Legal Question in Business Law in New York

Changing the terms of an oil delivery contract

In the past year, I have signed a contract with a certain home heating oil delivery service. This contract established a fixed rate per gallon for the oil. However, since oil prices have begun to rise, I have been notified that my oil company is arbitrarily increasing the agreed upon price of the oil by 15 cents. Furthermore, I was instructed not try to contact the company as the issue will not be discussed. I have since learned that many of my neighbors have received similar letters from other oil companies as well.

My question is this: can they do that? I though it was illegal to arbitrarily change the terms of a contract. Do I have any legal recourse?

Any information would be greatly appreciated.


Asked on 1/25/00, 8:19 pm

1 Answer from Attorneys
Walter LeVine Walter D. LeVine, Esq.

Re: Changing the terms of an oil delivery contract

Was the contract for a fixed term, with fixed gallonage and at a fixed price? Did the contract only guaranty delivery with a specified or open gallonage? Does the contract have any provisions regarding changes in prices due to supply cost changes, up or down?

Generally, these contracts only act to guaranty a certain minimum gallonage, and may specify the guaranteed price. Have you guaranteed to purchase a specified gallonage, or is that open depending upon your traditional usgaes?

While you may have a valid contract, if all terms and conditions have been specified, but if the contract had provisions for changes (in gallonage and/or delivery prices) they may have a legitimate claim to be able to increase the price due to supply cost changes. Was the price fixed in the contract for the same or more than what had been the per gallon cost at the time of the contract. For example, if the then current price was $.85/gallon and they guaranteed to deliver a specified quantity at $.90, you could probably hold them to the guaranteed price. If the new price they are quoting is less than the current rate (e.g. $1.05 quoted, $1.10 actual), you may have a problem holding them to the agreed price. They will probably breach and not deliver due to the significant increase in costs recently. Then you will have to get oil elsewhere and sue them for the increased cost. While a guaranteed contract is enforceable, there may be defenses they could assert that might allow them to have the contract renegotiated due to unforseen circumstances.

How much is involved overall due to the increase? If it is only a few hundred dollars, the cost of litigation and risk of not receiving fuel at the new quoted price may not be worth agruing about.

More information is needed to fully respond.

Walter

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Answered on 1/27/00, 1:40 pm


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