Five Stories That Matter in Michigan This Week – August 25, 2023

  1. Housing Inequality May be on the Michigan Legislature’s Agenda this Fall

Recent news reports suggest that one of the Michigan’s legislature’s priorities for this fall will be to pass a slate of bills meant to address housing inequality. This may include a 15-20 omnibus bill package addressing issues such as (according to Mlive.com) “efforts to clarify the organizing rights of tenants, requiring landlords pay for the relocation of tenants with red-tagged buildings and establishing a standard criteria for what a housing inspector may consider a safe and livable dwelling.”

Why it Matters: With high mortgage rates and low for-sale housing inventory, affordable housing is a hot-button issue for many Michiganders. Data from the National Low Income Housing Coalition’s Out of Reach report ranked Michigan 28th worst in the nation for rental affordability.

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  1. Business Education Series – Practical A.I. Business Solutions

Explore the transformative potential of Artificial Intelligence in the business landscape during our Lansing Regional Chamber of Commerce Business Education Series. 

Why it Matters: From understanding the capabilities of AI models like ChatGPT to creating customized workflows using API integrations and automation tools, discover how AI can drive innovation and efficiency across industries. Learn more.

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  1. Michigan Supreme Court Clarifies the Difference Between “Requirements” and “Release-by-Release” Contracts Under the Uniform Commercial Code

In an important decision that impacts customers and suppliers in the manufacturing industry, the Michigan Supreme Court, in MSSC, Inc. v. AirBoss Flexible Prods. Co., clarified the contractual circumstances under which a supplier can become bound to a long-term “requirements contract” under the Uniform Commercial Code.

Why it Matters: In light of the Supreme Court’s decision, buyers and sellers of goods should review their contracts with legal counsel to evaluate whether they meet the standards for a requirements contract. Read more on the topic from your Fraser Trebilcock attorney.

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  1. CRA Publishes July 2023 Data; Average Price Increases

Per data released by the Cannabis Regulatory Agency, the average retail price for adult-use sales of an ounce of cannabis is $98.65, an increase from $89.27 in June. This is still a large decrease from July 2022, where the average price was $121.58.  

Why it Matters: While the prices of cannabis and cannabis-related products continue to decrease and make consumers happy, growers on the other hand are seeing profits decrease resulting in them seeking ways to halt new licenses to be granted in an effort to steady prices. Contact our cannabis law attorneys if you have any questions. 

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  1. Michigan Supreme Court Rules on Open and Obvious Doctrine

In its decision in a pair of consolidated cases (Kandil-Elsayed v F & E Oil, Inc and Pinsky v Kroger Co of Mich), the state’s high court did away with a legal doctrine known as “open and obvious.” Generally speaking, under this doctrine, a premises possessor (whether that is the landowner, land contract vendee, lessee, or other party with the right to possess the property) does not have a duty to warn individuals of potentially dangerous conditions on the premises if the condition is “open and obvious.”

Why it Matters: What happens next is anybody’s guess, but likely effects of this decision include an increase in the number of personal injury lawsuits filed, an increase in the number of personal injury cases going to trial, and across the board increases in property insurance rates for commercial and residential property owners.

Related Practice Groups and Professionals

Real Estate | Jared Roberts
Business & Tax | Robert Burgee
Cannabis Law | Sean Gallagher

Michigan Supreme Court Clarifies the Difference Between “Requirements” and “Release-by-Release” Contracts Under the Uniform Commercial Code

In an important decision that impacts customers and suppliers in the manufacturing industry, the Michigan Supreme Court, in MSSC, Inc. v. AirBoss Flexible Prods. Co., clarified the contractual circumstances under which a supplier can become bound to a long-term “requirements contract” under the Uniform Commercial Code. As discussed below, unless a contract identifies a quantity, it will be treated as a release-by-release contract.

The Underlying Dispute

In this case, MSSC, Inc., a “Tier 1” automotive buyer, sought to enforce a purchase order for goods manufactured by “Tier 2” automotive supplier Airboss. Many years before the suit, the parties agreed to a specific set of terms and conditions that would govern the transactions between the parties and the individual purchase orders, or releases, pursuant to that agreement. The parties identified their purchase order as a “blanket” order that listed the parts to be supplied but did not include specific quantities of the parts to be supplied by Airboss. Instead, the quantity to be supplied by Airboss would be based upon the needs of MSSC for their customers’ orders. However, no one purchase order nor the any of the terms and conditions required MSSC to send any specific number of firm orders to Airboss. As time passed, the fixed price agreed to by the parties began to result in substantial losses to Airboss and Airboss eventually threatened to cease production under the agreement unless MSSC agreed to a price increase.

At the trial court, Airboss moved for summary disposition, arguing that the purchase order failed to satisfy MCL 440.2201(1), the statute of frauds of the Uniform Commercial Code, because it did not include a quantity term. In response, MSSC, Inc. moved for summary disposition, arguing that the blanket purchase order was a requirements contract that satisfied the statute of frauds.

The trial court ruled in favor of MSSC, Inc., reasoning that because the purchase order contained the word “blanket” on the first page, it therefore included a “quantity term” that satisfied the statute of frauds. Airboss appealed to the Michigan Court of Appeals, which affirmed the trial court’s ruling.

The Michigan Supreme Court’s Analysis

At the core of this case is the treatment of “requirements contracts,” under the UCC, which are those whose quantities are determined “by the output of the seller or the requirements of the buyer ….”  MCL 440.2306(1). Prior to this case, those were the choices you either had a contract for the “requirements of the buyer” (oversimplified as one for “all of the wood the buyer needs”) or a contract for the “output of the seller” (oversimplified as “all of the wood I can cut”). As the Michigan Supreme Court went on to explain, however, some of these oversimplifications led to unspecific or unidentifiable quantity, which violates the statute of frauds (i.e., a legal principal that dictates the essential items that must be included in order to create a binding contract). The Court went on to conclude that where a contract fails to specify a quantity or a quantity-determining term, it would be found to have created a newly recognized type of contract called a “release by release contract.” Under such an agreement, “the purchase order and incorporated terms and conditions created a blanket—or umbrella—agreement, while the releases created individual purchasing contracts governed by the umbrella terms.” MSSC, Inc. v. Airboss Flexible Prod. Co., No. 163523, 2023 WL 4476721, at *10 (Mich. July 11, 2023). As such, the umbrella agreement included the pricing, shipping, and other terms and conditions of the agreement between the parties, but it was each individual order (or each “release”) that created a binding contract. There is no long-term commitment required by either party in a release-by-release contract.

The Supreme Court ruled that the lower courts erred by relying on parole evidence – that is information not contained within a written contract – to determine whether the parties intended the term “blanket” to identify a contractual quantity and to clarify what quantity was intended. Instead, the contract must contain language that identifies a quantity in order for it to be enforceable as a requirements contract. Accordingly, Airboss was within its rights to reject releases from MSSC because no quantity term was specified in the underlying contract.

Practical Implications

In light of the Supreme Court’s decision, buyers and sellers of goods should review their contracts with legal counsel to evaluate whether they meet the standards for a requirements contract. If you have questions, or require assistance, please contact Bob Burgee.


Robert D. Burgee is an attorney at Fraser Trebilcock with over a decade of experience counseling clients with a focus on corporate structures and compliance, licensing, contracts, regulatory compliance, mergers and acquisitions, and a host of other matters related to the operation of small and medium-sized businesses and non-profits. You can reach him at 517.377.0848 or at bburgee@fraserlawfirm.com.

Five Stories That Matter in Michigan This Week – August 18, 2023

  1. Hosting an Event that Involves Cannabis in Michigan Requires Proper Licensing

As the legal cannabis industry continues to grow in Michigan, more events involving the consumption of cannabis are being hosted across the state. As the Cannabis Regulatory Agency (CRA) discussed in a recent information release, such events require proper licensing. Specifically, according to the CRA, “CRA rules require a person who allows consumption of marijuana products on the premises of a non-residential location – and charges a fee for entry, sells goods or services while individuals are consuming on the premises, or requires membership for entry – must acquire either a designated consumption establishment license or a temporary marijuana event license. An application for a temporary marijuana event license must be submitted 90 days prior to the date of the event.”

Why it Matters: Violations of requirements may result in disciplinary action. If you have any questions, please contact your cannabis law attorneys at Fraser Trebilcock.

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  1. Fraser Trebilcock Attorney Thaddeus Morgan Obtains Summary Judgment for Firm Client; Sixth Circuit Affirms Dismissal

The U.S. Court of Appeals for the Sixth Circuit affirmed a decision by the U.S. District Court for the Western District of Michigan, which granted summary judgment for the firm’s client, who was represented by Fraser Trebilcock attorney Thaddeus Morgan.

Why it Matters: The U.S. Court of Appeals for the Sixth Circuit did not find either of the district court’s decisions erroneous, affirming the denial of the Plaintiff’s motion to amend and granting summary judgment to the defendants. Read more on the case.

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  1. Michigan Cannabis Sales Exceed $276 Million in July

Cannabis sales surpassed $276 million in July, via the monthly report from the Michigan Cannabis Regulatory Agency. Michigan adult-use sales came in at $270,603,217.84, while medical sales came in at $6,143,046.23, totaling $276,746,264.07.

Why it Matters: Marijuana sales remain strong in Michigan, particularly for recreational use. However, there still are significant concerns about profitability and market oversaturation that the industry is contending with.

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  1. Business Education Series – Setting Meaningful Goals and Time Blocking for Success

On August 22, 2023, gain valuable knowledge and skills to set meaningful goals, establish priorities, and effectively manage their time through the practice of time blocking.

Why it Matters: Participants will learn practical strategies and techniques to enhance their goal-setting abilities, develop a clear sense of direction, and optimize their productivity. Learn more.

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  1. Michigan Supreme Court Clarifies the Difference Between “Requirements” and “Release-by-Release” Contracts Under the Uniform Commercial Code

In an important decision that impacts customers and suppliers in the manufacturing industry, the Michigan Supreme Court, in MSSC, Inc. v. AirBoss Flexible Prods. Co., clarified the contractual circumstances under which a supplier can become bound to a long-term “requirements contract” under the Uniform Commercial Code.

Why it Matters: In light of the Supreme Court’s decision, buyers and sellers of goods should review their contracts with legal counsel to evaluate whether they meet the standards for a requirements contract.

Related Practice Groups and Professionals

Cannabis Law | Sean Gallagher
Litigation | Thaddeus Morgan
Business & Tax | Ed Castellani