## Facts

- A gas utility and a propane supplier entered a written agreement to provide centralized propane distribution for residential developments until natural gas mains were extended.
- Developers applied to the utility for a central propane system; for each approved development, the utility could request propane service from the supplier using a supplemental form contemplated by the master agreement.
- Upon signing a supplemental form, the supplier agreed to install, own, maintain, and operate propane storage/vaporization facilities and to provide a continuous propane supply commensurate with the utility’s reasonably anticipated requirements for that development.
- The utility agreed to install and operate distribution facilities within developments and to purchase from the supplier the propane needed to serve those developments at a price tied to an objective posted-price standard.
- The agreement had a one-year term with automatic one-year renewals; only the utility could terminate, by written notice at least 30 days before the end of a term.
- After the relationship began, the supplier announced a price increase; the utility disputed it, and the supplier attempted to terminate, asserting the contract was unenforceable for lack of mutuality because only the utility had a termination right.
- The utility sued for breach and sought a mandatory injunction compelling continued supply; evidence showed substitute long-term supply was unlikely and interruption would affect residential customers.
- After a bench trial, the district court held the contract invalid for lack of mutuality and denied injunctive relief without deciding damages.

## Issues

1. Whether a bilateral supply agreement is void for lack of mutuality when only one party has a restricted right to terminate at the end of contract years.
2. Whether specific performance (mandatory injunctive relief) is an appropriate remedy to compel continued propane supply under the agreement.

## Decision

- The court of appeals reversed.
- The agreement was valid and enforceable; the utility’s unilateral termination clause did not render the supplier’s promise illusory or destroy consideration.
- The court directed the entry of equitable relief compelling performance because legal damages were inadequate and the contract was sufficiently definite to enforce.

## Legal Principles

- A bilateral contract is not invalid merely because only one party has a termination right, so long as that power is meaningfully restricted (e.g., limited timing and advance notice) and the parties otherwise assume enforceable obligations.
- Requirements-type obligations can supply consideration and mutuality where one party is bound to purchase its needs from the other once the arrangement is triggered for particular projects.
- Specific performance may be ordered for long-term supply contracts when (a) contractual duties are sufficiently definite for judicial enforcement, (b) the agreement has a reasonably ascertainable duration, and (c) the remedy at law is inadequate due to difficulty of cover and uncertainty in measuring damages.
- Courts may consider the public consequences of service disruption when assessing the propriety of mandatory injunctive relief in utility-related supply arrangements.

## Conclusion

The court held the propane supply agreement enforceable despite a unilateral, time-and-notice-limited termination clause and ordered specific performance because the agreement’s terms were definite and damages would not adequately protect the utility or its residential customers from supply disruption.


Laclede Gas Co. v. Amoco Oil Co., 522 F.2d 33 (8th Cir. 1975)