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Contracts Keyed to Fuller
Kansas Municipal Gas Agency v. Vesta Energy Co., Inc.
Citation:
840 F. Supp. 814 (D. Kan. 1993)Facts
KMGA, through its agent GasTrak, issued a request for proposal (RFP) seeking natural gas suppliers. Vesta responded with a proposal to supply 100% of KMGA’s gas requirements. After negotiations, the parties executed three letter agreements whereby Vesta agreed to supply gas to KMGA at agreed prices for one year. The letter agreements stated they would “remain valid until the execution of a mutually agreeable contract” and would become “null and void” if the parties failed to reach such a contract. The parties then negotiated for several months attempting to finalize a written contract, exchanging draft contracts and conducting negotiations on unresolved issues including peak volume pricing, creditworthiness provisions, and force majeure language. On September 8, 1992, Vesta declared the letter agreements null and void due to failure to reach a mutually acceptable contract. KMGA then had to purchase gas from another supplier at higher prices.
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