Market-Out Clause [Oil and Gas] Law and Legal Definition
Market-out clause refers to a provision in a contract allowing a pipe-line purchaser of natural gas to lower the purchase price. Market-out clause is only applicable if market conditions become uneconomical to continue buying at the contract price. However, market-out clause gives discretion to the oil well owner to accept or reject the lower price in the contract. A well owner can reject the market-out clause by canceling the contract. The authority to invoke a market-out clause is placed unilaterally with a buyer, unless the market-out clause spells out specific restrictions.[Kennedy & Mitchell, Inc. v. Anadarko Production Co., 243 Kan. 130 (Kan. 1988)]
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