## Facts

- Hanwha Corp. (Korea) and Cedar Petrochemicals, Inc. (New York) completed about twenty prior petrochemical transactions using a recurring exchange of documents.
- In the parties’ typical dealings, they first reached a “firm bid” on product, quantity, and price, after which Cedar sent a signed contract sheet incorporating Cedar’s standard terms, including a New York choice-of-law clause.
- Hanwha typically responded with its own form containing Hanwha’s standard terms, including a Singapore choice-of-law clause.
- In a 2009 proposed sale of toluene, the parties again agreed on product, quantity, and price, but Cedar’s documents selected New York law and Hanwha’s response selected Singapore law.
- Hanwha sued for breach of contract and anticipatory breach; Cedar removed to federal court on the basis that the dispute was governed by the CISG.
- The parties filed cross-motions for summary judgment focused on whether a binding contract was formed despite the unresolved choice-of-law conflict.

## Issues

1. Under the CISG, did the parties form a binding sales contract after agreeing on product, quantity, and price, notwithstanding their conflicting standard-form choice-of-law clauses?
2. Do conflicting choice-of-law clauses constitute a “material” alteration under CISG Article 19, making the purported acceptance a counter-offer and preventing mutual assent?
3. Did the parties’ prior course of dealing establish contract formation at the “firm bid” stage despite continued disagreement on governing law?

## Decision

- The court granted Cedar’s motion for summary judgment and dismissed Hanwha’s complaint.
- The court denied Hanwha’s cross-motion for summary judgment.
- The court held that no contract was formed because the parties never agreed on the governing-law term, which the court treated as material under the CISG.

## Legal Principles

- The CISG governs formation of an international sales contract between parties in different Contracting States.
- Under CISG Article 19, a purported acceptance that adds or changes material terms is a rejection and counter-offer rather than an acceptance.
- Terms relating to liability and settlement of disputes are treated as material under CISG Article 19(3); a governing-law clause may fall within that category when the parties treat it as essential.
- Where each party insists on its own conflicting choice-of-law clause in standard forms and neither assents to the other’s term, the exchange reflects continuing counter-offers without mutual assent, and no contract is formed.
- A prior course of dealing does not establish contract formation at an earlier stage when the parties consistently included and maintained conflicting choice-of-law provisions and there is no showing of waiver or agreed resolution of that conflict.

## Conclusion

Applying the CISG’s formation rules, the court concluded that the parties’ unresolved and conflicting choice-of-law clauses were material, so their exchange of forms never resulted in acceptance and mutual assent; without a formed contract, Hanwha’s breach and anticipatory breach claims failed as a matter of law.


Hanwha Corp. v. Cedar Petrochems., Inc., 760 F. Supp. 2d 426 (S.D.N.Y. 2011)