Fifth Circuit Affirms Arbitral Award for Breach of Unsigned Contract
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The United States Fifth Circuit Court of Appeals has affirmed an arbitral award based upon breach of an unsigned contract. In Tricon Energy Limited v. Vinmar International, Ltd., No. 12-20100 (5th Cir. May 3, 2013), Vinmar agreed to purchase an industrial petrochemical from Tricon through the services of a broker. The parties entered into a binding agreement through the broker using three memoranda to confirm the terms of the deal. The following day, a representative for Tricon sent a Vinmar a sales contract that included most of the terms of the deal and an arbitration clause. Near the signature block, the contract stated, “Please advise your agreement by signing the foregoing and returning via fax . . . within 24 hours In the event we do not receive your reply as requested, then this contract shall be the governing instrument.” Neither party signed the contract.
Later, a representative for Vinmar made handwritten suggested changes to the contract, but not the arbitration clause and sent the edited document to Tricon. Tricon agreed to all of the suggested terms except for an industry standard time bar of 90 days. After the price of the chemical Vinmar purchased fell dramatically, Vinmar sent Tricon an offer to “wipe the slate clean.” Tricon reportedly rejected the offer. Vinmar then demanded that any chemical delivered to it be manufactured in the United States despite that no such provision was included in the parties’ purchase agreement. After Tricon stated the company could not make such a guarantee, Vinmar refused to accept delivery. Tricon was able to sell only a portion of the refused chemical by the date for contract completion.
About one year later, Tricon sought to initiate arbitral proceedings with Vinmar for the alleged breach of contract. A panel of three arbitrators found that the parties entered into a binding contract that included an arbitration provision when a representative for Tricon accepted most of Vinmar’s proposed additional sales contract terms. The three-arbitrator panel awarded Tricon more than $1.3 million in damages, interest at the contractual rate of 8.5 percent, and attorney’s fees.
Read original articleTags: Ltd., Representative, United States Fifth Circuit Court of Appeals, Vinmar International
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