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Note: Adani Exports Limited (Buyer) solicited a "formal offer" from AMCI Export Corp. (Seller) to supply 65,000 metric tons of steam coal for resale to an Indian State Electricity Board. A number of communications followed. There was no one signed document evidencing the terms of the transaction, however, a written "acknowledgement of purchase" from Seller and a "confirmation of purchase" from Buyer, and various emails were exchanged.

Due to disagreements about details, which extensions of time were unable to resolve, there was no shipment. Buyer sued Seller for breach of contract. Both parties moved for summary judgment, which was denied by the United States District Court for the Western District of Pennsylvania, McVerry, J.

The court denied the parties' motions for summary judgment because it found that a genuine issue as to material fact existed in regard to the existence of a contract. Seller argued that because the parties' previous transactions were evidenced in writing, the absence of writing negated the existence of a contract. One of the communications provided that, "Payment... 100% based on presentation of standard load-port shipping documents under confirmed L/C opened through a first class/prime bank." The court noted that there was testimony that Buyer understood that a contract had to be signed in order to open an LC and that "letters of credit were usually not opened until after the nomination of a vessel."

Seller contended "that [Buyer] cannot maintain this breach of contract action because of [Buyer's] failure to supply a letter of credit." The court noted that US UCC § 2-325(a) provided that, "failure of the buyer seasonably to furnish an agreed letter of credit is a breach of the contract for sale."

Seller argued that an LC was a condition precedent to the formation of a contract under the Uniform Commercial Code. Buyer contended that the existence of a written document was solely for the purpose of procuring an LC. The court stated that, "[u]nder the UCC, the question of whether a letter of credit is deemed to be a condition precedent to the formation of a contract is generally treated as a question of fact." The court ruled that failure to open a letter of credit does not entitle Seller to summary judgment. It also ruled that emails may be referred to in determining whether memoranda satisfy the local Statute of Frauds, requiring a signed writing or writings indicating a contract under US UCC § 2- 201 (UCC Statue of Frauds).

[JEB/alh]

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