General Electric Company v. Metals Resources Group Limited

• Decision Date: 30 April 2002
• Citation: 293 A.D.2d 417,741 N.Y.S.2d 218
• Court: New York Supreme Court — Appellate Division
• Parties: GENERAL ELECTRIC COMPANY, Respondent,<BR>v.<BR>METALS RESOURCES GROUP LIMITED, Appellant.

293 A.D.2d 417

741 N.Y.S.2d 218

GENERAL ELECTRIC COMPANY, Respondent,

v.METALS RESOURCES GROUP LIMITED, Appellant.

Decided April 30, 2002.

Concur — Williams, P.J., Tom, Mazzarelli, Andrias and Friedman, JJ.

Plaintiff commenced this action to recover amounts due from defendant under the parties' commodity swap contract. By presenting proof of the contract and defendant's failure to make payment according to its terms, plaintiff carried its burden as a summary judgment movant to demonstrate its prima facie entitlement to judgment as a matter of law. Defendant, however, failed to meet its consequent burden to raise a triable issue warranting the motion's denial (see, Convenient Med. Care v Medical Bus. Assoc., 291 AD2d 617). Contrary to defendant's argument, the parties' contract was not an illegal contract to gamble, but rather a legitimate commodity swap agreement exempt from the strictures of the Commodities Exchange Act (see, 17 CFR 35.2), General Business Law § 351 and General Obligations Law § 5-401 (see, Procter & Gamble Co. v Bankers Trust Co., 925 F Supp 1270, 1285; In re Thrifty Oil Co., 249 BR 537, 553). Nor were defendant's contract obligations excusable as impossible to perform. Defendant's performance may have been rendered financially disadvantageous by circumstances unforeseen by the parties at the time of the contract's making. However, financial disadvantage to either of the contracting parties was not only foreseeable but was contemplated by the contract, even if the precise causes of such disadvantage were not specified. In any event, it is not a basis for reliance upon the impossibility of performance doctrine (see, Stasyszyn v Sutton E. Assoc., 161 AD2d 269, 270). The force majeure doctrine is no more helpful to defendant. The parties' integrated agreement contained no force majeure provision, much less one specifying the occurrence that defendant would now have treated as a force majeure, and, accordingly, there is no basis for a force majeure defense (see, Kel Kim Corp. v Central Mkts., 70 NY2d 900, 902). Nor is there any basis for a frustration of purpose defense. The inducing circumstance for the subject contract was prospective instability in the price of cobalt, the commodity "swapped" under the contract. Plaintiff sought to insulate itself from cobalt price increases by shifting the risk of such increases to defendant and defendant, in exchange, sought to shift the risk of cobalt price decreases to plaintiff. That the price of cobalt increased due to market forces did not frustrate the contract's purpose; to the contrary, it constituted an instance of the very market instability whose prospect induced the contract in the first instance (see, Pettinelli Elec. Co. v Board of Educ., 56 AD2d 520, affd 43 NY2d 760). Also without merit is defendant's claim that the parties' agreement was orally modified to relieve defendant of the risk of cobalt price increases attributable to labor strikes. While oral amendment is not barred under the agreement, the evidence of the purported oral agreement offered by defendant is insufficient to raise a triable issue as to whether a sufficiently definite agreement was entered into. The evidence in the record indicates at most an agreement to agree, which is not enforceable (see, Martin Delicatessen v Schumacher, 52 NY2d 105)...