Opinion ID: 407800
Heading Depth: 3
Heading Rank: 2

Heading: The Unconscionability Issue:

Text: 27 CGNL next argues that Entex interprets the pass through clause as a blank check, passing through increases in the cost of gas without first making an effort to collect such increases from its supplier, United Gas Pipeline Co. CGNL claims that such an interpretation of the clause is unconscionable, in violation of section 2.302 of the Texas Business and Commercial Code. 28 The basic test for unconscionability under that section is whether, in light of the general commercial background and the commercial needs of the particular trade or case, the clause involved is so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract. Tex.Bus. & Comm.Code Ann. § 2.302, comm. 1 (Vernon 1968). The district court has concluded, and we agree, that the evidence shows that Entex has not acted in an unconscionable manner. On the contrary, Entex provided CGNL with statements outlining the reasons for the price adjustments, including copies of Lo-Vaca's invoices to Entex, as well as periodical forecasts of the upward adjustments in the prices, in order to assist CGNL in obtaining Mexican government approval for a rate increase to its customers in Nuevo Laredo. Furthermore, the pass through provision did not result in a gross disparity between the amount paid and the consideration received; indeed, the clause served to bring the amount paid in line with the fair market value of the gas. We agree with the district court that the fact that CGNL, at the time it signed the pass through clause, had no alternative source of gas does not, by itself, render the clause or its application unconscionable. We hold that, upon the evidence presented, Entex has not interpreted the pass through clause as a blank check, 7 and did not act in an unconscionable manner.