Federal Court Finds that OEM Purchase Order Does Not Necessarily Govern Parties’ Contract

The U.S. Eastern District of Michigan recently held that an automotive OEM’s purchase order did not, as a matter of law, govern the parties’ supply contract.   In Synergen Inc. v. FCA US LLC, case no. 16-cv-11842 (E.D. Mich. March 23, 2020), FCA US LLC had issued a request for quotation to a prospective supplier, Nartron Corporation.  Nartron responded with a detailed quotation that expressly rejected FCA’s future purchase orders.  FCA subsequently issued a purchase order that incorporated FCA’s general terms and conditions, which expressly rejected any additional or different terms.  Litigation later ensued, and FCA filed a motion for partial summary judgment declaring that its terms and conditions constitute the governing contract.  However, the Court held that it could not, as a matter of law, find that FCA’s terms and conditions controlled.  Among other things, the Court stated that a reasonable jury could conclude that the quote was the relevant offer and that the purchase order was an acceptance of that order.  The Court noted that a quotation could represent an offer “if it is sufficiently detailed and it reasonably appear(s) . . . that assent to that quotation is all that is needed to ripen the offer into a contract.”  Unlike other cases in which the quotation was a mere invitation to negotiate, the quotation at issue did not ask FCA to contact Nartron for further negotiations and instead included payment terms and a detailed schedule for performance.  The Court further stated that, even if the purchase order was a counteroffer, summary judgment would still be inappropriate because FCA had not established as a matter of law that Nartron assented to the differing terms by providing goods.  The Court noted that “assent” is a question for the trier of fact under Michigan law. 

It is important to note that this decision does not bar FCA from prevailing at trial; it only means that the Court could not find for FCA as a matter of law.  The decision is a relative outlier among cases addressing purchase orders and quotations, but it is a reminder to suppliers and legal practitioners alike that a quotation may be a relevant factor when construing the contract.