Background and Commercial Context

This dispute arose from Marathon Oil Company's force majeure declaration under its natural gas purchase and sale agreement with Mercuria Energy America, LLC. Marathon declared force majeure and delivered less natural gas than contractually required for the month. The parties had structured their relationship using a North American Energy Standards Board (NAESB) base-contract form, a standard industry template. Mercuria challenged whether the transaction confirmations exchanged between the parties—particularly Marathon's confirmation containing a pipeline delivery term—were binding components of their contract.

The Transaction Confirmation Dispute

The central legal question turned on whether the parties' transaction confirmations formed part of their integrated contract, and if so, which confirmation controlled. Marathon's transaction confirmation identified a specific pipeline delivery term that supported its force majeure declaration, while Mercuria's confirmation was silent on this delivery specification. Mercuria argued that the absence of a check mark near the pipeline delivery term in its signed confirmation constituted timely notice of disagreement, rendering Marathon's confirmation non-binding. The parties also disputed whether their instant messaging chat—rather than the transaction confirmations—should govern the transaction's delivery terms.

The Court's Analysis and Holdings

Judge Melissa Davis Andrews, sitting by designation, applied traditional contract interpretation principles while recognizing the specialized nature of NAESB-form agreements. The court held that the absence of a check mark near the gas pipeline delivery term in Mercuria's signed transaction confirmation did not constitute timely notice of disagreement with Marathon over the transaction, and thus supported the confirmation as a binding agreement.

The court further held that the pipeline term in Marathon's transaction confirmation did not require express agreement by the parties under an exception in the base contract that required express agreement for provisions other than those relating to commercial terms of the transaction. Accordingly, the transaction confirmations were binding.

Critically, the court determined that the timely transaction confirmations between Marathon and Mercuria—only one of which contained the pipeline delivery term supporting the force majeure declaration—did not materially differ, and thus the transactions were binding and formed part of the parties' integrated base contract.

Finally, the court held that the transaction confirmations combined with the base contract to form the contract for sale and purchase of natural gas, rather than the base contract combining with the instant messaging chat that specified the transaction's delivery. The court concluded that the effectiveness of transaction confirmations was governed by the base contract, regardless of whether confirmations were mandatory or permissive, or whether the receiving party signed the confirmation, and thus both transaction confirmations were part of the contract.