Hemlock Semiconductor Operations, LLC v. Solarworld Industries Sachsen Gmbh

Facts

P and D are both involved in manufacturing components of solar-power products. P and D entered into a long term purchase agreement where P would supply D with set quantities of polycrystalline silicon (polysilicon) at fixed prices between the years 2006 and 2019. D couldn't have been happier because the market price was initially well above the contract price. After entering into the LTAs, P began a massive expansion of its manufacturing facilities in the United States at a cost of over $4 billion. As part of the transaction, D was required to make significant advance payments, which were then credited against the purchase price of the polysilicon. D acknowledges that the purpose of the payments was to help fund P's expansion. The market price cratered several years later after the Chinese government began subsidizing its national production of polysilicon. P and D agreed to lower the LTA price in 2011. The price reverted to the original amount after a year. P then demanded that D pay the original LTA price for the specified quantity of polysilicon for the year 2012. In March 2013, P sent D a 'Shortfall Notice' that set forth the quantities of polysilicon that D had failed to purchase under the LTAs in 2012 and that demanded payment pursuant to the take-or-pay provision. D insisted that the parties had permanently amended the LTAs and that P had waived the ability to enforce the LTAs. P sued D for breach of contract insisting on payment under the liquidated damages provision in the contract. D asserted affirmative defenses, including illegality, commercial impracticability, and frustration of purpose. P filed a motion for summary judgment, and it was granted. D appealed. D, in part, claims that the doctrines of commercial impracticability and frustration of purpose excuse D's breach. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

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