Laclede Gas Co. v. Amoco Oil Co.
522 F.2d 33 (8th Cir. 1975)
- Amoco Oil was a supplier of natural gas, Laclede was a distributor in Missouri. Amoco had entered a contract with Laclede to provide as much natural gas as Laclede needed to meet their customers’ demands. Laclede would maintain distribution facilities connected to Amoco’s main line and pay the “Wood River Area Posted Price” plus 4¢ a gallon for propane.
- This is an example of a requirements contract.
- The contract was originally for one year. It automatically renewed, unless Laclede gave notice of termination 30 days prior to contract renewal.
- Amoco did not have a similar clause to cancel the contract.
- After two years, Amoco canceled the contract and claimed that it was because the contract lacked mutuality. The Federal Energy Administration required Amoco to resume the supply of propane and Laclede sued for a mandatory injunction against termination of the contract (aka specific performance).
- Propane was available on the open market. Laclede could theoretically gotten the propane from another supplier and sued Amoco for additional costs. But they argued that they could not guarantee the price, and could someday not have a supply (heating fuel is a necessity, you can’t cover lack of heat with $$$ and people could freeze without a guaranteed supply).
- The Trial Court found for Amaco. Laclede appealed.
- The Trial Court found that since Laclede could arbitrarily cancel the contract, and Amoco did not have a similar right, there was no mutuality and the contract was void.
- Amoco claimed there were four problems with the courts granting specific performance:
- There was no mutuality of remedy,
- Remedy of specific performance would be difficult to administer,
- The contract is indefinitely long, and
- Remedy via monetary damages is adequate.
- The Appellate Court reversed and issued the injunction.
- The Appellate Court found that the mutuality argument was not a requirement.
- The Court found that the public interest is in getting fuel delivered to retail customers, and letting suppliers cancel arbitrarily and suddenly was not in the public interest.
- Restatement of Contracts §370 it states that “Specific performance will not be decreed unless the terms of the contract are so expressed that the court can determine with reasonable certainty what is the duty of each party and the conditions under which performance is due.”