Texas Business Court Decision – September 18, 2025
No.25-BC11A-0013 Marathon Oil Co. v. Mercuria Energy America, LLC (Eleventh Division, Judge Andrews, sitting by designation) 25-bc11a-0013-marathon-oil-v-mercuria-energy-america-2025-tex-bus-36.pdf
Civil case – North American Energy Standards Board Contracts. Marathon and Mercuria entered into a Base Contract or master contract in January 2021, setting out terms and conditions governing Marathon’s individual sales of natural gas to Mercuria; the Base Contract was based on the North American Energy Standards Board (NAESB) form contract. The parties agreed to the transaction through ICE Chat, an instant messaging platform used by natural gas traders. The chat specified quantity of gas to be delivered, duration (February 2021), price, and delivery location. Mercuria sent a transaction confirmation, and Marathon followed with one of its own, confirming the same terms, plus a “pipeline” term for “Enable Gathering and Processing” that was not in Mercuria’ confirmation. Mercuria signed and returned Marathon’s confirmation with checkmarks added near some of the terms but not next to the “Enable Gathering and Processing” term. In February 2021, Marathon declared force majeure in the wake of Winter Storm Uri, and delivered about 80% of the MMBtu due Mercuria. Mercuria disputed the force majeure declaration and brought this action.
Marathon argued that the pipeline term is part of the parties’ contract because its confirmation was binding, became part of the contract, and either controls over Mercuria’s confirmation or can be read together with it; Mercuria argued the pipeline term was not part of their agreement because the ICE Chat terms control, Marathon’s confirmation could not vary or supplement the ICE Chat terms or the Base Contract, and that it rejected the term by returning Marathon’s confirmation without checking the term.
Held: (1)Under the NAESB Base Contract, both of the transaction confirmations are valid and binding, and the absence of the checkmark in Mercuria’s signed confirmation did not constitute notice of a disagreement on the terms, especially where Mercuria did not note any objections to the confirmation and attached it to a transmission note stating “Attached is the executed confirmation;” nor was there anything in the parties’ prior interactions that would put Marathon on notice that the absence of a checkmark was notice that the confirmation materially differed from the its understanding of the agreement; as a result, the first means provided in the Base Contract for disputing a confirmation term – timely notice that the confirmation did not not comport with the parties’ agreement – is not present here; (2) with respect to the second means for disputing a confirmation term – a competing confirmation reflecting a material difference in terms – the confirmations did not materially differ when the party responsible for delivery specified a delivery term on which the buyer was silent; the absence of any pipeline in Mercuria’s confirmation does not conflict with the designation of a delivery pipeline in Marathon’s confirmation; as the seller, solely responsible for delivery under the Base Contract, it made sense for Marathon to identify the means of delivery; if Mercuria wanted the agreement not to include any such delivery specification it could have told Marathon or so stated in its confirmation; (3) the pipeline term is a commercial term of the transaction, and Provision 1.2 of the Base Contract, which provides certain exceptions to the Base Contract’s general, “deemed-accepted” approach, did not apply; (4) the confirmations are binding, and they, not the ICE Chat, combine with the Base Contract to form the parties’ contract; (5) because both parties sent timely transaction confirmations, the confirmations’ effectiveness is governed by the Base Contract regardless of whether the confirmations were mandatory or permissive and regardless of whether the receiving party signed the confirmation. In sum, the court holds both parties’ transaction confirmations are part of their contract and neither party’s confirmation trumps the other; they must be read together with the Base Contract as a single, integrated agreement; the court goes on to note whether and how this holding may affect what is required under the Contract is beyond the scope of the opinion.