Lenape Resources Corporation v. Tennessee Gas Pipeline Company: Natural gas take-or-pay contracts under the Uniform Commercial Code
The majority decision in the Lenape court case is analyzed. In this case, the Tennessee Gas Pipeline Company challenged its take-or-pay oblicagion to the Lenape Resources Corporation under the theory that the Lenape gas purchase agreement constituted an output contract and was, therefore, subject to the good faith and proportionality requirements of the Uniform Commercial Code. Tennessee`s challenge was rejected by the Supreme Court of Texas in a five to four decision, with a strong minority dissent. The paper provides background on take-or-pay contracts, details the circumstances leading Tennessee to challenge the contract, and provides the procedural history of the case. The majority opinion is analyzed in light of the dissent, and motivating policy considerations are discussed. It is concluded that the majority decision may have been based more on policy concerns than on legal reasoning, and that subjecting take-or-pay contracts to good faith and proportionality requirements would not seriously diminish natural gas production nor reallocate market risks.
- OSTI ID:
- 569794
- Journal Information:
- Energy Law Journal, Vol. 18, Issue 2; Other Information: PBD: 1997
- Country of Publication:
- United States
- Language:
- English
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