## Facts

- Farmers holding a five-year agricultural lease contracted for natural gas service to run irrigation well engines.
- On April 21, 1964, the parties executed a written gas-service agreement for five years, with an option to renew for an additional five years.
- The agreement required the farmers to make annual minimum payments of $7.50 per 1400 h.p. for each installed engine.
- The supplier built a five-mile pipeline to the properties at a cost exceeding $100,000 and began deliveries in early April 1964.
- The contract obligated the supplier to deliver gas as set out in the contract, using “endeavor to supply” language and including limitations (including priority to domestic customers) and disclaimers regarding quantity, quality, and continuity of service.
- Before the contract was assigned to Texas Gas Utilities Company (effective January 1, 1965), the farmers were evicted from the leased properties; the contract did not address eviction.
- Gas remained available, the company furnished gas as ordered, and it delivered gas to the farmers’ successors, crediting the farmers for amounts paid by those successors.
- The farmers failed to pay the required annual minimum charges, and the gas company sued to recover them.

## Issues

1. Whether the gas-supply contract was unenforceable for lack of mutuality of obligation because the supplier’s promises were allegedly illusory, leaving no consideration to support the farmers’ minimum-payment obligation.

## Decision

- The Supreme Court of Texas held the contract was not void for lack of mutuality of obligation.
- The court treated “mutuality of obligation” as a consideration inquiry and concluded the written agreement reflected an exchange of obligations of value.
- The court reversed the intermediate appellate court’s judgment that the contract was unenforceable for lack of mutuality.
- The case was remanded for consideration of issues not reached because the lower court had disposed of the case solely on mutuality grounds.

## Legal Principles

- “Mutuality of obligation” in this context is another way of asking whether the contract is supported by consideration; if one party is not bound to any legal obligation, the agreement is unilateral and unenforceable.
- Mutuality does not require symmetry of duties; it requires that each party undertake some real legal obligation that is reciprocally induced by the other’s promise.
- A promise is not illusory merely because it is qualified by reasonable-efforts language, priority obligations, or limiting conditions; such terms may limit liability or define performance rather than negate obligation.
- Later events affecting performance (such as loss of a leasehold) do not retroactively eliminate consideration that existed at contract formation, though they may bear on other defenses to enforcement.

## Conclusion

The Supreme Court of Texas ruled that the gas company’s contractual duty to supply gas—though limited by reasonable conditions and disclaimers—was a real obligation that provided consideration for the farmers’ promise to pay minimum annual charges; the mutuality holding was reversed and the case remanded for resolution of remaining issues.


Texas Gas Utils. Co. v. Barrett, 460 S.W.2d 409 (Tex. 1970)