Pennzoil vs Texaco
The trial took place in Texas, not in New York, where a different set of values prevails and where every contract must be carefully examined for "gotcha" provisions. The verbal agreement was enforced because of Texas law. I am not sure if the verbal contract would have been enforceable over a written one in New York. Interestingly it was Texaco, a Harrison, New York, headquartered company, that requested the trial take place in Texas.
For those who are not acquainted with this case, Pennzoil (a Texas oil company whose CEO had been a long time partner with G.H.W. Bush) entered into a hand-shake agreement to purchase Getty Oil. Then Texaco (with lawyers and investment advisors counselling) tendered a much higher offer and bought Getty Oil. Pennzoil sued Texaco for interfering in a done deal. They claimed 3 billion actual and some 7.5 billion punitive and won. Texaco's legalistic arguments were trumped by the down-home arguments of the Texans.
Texaco never disputed the absurd amounts claimed and therefore lost the opportunity in court to challenge the overblown claim. They then made another blunder by filing a failed appeal in Federal Court.
The after-bankruptcy settlement, four years later was agreed on 3 billion. A rump Texaco (has to sell assets to pay the judgement) was subsequently swallowed by ("merged into") Shell.
Manuel Sotil
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