A quarterly summary and brief analysis of significant decisions issued by the Massachusetts Superior Court Business Litigation Session. A service of O’Connor, Carnathan and Mack LLC.		  

August 2004
 

Volume 1
Number 1
Page 2
 

Summarizing opinions from April 1, 2004 through
June. 30, 2004


Supply Contract Not Void for Economic Duress
 

 
 


 


 



 


 
     

O  T  H  E  R      D  E  C  I  S  I  O  N  S  :

Cabot Corp. v. AVX Corp., 2004 Mass. Super. LEXIS 237
(June 18, 2004, 03-1235) (Van Gestel, J.).
     

Cabot was one of the world’s largest suppliers of tantalum products, which are materials used in the manufacture of high performance electronic capacitors. AVX was one of the world’s largest manufacturers of such capacitors. In 2000, demand for tantalum greatly exceeded the supply, and Cabot required customers to enter into long-term supply contracts to ensure their supply.

In late 2001, after demand dropped sharply, AVX sought to be released from
 




 

 

 
performance of some of its tantalum purchase obligations. Judge Van Gestel rejected AVX’s contention that it signed the supply contract under “economic duress,” and granted partial summary judgment to Cabot. “’Agreements are made to be performed, and relief should be given in the absence of special circumstances showing it would be inequitable to do so.’” (quoting Freedman v. Walsh, 331 Mass. 401, 406 (1954)).

 


 


 



 


 

 
 
     
     
 


“Agreement” Was Merely a Starting Place for Hard Negotiations and Not a Binding Contract
 

 

 
 

 

 

 

 

 


 


 

PDC-El Paso Meriden, LLC v. Alstom Power, Inc., 2004 Mass. Super. LEXIS 227
(June 14, 2004, 99-6016 BLS) (Van Gestel, J.).
     

In PDC-El Paso, Judge Van Gestel entered summary judgment on claims arising out of a July 1998 agreement to design and build an electric generating facility in Meriden, Connecticut. On close analysis, the Court determined that the July 1998 document was not a binding contract because it failed to state the terms necessary for a deal of this complexity:

“This is, after all, a project to construct a very large building for a very special purpose, which includes and must accommodate two very special, and very expensive turbines. A simple paper making an offer to purchase a specified condominium for a particular price can,

 

 

 

 



 

 

when accepted, blossom into an enforceable contract to buy the property ... , but much more must be included to achieve a binding commitment for the kind of significant engineering, procurement and construction project under consideration here.”

Id. at *29 (citation omitted). Accordingly, the Court concluded that the July 1998 was merely “an agreement to negotiate,” which would be void for vagueness if presented as a binding contract. The Court also rejected related claims for breach of the covenant of good faith and fair dealing, and the Massachusetts and Connecticut Unfair Trade Practices Acts.

 

 

 

 

 

 

 



 
 
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