After Kamax: Managing Automotive Supply Contracts When the Rules Remain Unclear

The Michigan Supreme Court had a chance to address a question that matters across the automotive supply chain: when does a purchase order, blanket agreement, or long-term supply arrangement create an enforceable requirements contract under Michigan law? But in FCA US LLC v Kamax Inc., ___ Mich App ___ (2025) (Docket No. 371234), appeal dismissed, ___ Mich ___ (Apr. 22, 2026) (Docket No. 168680), the Court did not reach the merits. After the parties settled, the Court vacated its order granting leave to appeal and dismissed the application, leaving buyers, suppliers, and in-house counsel to operate without the bright-line guidance many had hoped to receive..

For in-house counsel, this lack of clarity is a reason to manage contract risk deliberately.

Why Kamax Matters

Automotive supply relationships rarely fit neatly into a single document. A typical arrangement may involve a quote, purchase order, buyer terms, supplier terms, releases, EDI documents, forecasts, quality manuals, tooling documents, and years of course-of-performance evidence.

When the relationship is healthy, the parties may operate without focusing on whether those documents create a fixed-quantity contract, a requirements contract, a percentage-of-requirements contract, or merely a release-by-release relationship.

When the relationship becomes stressed, that distinction can become decisive.

A buyer may believe the supplier is obligated to continue shipping for the life of the program. A supplier may believe it accepted only firm releases, not an open-ended obligation to supply indefinite future demand. The same documents may support competing narratives. Kamax leaves those competing arguments alive.

The Practical Issue After Kamax

The practical issue is not whether in-house counsel should wait for the courts to provide a cleaner answer. They cannot. Their companies still need to source parts, support launches, manage distressed suppliers, respond to cost changes, preserve supply continuity, and negotiate from whatever contract record already exists.

That makes Kamax less a case update than a drafting and leverage problem.

The useful question is: if this relationship breaks down, what will each side argue the contract requires, and have we made our intended position as strong as it can reasonably be?

Start With the Quantity Commitment

The first issue is what quantity commitment the contract actually contains.

Does the contract require the buyer to purchase all of its requirements? A stated percentage of its requirements? A minimum quantity? A fixed quantity? Only quantities issued in firm releases? Or something less clear?

This is not a technical drafting issue. It goes directly to supply assurance and commercial exposure.

If the buyer expects guaranteed supply for a program, the documents should say what commitment supports that expectation. If the supplier is pricing based on expected volume, the documents should say whether the buyer is committing to any volume, share of requirements, minimum purchase, or other economic protection.

Ambiguity may help get a deal launched. It rarely helps when parts are short, costs have moved, or a party wants out.

Keep Forecasts in Their Lane

Forecasts are essential in automotive supply relationships. They help suppliers plan labor, material, equipment, capacity, and cash flow. But forecasts should not be allowed to blur the legal line between planning information and binding purchase obligations.

In-house counsel should look for clear distinctions among:

• firm releases;

• non-binding forecasts;

• frozen periods;

• capacity reservations;

• estimated annual volumes;

• lifetime program volumes; and

• planning assumptions used for pricing.

The more these concepts are collapsed into one another, the more room there is for dispute. A buyer may describe forecasts as operational estimates until it needs continuity of supply. A supplier may rely on those same forecasts when seeking price relief, volume protection, or tooling recovery.

The documents should not force the legal department to reconstruct the deal from inconsistent operational records after the relationship has deteriorated.

Align the Paper With the Commercial Reality

A common automotive-contracting problem is that the documents do not match the deal the business team believes it made. The business team may view the award as a life-of-program commitment. The purchase order may say the buyer has no obligation except for issued releases. The supplier may reserve capacity based on forecasted volumes. The pricing may assume annual volumes that are never guaranteed. The tooling documents may assume program continuity. The terms and conditions may preserve broad termination rights.

Each piece may be defensible in isolation. Together, they may create a dispute waiting to happen. Post-Kamax, in-house counsel should not merely ask whether the forms are “standard.” They should ask whether the forms coherently express the actual deal.

That review is especially important for sole-source parts, custom components, distressed suppliers, low-margin legacy parts, EV transition programs, tariff-affected parts, and parts supported by dedicated tooling or dedicated capacity.

Buyer-Side Considerations

For buyers, the main risk is assuming that standard purchasing documents provide more protection than they do.

If the buyer needs a supplier to support a program for a defined period, or to supply all or a specified share of requirements, the documents should say so directly. The contract should identify the covered parts, program, duration, quantity structure, and relationship between releases and forecasts.

If the buyer wants flexibility to resource parts elsewhere, dual-source, reduce volumes, or exit the relationship, the documents should preserve that flexibility clearly.

The harder point is that a buyer cannot always have maximum supply assurance and maximum purchasing flexibility without addressing the tension between those positions. Strong supply-assurance language may require corresponding commitments on volume, duration, pricing, capacity, or recovery of supplier investment. That is where in-house counsel can add value: by forcing the tradeoff into the open before the relationship is under stress.

Supplier-Side Considerations

For suppliers, the main risk is accepting broad program obligations without corresponding economic protection. A supplier should know whether it is committing to supply only firm releases, all requirements, a percentage of requirements, or some other quantity structure. It should also know whether its price depends on assumed volumes, material costs, labor assumptions, tariffs, tooling amortization, or capacity investment.

If the supplier is taking on program-level obligations, it should consider whether it needs minimum volume protection, price-adjustment rights, material escalation clauses, tariff or change-in-law language, tooling recovery, termination payments, or a defined process for addressing volume shortfalls.

Suppliers should also be careful with informal language. Emails referring to “awards,” “life of program,” “capacity commitment,” “full support,” or “your requirements” may later become part of the factual record. Commercial teams do not need to write like litigators, but they should understand which words create leverage.

Manage the Record Before There Is a Dispute

The most useful post-Kamax work may be operational, not purely contractual.

When a supply relationship becomes stressed, the record begins forming quickly. Internal emails, buyer-supplier communications, forecast changes, release patterns, premium freight demands, capacity discussions, allocation notices, and price-relief negotiations may all matter later.

In-house counsel should consider escalation protocols for high-risk supply relationships. The goal is not to slow the business down. The goal is to keep the company from accidentally undermining its own contract position. For example, if a buyer’s position is that the supplier is bound to support all requirements for the life of the program, business communications should not repeatedly describe future volumes as optional, speculative, or subject to complete discretion.

Conversely, if a supplier’s position is that it is bound only by firm releases, its communications should avoid suggesting an unqualified life-of-program supply commitment unless that is the intended deal.

The record should support the contract theory the company may need to rely on later.

A Practical Post-Kamax Review

For in-house counsel, the most useful review is targeted. Start with high-risk relationships and ask:

• What quantity commitment does the written contract actually contain?

• Does the document hierarchy clearly identify which terms control?

• Are firm releases, forecasts, capacity reservations, and estimated volumes clearly separated?

• Does the pricing assume a volume level that the buyer has not committed to purchase?

• Does either party have termination rights inconsistent with the supposed life-of-program commitment?

• Are tooling, inventory, and unrecovered investment addressed if the program ends early or volumes fall?

• Does the contract address cost changes, tariffs, material volatility, and extraordinary commercial disruption?

• Would the company seek injunctive relief if the other side stopped performing, and does the contract support that remedy?

• Do ordinary-course communications align with the company’s intended legal position?

Bottom Line

Kamax did not create uncertainty in automotive supply contracting. It exposed uncertainty that already existed in many supply documents.

For in-house counsel, the response is to control what can be controlled: clearer quantity language, better document hierarchy, disciplined forecast terminology, aligned business communications, and a realistic understanding of the tradeoffs between flexibility and supply assurance.

The companies best positioned after Kamax will not be the ones with the most aggressive forms. They will be the ones whose contracts, operations, and communications tell the same story when the relationship is tested.