Market-out clause
April 16, 2019
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16/4/19 Market-out clause
Market-out clause refers to a provision in a contract allowing a pipeline purchaser of natural gas to lower the purchase price.
Market-out clause is only applicable if market conditions become uneconomical to continue buying at the contract price. However, market-out clause gives discretion to the oil well owner to accept or reject the lower price in the contract.
A well owner can reject the market-out clause by canceling the contract. The authority to invoke a market-out clause is placed unilaterally with a buyer, unless the market-out clause spells out specific restrictions.
