## Facts

- Denbury Onshore, LLC operated CO₂ recovery and dehydration facilities in Mississippi and used outside welding contractors for construction work at multiple plant sites.
- Precision Welding, Inc. provided welding and construction services to Denbury from about 2002 to 2006 under an oral arrangement with hourly billing and no written end date.
- The parties did not agree on a fixed term, and Precision typically moved from one Denbury project to the next as work was completed.
- In 2005 Denbury began soliciting time-and-materials bids for a Jackson Dome dehydration project described as two plants (Barksdale I and Barksdale II); Precision submitted the lowest bid and began work on Barksdale I.
- A 2006 audit disclosed that Precision had provided gift cards to certain Denbury employees; Denbury concluded the employees violated its ethics policy by accepting them.
- When questioned by auditors, Precision’s president initially identified employees who received gift cards but later stated he could not remember; Denbury viewed this as noncooperation and terminated Precision almost immediately, before work began on Barksdale II.
- Precision sued, and the case proceeded to trial primarily on a breach-of-contract theory that Denbury promised Precision could remain on the job through completion of the project(s).
- A jury awarded Precision \$1,500,000; the trial court denied Denbury’s motions (including JNOV) challenging the verdict.

## Issues

1. Whether the parties’ oral relationship created a contract for a definite term (continuing through completion of the project(s)) or an indefinite-duration agreement terminable at will.
2. Whether the trial court erred by allowing the jury to award expectancy damages based on a supposed promise to keep Precision on the job through completion.
3. Whether, even if the contract was terminable at will, Denbury had a duty to give reasonable notice of termination and, if not, what damages are recoverable.

## Decision

- The Mississippi Supreme Court held the oral agreement—hourly payment for work performed with no specified duration—was an indefinite-duration contract terminable at will as a matter of law.
- The Court reversed the \$1,500,000 verdict because it rested on an improper theory that Denbury was obligated to retain Precision through project completion.
- The Court remanded for a new trial limited to whether Denbury provided reasonable notice of termination and, if not, the damages proximately caused by the lack of reasonable notice.
- Disposition: reversed and remanded for proceedings confined to reasonable-notice damages.

## Legal Principles

- An oral services agreement paid at an hourly rate, without a definite duration, is presumptively terminable at will under Mississippi law.
- A course of dealing and expectations of continued work do not, without an express promise or definite term, convert an at-will service relationship into a contract lasting through project completion.
- Expectancy damages for future work (including alleged lost profits through completion) are generally unavailable under an at-will services contract absent a definite term or express retention promise.
- Even where termination is permitted at will, the terminating party may be required to provide reasonable notice; recoverable damages are limited to losses proximately caused by failure to provide reasonable notice, not long-term expectancy profits.

## Conclusion

The court treated the parties’ hourly, indefinite oral arrangement as terminable at will, set aside the jury’s lost-expectancy award, and ordered a new trial solely to determine whether Denbury gave reasonable notice of termination and, if not, what limited damages flowed from the lack of notice.


Denbury Onshore, LLC v. Precision Welding, Inc., 98 So. 3d 449 (Miss. 2012)