Kaiser-Francis Oil Co. v. Producer’s Gas Co.

Kaiser-Francis Oil Co. (plaintiff) sold natural gasoline to Producer's Gas Co. (PGC) (defendant) under two contracts, each containing a force majeure clause excusing performance for unforeseen events beyond the parties' control, such as acts of God, strikes, government orders, or an inability to secure labor or materials. After the resale price of natural gasoline dropped, PGC stopped paying Kaiser for gas taken from its wells, instead claiming to buy that gas more cheaply from Kaiser's co-owners, and also refused to pay for contractually guaranteed minimum quantities it never took. When Kaiser sued to enforce the contracts, PGC argued the price decline itself was a qualifying force majeure event, including as applied to a broader partial decline in demand caused by market forces. The district court granted summary judgment for Kaiser, and PGC appealed.