Texaco v. Pennzoil

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Texaco v. Pennzoil
Court Court of Appeals of Texas, Houston, First District
Citation 729 S.W.2D 768 (1987)
Date decided May 26, 1987
Appealed from 151st District Court, Harris County
Related Texaco v. Pennzoil II
Texaco v. Pennzoil III
Case Opinions
written by Jack Smith Warren

Relevant Facts:

Gordon Getty owned 40.2% of the shares of Getty Oil Company and the J. Paul Getty Museum owned 11.8% of the shares. Pennzoil contacted both parties and offered a partner merge such that Pennzoil would own 3/7ths and the Gordon Getty Trust would own 4/7ths with Pennzoil providing a CEO and Gordon Getty as chairman of the board. The Museum would receive $110 per share for its ownership, and all other public shares would be cashed in by the company at $110 per share. This was all provided for in a Memorandum of Agreement which was signed by Pennzoil’s CEO, and the Museum’s president. The Memorandum stated that the agreement was subject to approval of the board of Getty Oil, and was to expire if not approved at the board meeting on January 2. The board did not approve anything on January 2, because they thought the $110 offer was too low. They also started to look for other possible buyers. On January 3 the board voted to approve a $110 offer plus a $5 stub from Pennzoil. Getty Oil and Pennzoil issued a press release describing the transaction the next day. Then on January 5 Texaco contacted the Museum and agreed to purchase their shares, and then offered $125 per share to Gordon Getty, which he quickly accepted. The Getty Oil board voted on January 6 to withdraw its counter-proposal to Pennzoil, and accept Texaco’s offer. The merger agreement between Texaco and Getty Oil was signed on January 6. Pennzoil filed suit against Texaco for tortuous interference.

Procedural History:

Judgment by jury awarding Pennzoil damages. Texaco appealed.


Whether manifestations that are not between parties forming a contract, but are rather between one party in the formulation of the contract and another disjoint party can be considered in deciding the intent of the contract.


Judgment for Pennzoil confirmed. Texacos appeal deemed warantless.


Only manifestations between the parties formulating a contract can be considered, thereby excluding any evidence of meetings involving one party and a third party. The existence of a binding contract must be dependant upon objective manifestations, not the subjective intent of the parties.


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