AUSTIN - On Friday, the Texas Supreme Court found that a lower appellate court erred by failing to apply a common-law default rule in a dispute over dozens of oil-and-gas leases.
According to the high court’s opinion, the case concerns whether Apache Corp. breached its purchase-and-sale agreements with Apollo Exploration, Cogent Exploration and SellmoCo. In those PSAs, the sellers sold 75 percent of their working interests in 109 oil-and-gas leases to Apache. The parties asked justices to resolve key questions of contract construction.
“Since this Court’s earliest days, we have confronted contracts that use the words ‘from’ or ‘after’ a specified date to measure a length of time,” the opinion states. “To enhance clarity, provide certainty, and prevent future disputes, our cases have long followed a default common-law rule in that circumstance, under which we must treat the time period as excluding the specified date.
“A period measured in years ‘from’ or ‘after’ a measuring date, therefore, ends on the anniversary of the measuring date, not on the day before the anniversary.”
In this case, however, the parties’ agreement implicates the default rule without displacing it, the opinion states.
“We must therefore apply the default rule to the parties’ dispute,” the opinion states. “Because the court of appeals did not do so—and because we also conclude that it incorrectly construed other contractual provisions at issue—we reverse its judgment on the issues presented for our review and remand the case to that court for further proceedings.”
Case No. 21-0587