Article 10. Marketing Contracts of California Public Utilities Code >> Division 1. >> Part 4. >> Chapter 1. >> Article 10.
The association and its members may make and execute
marketing contracts which require the members to sell, for any period
of time not to exceed the productive life of the gas facilities or
supplies, all or any specified part of any gas produced by the
members exclusively to or through the association or any facilities
of the association. If the members contract a sale to the
association, title to the gas passes absolutely and unreservedly,
except for recorded liens, to the association upon delivery or at any
other specified time which is expressly and definitely agreed in the
The contract may provide that the association may sell or
resell any gas which is delivered by its members, with or without
taking title to the gas, and pay over to its members the resale
price, after deducting all of the following:
(a) Necessary selling, overhead, and other costs and expenses,
including interest on preferred stock, not exceeding 8 percent per
annum, and reserves for retiring the stock, if any.
(b) Other proper reserves.
(c) Interest not exceeding 8 percent per annum upon common stock.
Notwithstanding any provision of the Civil Code, a contract
which is entered into by a member of an association which provides
for the delivery to the association of any gas produced by the member
may be specifically enforced by the association to secure the
delivery to it of that gas.
The bylaws or the marketing contract may fix, as liquidated
damages, specific sums to be paid by the member to the association
for the breach of any provision of the marketing contract regarding
the sale or delivery or withholding of gas and may provide that the
member will pay all costs, premiums for bonds, expenses, and fees, if
any action is brought upon the contract by the association. These
provisions are valid and enforceable in the courts of this state.
Provisions for liquidated damages are enforceable as such and shall
not be regarded as penalties.
If there is a breach or threatened breach of a marketing
contract by a member, the association may file an action for an
injunction to prevent the further breach of the contract and for a
decree of specific performance of the contract. Pending the
adjudication of that action and upon filing a verified complaint
which shows the breach or threatened breach, and upon filing a
sufficient bond, the association shall be issued a temporary
restraining order and preliminary injunction against the member.
In any action upon a marketing agreement, it is conclusively
presumed that a landowner, landlord, or lessor is able to control the
delivery of any gas which is produced on his or her land by the
tenants or others, whose tenancy or possession on the land, or the
terms of whose tenancy or possession on the land were created or
changed after execution by the landowner, landlord, or lessor of the
marketing agreement. In that action, the remedies for nondelivery or
breach which are provided by this article are enforceable against the
landowner, landlord, or lessor.