Opinion ID: 2429057
Heading Depth: 1
Heading Rank: 3

Heading: good faith under the uniform commercial code

Text: Conoco urges us to rely on two Uniform Commercial Code sectionsTexas Business and Commerce Code sections 1.203 and 2.306to affirm the court of appeals' decision to remand for trial the question of whether Northern canceled the gas purchase contracts in good faith. As noted above, the Agreement provides that it should be interpreted in keeping with the provisions of the Uniform Commercial Code. Nevertheless, we see nothing in that Code that will support the court of appeals' judgment. The first section to which Conoco directs our attention states the general rule that [e]very contract or duty within this title imposes an obligation of good faith in its performance or enforcement. TEX. BUS. & COM.CODE § 1.203. However, [t]his section does not support an independent cause of action for failure to perform or enforce in good faith. Rather, this section means that a failure to perform or enforce, in good faith, a specific duty or obligation under the contract, constitutes a breach of that contract or makes unavailable, under the particular circumstances, a remedial right or power. Id. cmt.; accord Adolph Coors Co. v. Rodriguez, 780 S.W.2d 477, 482 (Tex.App.Corpus Christi 1989, writ denied). [2] The Agreement nowhere imposes on Northern a duty or an obligation to maintain the gas purchase contracts. In the absence of a specific duty or obligation to which the good-faith standard could be tied, section 1.203 will not support Conoco's claim for damages. Likewise, the other section on which Conoco relies, section 2.306 of the Business and Commerce Code, cannot support remand on the question of good faith. Section 2.306 addresses, among other things, contracts for the sale of goods when the quantity term is indefinitetied either to the buyer's requirements or to the seller's output. TEX. BUS. & COM.CODE § 2.306(a). Section 2.306 requires that the quantity be such as actually occurs in good faith. Id. Conoco asserts that this section requires Northern to prove that its cancellation of the gas purchase contracts occurred in good faith, because the Agreement is really an output contract, albeit for processing the output rather than buying it. We accept that the Agreement's choice-of-law provision's call for interpretation under the Uniform Commercial Code was sufficient to adopt section 1.203 and the other general rules of Article One. But the parties did not adopt Article Two's rules on sales of goods any more than they adopted Article Three's rules on commercial paper or Article Nine's rules on secured transactions. We cannot ignore the service nature of the Agreement and subject it to statutes written specifically for sales. Therefore, we will not import into the Agreement a requirement from the Code's sales article.