While the novel coronavirus continues (rightfully so) to garner all the headlines, it is worth highlighting some of the other legal news swirling around the state. In January and February, the Supreme Court of Texas published two decisions that focus squarely on the freedom of contract in the energy industry. “Perhaps no principle of law is as deeply ingrained in Texas jurisprudence,” one of the recent cases noted, “as freedom of contract.”
On Jan. 31, the first of these decisions was published: Energy Transfer Partners v. Enterprise Products Partners, No. 17-0862. The Energy Transfer decision addressed whether parties have freedom to contract for conditions precedent to partnership formation. In this case, two separate companies—Energy Transfer and Enterprise—agreed to work together to explore the viability of a pipeline project. However, “in three written agreements, they reiterated their intent that neither party be bound to proceed until each company’s board of directors had approved the execution of a formal contract.” Thereafter, the parties formed an integrated team to pursue the potential pipeline project and marketed the deal to potential customers as a “50/50 JV.” But after months of trying the deal never came together, and Enterprise ended its relationship with Energy Transfer. Thereafter, Enterprise entered into a different pipeline deal with different partners.
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