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25-BC11A-0013 Marathon Oil v. Mercuria Energy America
Analysis
Liquidated Damages Enforceability Turns on Fact Issues in Natural Gas Contract Dispute
In Marathon Oil v. Mercuria Energy America, the Business Court of Texas held that material fact disputes preclude summary determination of whether a NAESB Base Contract "Spot Price Standard" liquidated-damages clause operates as an unenforceable penalty under the "unbridgeable discrepancy" standard. The court rejected Marathon's cost-basis theory as the proper measure of Mercuria's actual damages under the circumstances of the case.
Force Majeure Clauses Do Not Require Spot-Market Purchases or Buybacks Absent Express Language
In Marathon Oil v. Mercuria Energy America, the Texas Business Court held that contract language stating a seller has "no obligation to seek alternative Gas supplies" relieved Marathon of any duty to purchase spot-market gas or buy back delivery obligations during Winter Storm Uri. The decision enforces negotiated modifications to NAESB-form natural gas contracts according to their plain terms, without imposing implied mitigation duties under force majeure clauses.