The contract stated that INEO “shall not unreasonably withhold its consent” to the proposed increase in production and transportation of hydrocarbons, but INEOS stated that the proposed change would result in a substantial increase in Apache’s contractual rights and INEOS was only willing to consent if Apache agreed to revise the tariff payable (in favour of INEOS).
Apache was proposing to increase its output by 120 million barrels of crude oil, enabling it to use the network for an additional 20 years, up to 2040.Under the original terms and based on the original outputs, Apache’s right to use the network would have come to an end in 2020 although it was anticipated that production might continue beyond 2020.
INEOS argued that it was entitled to impose a higher tariff, before providing its consent to the change, as INEOS would be making substantial investment into the pipe network, some £500 million between 2019 and 2023. The original tariff was calculated to cover the cost of the network up to 2020 and did not price in investment and maintenance costs to extend the life and upgrade the network beyond 2020.
The Court ruled in favour of Apache and confirmed that INEOS could not impose a tariff increase, before giving its consent to amend the estimated outputs. The tariff payable by Apache was fixed by a clause within their contract, increasing by reference to a series of indices over time. By asserting that its consent was conditional upon a tariff increase, INEOS was forcing Apache to surrender a contractual right it had under their agreement and was an illegitimate attempt to substantially rewrite the bargain between them. As a result, withholding its consent in such circumstances was unreasonable and a breach of contract.
Where a contract states consent must not be “unreasonably withheld” or the parties are subject to a duty of good faith, the contract must be considered as a whole, to establish whether any preconditions are relevant and reasonable. Before providing consent, it is possible to impose terms which address a legitimate concern, where the stipulation is compensatory or mitigatory in nature. However, the requirements for providing consent should not normally seek to increase or enhance the rights of the party granting consent; the party seeking consent should not be held to ransom.
For assistance with your contract and commercial agreements, please contact Emma Watt.
The draft regulations making it mandatory for anyone entering a registered care home in England to have been double vaccinated unless they are clinically exempt were made on 22 July 2021.
In the Transforming Public Procurement Green Paper, the Government signalled its desire to increase its control over procurements by all contracting authorities.
The monthly round-up from the Anthony Collins Solicitors charities team.
Legal updates as the UK enters into stage 4 of the roadmap and legal restrictions on face coverings and social distancing are lifted.
The first disability we are going to discuss is diabetes. We begin by discussing the different types of diabetes; their similarities and differences and how we live with the disability within our day.
Tim Coolican and Freya Cassia explore the legal and practical options available to providers if a disappointing result is received following an inspection.
Following the launch of the CQC’s new strategy for how it regulates health and social care, many providers will be keen to know more about how the changes might affect them in the future.
EPC’s are not required to be served with a Section 21 notice for assured shorthold tenancies if the tenancy predates October 2015.
A new era of paperless property deals is upon us following the Land Registry’s landmark decision in July 2020 to accept e-signed documents for registration.
To receive invitations to our events, as well as information and articles on legal issues and sector developments that are of interest to you, please sign up to Newsroom.