## Facts

- Microgem Corp., Inc., a U.S. distributor, and Homecast Co., Ltd., a South Korean manufacturer, did business involving MG2000 digital converter boxes sold for the U.S. digital television transition.
- The parties entered into a written agreement in July 2007, but later disputed whether Microgem acted as Homecast’s sales agent or instead bought units for resale under Microgem’s brand.
- The relationship deteriorated over alleged nonpayment on several purchase orders and disagreements about responsibility for returns and costs tied to allegedly defective units.
- Microgem sued in federal court; Homecast asserted counterclaims seeking payment of an outstanding balance on multiple purchase orders.
- In October 2009, Homecast wired $456,912 to Microgem after a meeting; Homecast claimed it was a full settlement and release, while Microgem disputed that characterization.
- Before trial, both sides moved for summary judgment.

## Issues

1. Whether the CISG governed the parties’ international sales dispute and whether a New York choice-of-law clause excluded the CISG under CISG Article 6.
2. Whether a release clause in the July 2007 agreement barred Microgem’s later claims arising from subsequent transactions.
3. Whether the $456,912 wire payment constituted an enforceable global settlement and release as a matter of law.
4. Whether the parties’ breach, setoff, defect/returns, and damages disputes could be resolved on summary judgment.

## Decision

- The court held the CISG applied because the dispute involved an international sale of goods between parties in different CISG Contracting States.
- The court held a generic New York choice-of-law clause, without clear exclusionary language, did not opt out of the CISG; New York law could supplement only on matters the CISG does not address.
- The court declined to hold, as a matter of law, that the July 2007 release barred Microgem’s claims relating to later transactions, concluding factual disputes existed as to scope and intent.
- The court denied summary judgment on Homecast’s settlement defense, holding the parties’ intent regarding the $456,912 payment presented a genuine dispute of material fact.
- The court largely denied both sides’ summary-judgment motions and allowed the remaining claims and counterclaims to proceed to a jury trial.

## Legal Principles

- The CISG applies by default to contracts for the international sale of goods between parties located in different Contracting States, unless excluded under CISG Article 6.
- A contractual choice-of-law clause selecting the law of a CISG Contracting State does not, standing alone, clearly exclude the CISG; the CISG remains applicable absent an express opt-out.
- Releases are construed according to the parties’ objective intent and context; when the scope of a release as applied to later transactions is reasonably disputed, summary judgment is inappropriate.
- Whether communications and conduct formed an enforceable settlement and release is a fact question when evidence permits competing inferences about the parties’ intent.
- Disputes over performance, alleged defects, returns, setoffs, and damages commonly present jury questions when supported by conflicting evidence.

## Conclusion

The court applied the CISG notwithstanding a New York choice-of-law clause and denied summary judgment on release and settlement defenses because the scope of the release and the parties’ intent regarding the $456,912 payment were materially disputed, leaving the core contract and damages issues for trial.


Microgem Corp. v. Homecast Co., No. 10 Civ. 3330 (RJS), 2012 WL 1608709 (S.D.N.Y. 2012)