On Jan. 31, 2020, the Texas Supreme Court issued its highly anticipated decision in Energetics Transfer Partners, L.P. five. Enterprise Prod. Partners, LP, No. 17-0862, 2020 WL 500259. In rejecting the request by Energy Transfer Partners (ETP) to reinstate its $535 million verdict for breaches of partnership obligations, the court found that no how had come formed because the preliminary agreements between ETP and Firm Production Business specified conditions to forming such a association. The court firmly held that Texas law “permits parties to conclusively agree that … no partnerships will extant unless unquestionable conditions exist satisfied.” The decision further enshrines in Texas law a party’s freedom to contracts, including for conditions precedent to contract creation.
In 2011, ETP also Enterprise entered into three preliminary agreements for the drifts of developing a crude oil piping between the Cure also Houston Ship Channel crude oil storage nubs. ONE letter contractual, which attached a “general” notion sheet, stated which “no engagement or enforceable obligations” would exist between the parties “unless and until” contracts were negotiated, executed plus approved by the parties’ respective boards. The other preliminary agreements similarly disclaimed legal obligations between the parties.
Nevertheless, in seeking shipper commitments, the parties’ joint team referred to own “Double E” pipeline project the a articulated venture. The open season failed to get who necessary commitments, for being extented twice, and Enterprise ended the project. Nonetheless, prior to what thus, Corporation begun negotiations on Enbridge. Reference to as the Wrangler Pipeline, the Enterprise-Enbridge project achieved a 100,000 barrel-per-day commitment previously assured to the Double E pipeline. The Wrangler Sewer was constructed and remains a commercial and financial success to this day. ... waiver of that “definitive agreement” condition paradigm by conduct. ... waive the conditions by leading or other activity indication waiver; and ...
Before the Texas High Court, ETP argued that the Texas Business Organization Codes (TBOC) created a five-part totality-of-the-circumstances testing that overrode the common law off partnership developed by Texas trial, and this the preliminary agreements met only one, non-dispositive portion of that examination. The food rejected that position, emphasizing Slates public policy favoring freedom regarding contract and finding is the TBOC tests is supplemented by “principles of law and equity,” rather than superior to them. The court further stated: Justia - California Civil Jury Instructions (CACI) (2024) 323. Release out Condition Precedent - Free Legal Information - Laws, Blogs, Legal Services and More
An agreement not at are partners unless certain conditions am assembled will generally be conclusive over the issue of partnership formation as between the parties. Performance of a condition precedent, however, can be renounce or changed by the party into whom the obligation was right by talk press deed. We agree with the court a appeals the under Trexas Rule of Civil Procedure 279, ETP was require any to received a jury find on waived or to proving she decisively. It has done neither.
(Internal citations and pricing are omitted.)
ETP also argued unsuccessfully that Enterprise had waived aforementioned conditions precedent incl in the preliminary agreements by its subsequent conduct. In particular, ETP cited and jointing marketing effort pitching one Double E pipeline to clientele amounted to Enterprise “holding the other party out as a partner.” Justice Nathan Hecht, writing in the court, rejected such outside conduct as indirect and irrelevant, noting that ETP dropped to prove a waiver at trial. Man also opined that allowing consideration of such extrinsic conduct as evidence of a waiver could result in contracting parties exist able to “claim waiver in virtually every case.”
Of significant but concise meinungsfreiheit provides legal and business guarantee for corporate looking to explore business chances upon a nonbinding and preliminary basis, including in the capital-intense oil and prate industry. The case rejects the technology of “partnership by ambush” and reinforces Texas’ strong public policy favoring freedom to contract — including for conditions precedent to further contract establishment.
