Denbury Onshore, Llc and Denbury Resources Inc. N/K/A Denbury Inc. v. Apmtg Helium Llc
476 P.3d 1098 | Wyoming Supreme Court | 2020
What This Case Means for Subcontractors
Denbury agreed to deliver helium to APMTG but failed to meet delivery obligations. Denbury claimed two force majeure events excused its non-performance: a contractor's failure to complete a processing plant and well failures from sulfur deposits. The Wyoming Supreme Court upheld the lower court's decision, finding force majeure applied for only 36 days out of the entire contract period. Denbury was ordered to pay APMTG over $35 million in liquidated damages and interest for the breach.
Key Takeaways
- •Force majeure clauses are narrowly interpreted—you must prove the specific event directly caused your inability to perform, not just that problems existed during the contract period
- •Contractor delays or equipment failures by third parties typically don't qualify as force majeure unless the contract specifically names them or they're truly unforeseeable acts of nature
- •Liquidated damages clauses will be enforced even for large amounts if the court finds them reasonable; don't assume a judge will reduce them just because they're substantial
Denbury failed to show its non-performance was excused by a force majeure event except for a period of 36 days.
Frequently Asked Question
Can I use force majeure to avoid paying damages if my supplier or subcontractor fails to deliver?
No, not automatically. Courts require you to prove the force majeure event directly prevented your performance—not just that problems occurred. Third-party failures (like a contractor not finishing work) typically don't qualify unless your contract specifically lists them. You remain liable for damages unless you can show an unforeseeable, uncontrollable event made performance impossible.
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