Sunday, December 1, 2013

Kaiser-Francis Oil Co. v. Producer’s Gas Co. case brief

Kaiser-Francis Oil Co. v. Producer’s Gas Co. case brief summary
870 F.2d 563 (1989)


CASE SYNOPSIS
Appellee seller brought an action against appellant buyer seeking to enforce the provisions of two gas purchase contracts between the parties. The United States District Court for the Northern District of Oklahoma granted the seller's motion for summary judgment on the issue of liability and rejected all of the buyer's defenses. The buyer appealed.

CASE FACTS
Under the contracts between the parties, the buyer was required to take or pay for certain minimum quantities of gas from wells in which the seller had a percentage interest. When the resale price for natural gas declined, the buyer refused to pay for gas and also refused to pay for the minimum contract quantities of the gas which were not taken. The buyer argued that the force majeure provision in the contracts extended to a partial lack of demand caused by market forces thereby providing relief from the take-or-pay obligation contained in each contract. The buyer argued that a force majeure event occurred because the demand for gas sharply decreased, with a corresponding decrease in the resale price of gas that the buyer was obligated to take or pay for under the contracts. The buyer argued that there was an issue of fact concerning the extent of the failure of demand for gas.

DISCUSSION

  • The court disagreed and determined that the issues could be resolved as a matter of law. 
  • The court held that neither a decline in demand, nor an inability to sell gas at or above the contract price, constituted a force majeure event.

CONCLUSION
The court affirmed the summary judgment in favor of the seller.


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