Background: A Force Majeure Dispute Rooted in Contract Formation

Marathon Oil Co. and Mercuria Energy America, LLC entered into a contract for the purchase and sale of natural gas based on the North American Energy Standards Board (NAESB) base-contract form—a widely used master agreement in the natural gas industry. After agreeing to a specific transaction, the parties exchanged transaction confirmations. Mercuria's confirmation identified certain delivery terms, while Marathon's confirmation was silent on some of those terms but included additional specifications. The dispute arose when Marathon declared force majeure, and the parties disagreed about which terms governed their agreement. Because the specific delivery terms in the confirmations were potentially relevant to the force-majeure analysis, the parties sought early resolution of a threshold question: what constitutes the terms of their Contract, and does either party's confirmation control over the other's?

The Court's Analysis: No Material Conflict Means Both Confirmations Are Binding

The Business Court's 11th Division began with foundational contract-interpretation principles, emphasizing that courts must ascertain the parties' intent as expressed in the written agreement and read the entire agreement together as a whole, seeking to harmonize and give effect to all parts. The Court framed the central question as whether the transaction confirmations exchanged by the parties are part of their "Contract" as defined in their Base Contract, and if so, whether either confirmation trumps the other.

The Court held that whether the parties' transaction confirmations become part of the Contract depends on whether they are "binding" under the parties' agreement. A confirmation becomes binding unless the recipient timely either (a) notified the sender that the confirmation materially differed from its understanding of the agreement, or (b) sent its own confirmation containing materially different terms.

The Court holds that whether the parties' transaction confirmations are part of the Contract depends on whether they are "binding" under their agreement, which in turn depends on whether the recipient timely (a) notified the sender that the confirmation materially differed from its understanding of the agreement or (b) sent its own confirmation containing materially different terms.

The Holding: Both Confirmations Are Part of the Integrated Agreement

Applying this framework, the Court concluded that both transaction confirmations combine with the base contract to form a single, integrated agreement, and neither confirmation trumps the other. The Court reasoned that although the seller's transaction confirmation identifies a delivery term on which the buyer's confirmation is silent, the two confirmations do not materially conflict. Because there was no material conflict between the confirmations, both became binding and were incorporated into the parties' Contract.

This ruling provides important guidance for parties using NAESB and similar master agreements in the energy industry. The decision clarifies that silence in one confirmation on a term specified in another does not constitute a material conflict that would trigger a battle-of-the-forms analysis. Instead, where confirmations can be harmonized without contradiction, both become part of the integrated agreement governing the parties' transaction.