Oils ain’t oils

I was working as a solicitor in a large legal firm when one day the senior partner tossed a contract on my desk and said “Myles, we act for this client and need to get them out of this contract!”

He mentioned that other solicitors in the firm had tried but had not been successful in finding a solution.

Challenge accepted!

In simple terms, our client had a contract with an Oil Company… the exclusive rights to truck oil to and from an oil pipeline’s inlet/outlet valves.  The contract was firm and set for a number of years, with rights of renewal.

To our client’s detriment, what it did not contain was an escalation clause. And, over the period of the contract term, the client’s cost of supply had risen to the point where it was costing more than he was making. He needed a re-negotiated contract, and he needed it fast.

Well, I read the law. Nothing I could use there. I considered the facts. Nothing I could use there.

And then began the lateral thinking process. It occurred to me that there is often something in a contract that neither party wish to enforce. So, I went looking and found… nothing!

Then I decided to look for what was not there (often what is not said is more important than what is said). I read and re-read the contract until I saw it, or rather didn’t see it, because it wasn’t there.

There were no ‘quantities’ clauses! None!

Our client had exclusive rights to truck oil from the pipeline, but there were no minimum quantities that had to be trucked.  My client could literally truck zero oil if he wished! 

My thinking was that our client should contact the Oil Company and say that he is going to remove all trucks from the job by three o clock that afternoon.  He would be quite within his rights and what’s more he should advise them that if they attempted to have anyone else truck the oil he would sue them for breach of the exclusivity provisions of the contract.

Subsequent board room negotiations ensued with the Oil Company Solicitors for a new contract.

Escalation clauses were negotiated along with a new base price (based on quantity) and our client was happy (and so was the Oil Company).

Which just goes to prove that sometimes, in complex legal matters, ‘oils ain’t oils’ and it takes thinking outside the square to find solutions.

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