Contracts II, Pages 1189–1194

Laclede Gas Co. v. Amoco Oil Co.

United States Court of Appeals for the Eighth Circuit, 1975

Facts:

The parties' predecessors agreed to provide propane gas distribution systems to various subdivisions until natural gas mains were built out to them. Plaintiff was to determine if such a system was appropriate and to install and maintain it if so, and defendant was to supply the propane. Plaintiff could cancel the contract on the day of the year it was made with 30 days notice, if a system was to be converted to natural gas, but defendant was not permitted to cancel.

After a couple years, only 8 subdivisions were left being serviced by parties, and all were mobile home parks. Defendant experienced a shortage of propane, and so it voluntarily restricted all of its customers, including plaintiff, to only 80% of their requirements. After some conflict this was resolved, but defendant soon told plaintiff that it was raising its price. When plaintiff demanded an explanation as to why, defendant informed it that it was terminating the agreement because it lacked "mutuality."

Procedural History:

District court held that the contract was void because defendant did not have a clause enabling cancellation like plaintiff had.

Defendant's Argument:

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  1. there is no mutuality of remedy in the contract;
  2. the remedy of specific performance would be difficult for the court to administer without constant and long-continued supervision;
  3. the contract is indefinite and uncertain; and
  4. the remedy at law available to Laclede is adequate.

Issues:

  • Was the contract valid?

  • Is specific performance appropriate?

Reasoning:

  • It is not necessary that each stipulation in a contract exist for both parties. Plaintiff's right to cancel was also neither arbitrary nor unrestricted. Plaintiff had to wait at least a year, cancel on the day the contract was made, and give defendant 30 days' notice. These restrictions show that it was also not illusory.

  • While courts prefer not to grant specific performance where it would require constant and long-continued court supervision, they are allowed to at their discretion when justified by the public interest. Here, there is a public interest in getting the customers their propane, and it does not require that much supervision.

  • While the parties disagree about what price should be required, this could be determined by the district court. The evidence also shows that the last subdivision should be converted in 10–15 years, so the time limit would not be indefinite. The district court could again specify.

  • While plaintiff could have obtained propane from other suppliers, he could not have acquired another contract that was long-term like defendant's.

Holding:

The contract was valid, and specific performance should be granted. Reversed and remanded.


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