Amoco
Oil was a supplier of natural gas, Laclede was a distributor in
Missouri.Amoco had entered a
contract with Laclede to provide an adequate amount of natural gas to meet
Laclede's 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 $$$).
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 specific performance:
There
was no mutuality of remedy
Remedy
of specific performance would be
difficult to administer
The
contract is indefinitely long
Remedy
via monetary damages is adequate
Appellate
Court reversed the decision and found that the injunction should be
issued.
Appellate
Court found that the mutuality
argument was not a requirement.
Also
found that the public interest is in getting fuel delivered to retail
customers.
In
Section 370 of Restatement
of Contracts 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 wheat is
the duty of each party and the conditions under which performance is due."
