potential assignee’s capabilities. See Energen Res. MAQ, Inc. v. Dalbosco, 23 S.W.3d 551, 557 (Tex. App. – Houston [1st Dist.] 2000, pet. denied). The Court held that the negotiations of a contract can matter in determining whether a contract is silent on a material term. See Houston Expl. Co. v. Wellington Underwriting Agencies, Ltd., 352 S.W.3d 462, 469-70 (Tex. 2011). Here, evidence of the negotiations and the previous drafts between the parties showed that the consent-to-assignment provision was not silent as to the type of consent. Therefore, the Court held that COG’s evidence of the negotiations and preliminary drafts of the agreement was not barred from admissibility by the parol evidence rule. Finally, the Court noted that while some jurisdictions impose an obligation of good faith and fair dealing in contract disputes, Texas does not. See English v. Fischer, 660 S.W.2d 521, 522 (Tex. 1983). Under Texas law, a lessor may withhold consent arbitrarily if the consent-to- assignment provision fails to set a standard by which to measure consent. Benjamin Robertson, Katy Pier Moore, & Corey F. Wehmeyer, Consent to Assignment Provisions in Texas Oil and Gas Leases: Drafting Solutions to Negotiation Impasse, 48 Tex. Tech L.R. 335, 339 (2016). Because the parties explicitly negotiated the removal of the “shall not be unreasonably withheld” language from the agreement, COG had an unqualified right to refuse BSR’s proposed assignment. Therefore, the trial court erred in finding COG liable. Carrizo Oil & Gas, Inc. highlights the importance of the “shall not be unreasonably withheld” language in all contracts. Without the inclusion of the language, a party may withhold consent arbitrarily.
About the Authors:
Eli Kiefaber is a partner with Kiefaber & Oliva LLP. Eli focuses his practice on oil and gas matters, including acquisition and divestiture of oil and gas assets, title opinions, joint operating agreements, federal leases, pooling and unitization issues. Eli is licensed to practice law in
Texas, Oklahoma, Colorado and Ohio, is a regular speaker on issues relating to the development of unconventional shale plays and has given a variety of presentations regarding legal issues relating to oil and gas development. Eli earned his B.A from Kenyon College and his J.D., with honors, from Marquette University Law School.
Zachary Oliva is a partner with Kiefaber & Oliva LLP. Zack focuses his practice on energy and corporate law. He regularly assists clients in the drafting of oil and gas title opinions, purchase and sale agreements and contract interpretation. Additionally, he assists
clients with the negotiation, drafting and review of business formations, contracts and service agreements. Zack earned his B.A. from The Ohio State University and his J.D. from Capital University Law School. He is licensed to practice in New Mexico, Ohio and Texas.
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G r o w t h T h r o u g h E d u c a t i o n - A p r i l / M a y / J u n e 2 0 1 7
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