Methode Electronics has sued Delphi Automotive Systems after it terminated a three-year supply agreement.

The maker of electro-mechanical devices posted a first quarter loss due to charges and poor sales.

Methode said it was seeking a preliminary injunction to prevent the Delphi unit from prematurely terminating the agreement after it was notified of the cancellation of all purchase orders from 10 September.

It had been contracted to provide silicone-filled sensor pads for use in Delphi’s passive occupant detection system and the three-year deal would have been in force until 30 September, 2011.

“If we are not successful in this pending litigation, we believe demand for these sensor pads and our overall financial condition and results of operations will be materially adversely affected,” Methode said in a filing with the US Securities and Exchange Commission cited by Reuters.

Methode is already involved in a patent litigation with Delphi over the same supply agreement.

Methode said it recorded a first-quarter net loss of US$13,000, hurt by restructuring charges and continued weakness in the North American automotive market, which compared with net income of $6.9m a year ago.

Excluding restructuring charges, it earned 10 cents per share. Revenue fell 33% to $89.8m.