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Texaco, Inc. v. Pennzoil, Co.

Court of Appeals of Texas
729 S.W.2d 768 (1987)


The board of the Getty Oil Company (Getty) determined that it would sell three-sevenths of Getty stock to Pennzoil Company (Pennzoil) (plaintiff). The board members signed a memorandum of agreement with respect to the transaction. There was also a transaction agreement in progress that would formally memorialize the agreement. The parties had agreed to all essential terms of the contract, leaving only details and mechanics of the transaction to be formally drafted. Texaco became aware that Getty was unhappy with the terms of its agreement with Pennzoil. Texaco offered Getty a deal with better terms. Getty accepted the offer, thus breaching its agreement with Pennzoil. Pennzoil brought suit against Texaco for intentional interference with a contractual relationship. The jury found in favor of Pennzoil, finding specifically that there was a binding agreement between Getty and Pennzoil and that Texaco had induced Getty’s breach, causing Pennzoil substantial damages. Texaco appealed, arguing that a binding contract did not exist and that, even if it did, Texaco was unaware of the binding nature of the agreement and did not induce Getty’s breach.

Rule of Law


Holding and Reasoning (Warren, J.)

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