (Martinrea) provides DDC with transmission housings. Under their contract, Martinrea agreed “to sell to DDC and DDC agrees to purchase from Supplier 1 part to 100% of DDC’s needs for the parts . . . .” In June 2024, DDC sued Martinrea, alleging that the latter had fallen behind in its production. In February, 2025, Martinrea provided notice that it would no longer supply parts to DDC. In March, 2025, DDC amended its complaint to supplement its demand for damages with a demand for an injuntion and it sought  specific performance of the contract. Meanwhile, DDC sought housings from other suppliers, but it claims it will take up to two years for it to find suppliers that can produce the parts that Martinrea used to provide. In fact, DDC relies on Martinrea for 70-75% of its supplies. DDC’s needs are specialized. As a result, producing housings for DDC requires a capital investment. 

A transmission
Image by Microsoft Copilot

In Detroit Diesel Corporation v. Martinrea Honsel Mexico SA de CV, the DDC sought to enjoin Martinrea from stopping future deliveries. The outcome turns on whether the parties’ contract is a requirements contract under Michigan law. In Cadillac Rubber & Plastics, Inc. v. Tubular Metal Sys., LLC, 952 N.W.2d 576 (Mich. Ct. App. 2020), the court construed language similar to that in the contract between DDC and Martinrea as a requirements contract. However, in MSSC, Inc. v. Airboss Flexible Prods. Co., 999 N.W.2d 335 (Mich. 2023), the Michigan Supreme Court defined a requirements contract as one that dictates “that the buyer will obtain a set share of its total need from the seller.” The Airboss court did not address the “between one part and 100%” language. 

The Airboss court did distinguish between requirements contracts, which provide for mutual assurances and shared risk between the parties and “release-by-release” agreements, which allow each party to terminate the arrangement in short order by either not sending or not accepting a new release. Subsequent to Airboss, Michigan courts have refused to find a requirements contract in a contract that obligated a supplier to provide “approximately 65%–100% of [buyer’s] requirements” and where the contract obligated the supplier to provide “some portion or all of Purchaser’s requirements.” 

Arguably, the “between one part and 100%” language is different because it states an actual quantity, establishing both floor and ceiling. Neither of the post-Airboss decisions expressly overrules Cadillac Rubber. Given the uncertainty and the irreparable harm that DDC would suffer in the absence of an injunction, the Court granted DDC a preliminary injunction through September 30, 2025. In a related order, the Court certified to the Michigan Supreme Court the question of whether the “between one part and 100%” language suffices to create a requirements contract.

I wish federal courts would do this more often, rather than trying to Erie guess what the outcome will be. The certified question runs as follows: Whether contractual language that obligates a buyer to purchase from seller and a seller to sell to buyer “1 part to 100% of [buyer’s] needs” establishes a requirements contract consistent with MSSC, Inc. v. Airboss Flexible Products Co., 999 N.W.2d 335 (Mich. 2023)?