Getting out of a new lease

Oil and Gas Leasing Help
21

I will write this slowly. Of course he never received the Order for Payment. I can only go by the language Jon quoted. He clearly writes that payment by check will be made within 75 banking days of “Lessee’s receipt of this order of payment.” Jon would be the Lessor. I don’t know what the point would be. I don’t try to come to conclusions like that over something so phantom. I haven’t read it. Neither have you.

What does the fact that Michigan is a Race state have to do with anything? Jon says nothing about another oil company. Race and Race-Notice type statutes only kick in when more than one company is trying to get the same lease. That is not the case here. It’s a non-issue.

How can you feel so confident and dispense advice so generously and freely to Jon when you haven’t even read the instrument? He needs to take it to a Michigan atty. as was suggested before.

Any other “advice” rings hollow, and shouldn’t be taken seriously.

22

He nowhere says that he received an Order for Payment. He was quoting from the lease itself.

23

If you are going to comment on my posts you could at least read them.

I had suggested to other people with a similar problem that they could contact operators in their area that might lease them at different terms, in a RACE state.

An order for payment would do absolutely nothing without Jon’s signature, if you can’t see that, I think there is no hope for you. I said that if Jon had not received the Order for Payment, he had not even received conditional payment.

I don’t have to read the instrument to know that A) either Jon received and signed an order for payment or B) Jon did not sign an order for payment and he is not bound by one he didn’t sign.

I could not draw up an order for payment with Dave Quincy’s name on it to bind him without his signature.

I would like to point out that YOU have not read any of the documents either. I do not believe that it has been firmly established beyond doubt that Jon did not receive an Order for Payment. Jon merely says he has received no monies yet.

The lessee would be the issuing party of the order for payment, the order for payment would have to go somewhere for the lessee to “receive” the order for payment. An order for payment would be of no use without the signature of the person it is supposed to act as conditional payment to. If you can’t grasp that, I don’t know what to say.

Dave Quincy said:

I will write this slowly. Of course he never received the Order for Payment. I can only go by the language Jon quoted. He clearly writes that payment by check will be made within 75 banking days of “Lessee’s receipt of this order of payment.” Jon would be the Lessor. I don’t know what the point would be. I don’t try to come to conclusions like that over something so phantom. I haven’t read it. Neither have you.

What does the fact that Michigan is a Race state have to do with anything?. Jon says nothing about another oil company. Race and Race-Notice type statutes only kick in when more than one co. is trying to get the same lease. That is not the case here. It’s a non-issue.

How can you feel so confident and dispense advice so generously and freely to Jon when you haven’t even read the instrument? He needs to take it to a Michigan atty. as was suggested before.

Any other “advice” rings hollow, and shouldn’t be taken seriously.

24

I don’t think that there are any ifs, ands, or buts about it. He clearly hasn’t received the Order for Payment. I thought that was very easy to see.

A word to the wise is sufficient. Jon knows what to do by now.

If he hasn’t “read between the lines” or taken some good advice from at least 1 or 2 posters, there is nothing else that can be done for him here.

Case closed as far I’m concerned. His may just be beginning.

25

If you have a notion, offer it. Nobody will accuse you of dispensing legal advice.

Can we drop all of this? This discussion has become picayune and from some directions, outright boorish. I feel for Jon.

Dave Quincy said:

Good answer.

I had a few notions, but really didn’t want to offer legal advice without a license.

26

I believe I already did. That’s what “case closed” means.

Jon knows where I stand. Listen to the Michigan atty. if he chooses to hire one. “Any other advice will ring hollow, and shouldn’t be taken seriously.”

That really is my final say on the matter in case anyone still feels that I haven’t dropped it.

27

Thank you for your advise. I have not received anything just a copy of the lease I signed. Yes I should have not signed my lease unless I was 100% sure I wanted that lease. I will seek legal advice from an attorney and let you know what I find out. I have been told before that a contract is not valid unless an exchange of monies or services are received.

28

You’re welcome, and thanks for verifying that. Good luck and do follow up. There are a few of us who still believe that we can learn something, particularly from jurisdictions outside of where we normally do business.

Don’t forget. Keep us posted. Thanks again.

29

Jon, you are right to seek a Michigan attorney’s advice. Though try to find one familiar with oil & gas issues.

Unfortunately, I believe there has been a court case (not in MI) where the promise of royalty payment on possible future production was deemed to be enough proper “consideration” to hold a lease. I hope you work things out to your satisfaction.

30

A promise to pay is due consideration even though the money has not yet been paid. Does the lease provide for a payment due date?

Dave Quincy said:

I guess I missed something. He says he has received "nothing" in the way of bonus yet. What does that mean? What did the landman tell him or promise him, or actually give him? We don't know. The issue is whether a valid contract was formed or not. All replys thus far are speculation and conjecture. More information is needed. The reply about race vs. race notice, et al is interesting, but clearly not applicable to the facts. He states that only one co. has contacted him.

31

Jon,

Buddy seems to have hit the nail on the head here. The answer to your question, "Can I get out of a new lease," will depend on whether you have a contract with the lessee or not. The answer to that question will turn upon whether, as a matter of law in the state of Michigan, you have consideration for the contract or not. The various oil and gas jurisdictions are split on this exact fact pattern, so only an attorney licensed to practice law in the state of Michigan can give you a straight answer or an educated guess as to how a Michigan court would rule. The rest of us can only speculate whether you have a legal contract at the moment.

If you try to back out of this lease, be prepared to defend your actions in court later. I would strongly recommend you retain a qualified contract attorney in Michigan to advise you immediately, and let him correspond with the lessee if necessary.

32

Sylvester W. Brock, Jr. said:

A promise to pay is due consideration even though the money has not yet been paid.

In general, that is correct, which is what I meant when I said there are other forms of consideration besides a bonus payment. However, a conditional promise to pay (which I would argue is what Jon has given the fact that his lease has a "home office approval" clause) may not constitute consideration in certain jurisdictions. I have no idea what Michigan might say on the subject. Jon should hire an attorney if he intends to back out.

33

Jon is aware of this, and has agreed to keep the forum up to speed as to what he "finds out". See the grateful reply that he made yesterday. We were able to establish that he received no check, no bank draft and no Order for Payment. Your assessment of the "home office appoval" clause in the lease itself appears to be correct.