The augurs of ancient Rome prognosticated by inspecting the entrails of birds. Similarly, courts divine meaning by interpreting the detritus of our documents. When we don’t leave a clear message behind, those who follow get to tell us what the words we used meant. Sometimes they are right; sometimes not.
Ruminations now rushes in where fools fear to tread. We’re going to extract some lessons from a Supreme Court of Texas decision about mineral rights and royalties. Bless those who labor in that world. If we get something wrong in this world of oil and gas and other things extracted, we’re sure to hear from those whose world we are about to invade.
When a married couple purchased a certain 55-acre property, their seller “reserved” a 1/4 mineral interest (actually an NPRI – a non-participating royalty interest) in the property. That means the original owner would continue to get 1/4 of the benefits from all oil, gas, and minerals extracted from beneath the property.
Property ownership involves what is likened to a “bundle of sticks.” That means there are many rights embodied within the concept of ownership. These rights can be separated and different owners can own different rights in the same property. So, in the “mineral rights” concept, one party can own the property’s surface and another can own the subsurface portion. Similarly, one can own all of a property’s land right down to the earth’s core, excluding the minerals in that “dirt,” and those can be owned by another. Just like a “total” property can have multiple owners, so can those minerals. So, here, the married couple had a 3/4 interest in the property’s minerals and their seller kept a 1/4 interest. So far, so good. [Read more…]
Is your forum selection provision mandatory or permissive? What’s a forum selection provision? That’s the one your agreement says where you can file suit to enforce your agreement. What is often confused with a forum selection provision? That would be a choice of law provision. That’s where the parties agree as to which state’s law will apply to their agreement. Once you are properly in any state’s courts, those courts can apply whatever law you’ve agreed should be used. It doesn’t have to be the law of that state. [Yes, there are exceptions, but that’s the overriding principle.]
It is Labor Day weekend (and the start of Labor Day week). Ruminations has tried to present short blog postings on such weekends. Frankly, we’ve not been successful. Today’s posting is yet another attempt. So, with 30 words already behind us, here we go.
When a carpenter or other craftsperson needs to make “that final adjustment,” she or he reaches into the toolbox and out may come a shim. We’ve all seen shims used, but not everyone knows they have a name. Those wedges, washers, and thin strips of material used to align parts or make them fit are called “shims.” We who draft agreements of every type also use shims. Reluctant as Ruminations is to use the word “all” and mean “all,” today’s use seems accurate. Who among us hasn’t slipped in at least one “notwithstanding anything to the contrary” into every agreement longer than several pages? That’s using a shim because it makes the parts of the agreement “fit” together.
As we were reading a very recent decision issued by the Supreme Court of Alabama, we once again were preparing to write how wasteful it was for the parties to litigate the issues raised. This urge happens often enough that Ruminations has considered preparing “boilerplate” language to be inserted at the end of many blog postings. Then we got to the concurring opinion. It could apply to many of the “manufactured” disputes created by one party or the other and supported by their advocates. Though the following words by that concurring justice give away part of the story we are going to tell, its content and tone resonate with Ruminations. We suggest that we all step back each time issues like these arise and reconsider our thoughts about litigating them.
Last week we expressed the belief that very few tenants are “entitled” to receive a Right of First Refusal (First Offer, Last Offer, First Notice) and that very few landlords should give in when any of these are requested. We also wrote that we didn’t think any deals would go south if the landlord said, “No.” Well, that’s the ideal world as seen by Ruminations. But, we also live in the real world. Sometimes leases give tenants one of those rights.
A contract, such as a lease, gives one party, say a tenant, a right it would not have without the agreement. That means the other party, in the case of our example – the landlord, has an obligation it would not otherwise have had. That’s the essence of a contract – an exchange of rights for obligations or duties. Think about it, without some kind of enforceable agreement, a lease (oral or written), a license agreement or a use and occupancy agreement, what right would a tenant have to possess its premises and what obligation would the owner have to allow it?
We’ve written about guaranties before, most directly in postings that can be seen by clicking: 
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