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United States Court of Appeals for the Eighth Circuit - 522 F.2d 33
Tags: Contracts, Specific performance, Remedies, Breac
tl;dr:
The parties contracted regarding a propane delivery subsystem. Defendant was the exclusive provider to Plaintiff and Plaintiff had the exclusive right to cancel. Then, Defendant tried to raise prices during a propane shortage.Video Summary
Case Summary
In Laclede Gas Co. v. Amoco Oil Co. (1975), the Eighth Circuit Court of Appeals ruled on a contract dispute between a Missouri gas company, Laclede Gas Co., and a Delaware oil company, Amoco Oil Co. The case focused on specific performance, a legal remedy that requires a party to fulfill their contractual obligations.
Laclede Gas Co. had a contract with Amoco Oil Co. to purchase propane needed for certain subdivisions in Missouri. The contract allowed Laclede to terminate it after one year, with no such option for Amoco. Disagreements arose, and Amoco stopped supplying propane to Laclede. Laclede sued for breach of contract, seeking specific performance or damages.
The district court sided with Amoco, stating that the contract lacked mutuality of consideration - meaning it wasn't binding due to Laclede's option to end it at will. However, on appeal, the court reversed the decision, stating that there was mutuality of consideration within the agreement and specific performance was an appropriate remedy.
The court found that Laclede, by agreeing to purchase propane exclusively from Amoco, and Amoco, by committing to selling propane at a specified rate, both provided adequate consideration. The court also decided that specific performance was suitable in this situation because Laclede lacked access to an alternative long-term propane supplier and propane was not an easily substitutable product.
This case is significant for demonstrating the concept and application of specific performance in contract law, and how it may be deemed appropriate in certain circumstances.
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The case involves a contract dispute between Laclede Gas Company and Amoco Oil Company over the supply of propane. The district court ruled the contract invalid due to lack of mutuality, but the higher court reversed the decision, stating that a bilateral contract is not rendered invalid merely because one party has the right to cancellation while the other does not. The court determined that Laclede was bound to purchase all propane required by the particular development from Amoco, even though this commitment was not explicitly stated in the agreement. Laclede committed to purchasing all its propane requirements from Amoco by attaching its distribution lines to Amoco's header piping. Therefore, Laclede was obligated to purchase all propane it distributed from Amoco in any subdivision covered by the supplemental agreement where the distribution system had been established.
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