June 26, 2022

Volume XII, Number 177

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June 24, 2022

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June 23, 2022

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Supplier Alert: Key Changes in Stellantis/FCA New Terms and Conditions

In December 2021, FCA US LLC and Stellantis N.V. (“Stellantis”) issued new purchase order terms and conditions, that significantly changed the default terms between Stellantis and its suppliers. The supply base found many of the new terms objectionable. Most notably, many suppliers objected to Stellantis’ inclusion of: (1) numerous one-way “ratchet” provisions requiring suppliers to pass through any savings to Stellantis but not cost increases; (2) provisions expanding suppliers’ already broad express warranties to include warranties that suppliers have conducted all testing necessary to identify any defects in their products (even if not specified as part of a validation plan); and (3) granting Stellantis’ broad power to extend purchase orders unilaterally across multiple vehicle programs with no clear end dates.

Stellantis received fierce pushback from its supply base that objected to many of the new terms and conditions. Many of the changes in the new terms and conditions seemed particularly at odds with the current situation facing many suppliers as they struggle with mounting costs and myriad challenges in the supply chain.

On May 11, 2022, Stellantis announced several changes to its leadership, one of which being that Maxime Picat will replace Michelle Wen as Stellantis’ Chief Purchasing and Supply Chain Officer. On May 16, 2022, Stellantis issued a letter to suppliers announcing that Stellantis has reinstated the prior FCA terms and conditions. The change will apply retroactively to January 1, 2022. While Stellantis’ previous terms remain very favorable to Stellantis, they generally are considered more in line with industry standards.

Notably, however, the announcement leaves in place some limited aspects of the new terms and conditions. The updated terms and conditions issued in December 2021 included two parts: (1) the Global Terms and Conditions; and (2) an Exhibit A with specific Terms for North America. According to Stellantis’ announcement, the prior version of the terms and conditions will now serve as Exhibit A, leaving the Global Terms and Conditions in place. Although the rescinded Exhibit A contained most of the significant changes from the December 2021 update, certain notable changes in the Global Terms and Conditions remain effective. For example, suppliers must still: (1) bear all costs associated with regulatory compliance; (2) guarantee the accuracy of “made in __” labeling; and (3) provide advance notice when any part or product could become dangerous.

Suppliers should consider carefully how these changes will apply to their contracts going forward. 

© 2022 Foley & Lardner LLPNational Law Review, Volume XII, Number 136
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About this Author

Vanessa L. Miller, Foley Lardner, Manufacturing Litigation Lawyer,
Partner

Vanessa L. Miller is a partner and litigation lawyer with Foley & Lardner LLP. Ms. Miller’s practice focuses on a wide array of bet-the-company litigation, such as general manufacturing breach of contract and warranty disputes, automotive supply chain disputes, product liability lawsuits, trade secret claims, and railroad and rail transloading facility disputes. Ms. Miller also counsels clients on various commercial contract and product liability issues. She is a member of the firm’s Business Litigation & Dispute Resolution Practice.

313-234-7130
Nicholas Ellis, Foley Lardner Law Firm, Litigation Attorney
Senior Counsel

Nicholas Ellis is an associate and litigator with Foley & Lardner LLP. Mr. Ellis’ practice focuses on automotive supplier disputes, the Uniform Commercial Code (UCC), warranty claims, contract law and business tort law. He is a member of the Business Litigation & Dispute Resolution Practice and the Automotive Industry Team.

313-234-7168
Regina M. Gilmour Business Attorney Foley & Lardner
Associate

Regina Gilmour is an associate and litigation attorney with Foley & Lardner LLP based in the firm’s Detroit office where she is a member of the Business Litigation & Dispute Resolution Practice.

Regina takes pride in crafting winning strategies both in and out of court. Navigating the intricacies of case law and keeping up with trends and innovations help define and strengthen her arguments. She ensures that every agreement is in the best interest of her clients.

Prior to joining Foley, Regina was an associate at a corporate law firm in Michigan.

 

313-234-2749
Amir E. El-Aswad Litigation Attorney Foley Lardner Law Firm Detroit
Law Graduate

Amir El-Aswad is a law graduate and litigation attorney with Foley & Lardner LLP. Amir is based in the Detroit office, where he is a member of the Business Litigation & Dispute Resolution Practice Group. Amir is admitted only in Illinois. He is not admitted in Michigan.

After graduation, Amir served as a law clerk for the Hon. David M. Lawson of the U.S. District Court for the Eastern District of Michigan. During law school, he was a summer associate in Foley’s Chicago office. Amir also gained experience with criminal and constitutional matters by serving as a...

313.234.2756
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