Laclede Gas Co. v. Amoco Oil Co.

Laclede Gas Company (Laclede) (plaintiff) and Amoco Oil Company (Amoco) (defendant) entered into an agreement to provide propane gas to certain residential developments. Developments would apply to Laclede for propane systems. Laclede would then send supplemental form letters to Amoco requesting that Amoco supply the required propane. Once both parties had signed the letters, Amoco was required to provide a continuous supply of propane sufficient to meet Laclede’s requirements. Laclede was obligated to install and operate the propane-distribution facilities and to pay Amoco an agreed price per gallon. The agreement’s initial one-year term was to automatically renew for successive one-year terms. The agreement also contained a unilateral-cancellation provision that allowed Laclede to cancel the agreement by providing written notice at least 30 days before the expiration of the initial term or any subsequent term. When Amoco later notified Laclede of a price increase, Laclede objected. Amoco then informed Laclede that it was terminating the agreement, arguing that it was entitled to do so because the agreement lacked mutuality. Laclede sued Amoco, seeking specific performance of the agreement. An expert testified that Laclede was unlikely to find another supplier willing to enter a long-term contract like the one with Amoco. The district court found that the contract was void for lack of mutuality because Laclede had a unilateral right to cancel. Laclede appealed.