In 1940, the family of Thomas Back entered into an oil-and-gas lease with the Inland Gas Corporation.


In 1940, the family of Thomas Back entered into an oil-and-gas lease with the Inland Gas Corporation. The lease held that Inland would pay to Back’s family 12 cents per thousand cubic feet of gas extracted from the Back family’s land. Inland’s successors began to pay a royalty of 12.

5 percent of the market value of the extracted gas. Eventually, Back came to own a portion of the land in question, and Chesapeake Appalachia, LLC, came to own the lease. Chesapeake claimed to pay gas royalties of 12.

5 percent just as its predecessors did. In 2016, Back filed a class action suit against Chesapeake, alleging that Chesapeake had underpaid him and other landowners by deducting too many expenses from the royalty payments and by using false market prices in calculating its royalty payments.

Chesapeake moved to dismiss the suit under Kentucky’s statute of frauds. To satisfy Kentucky’s statue of frauds, Back needed to provide writings which together identify the parties to the lease, the property, and the modified royalty amount. The parties agreed that the original lease signed in 1940 satisfied the statute of frauds, but Chesapeake argued that Back’s claim that its predecessor agreed to pay a percentage of the gas’s market price rather than a flat rate was barred under the statute of frauds. The documents submitted by Chesapeake satisfied all of the requirements of the statute of frauds except one—they did not contain Back’s signature. Instead, Back submitted his signed royalty checks that he received with his statements as proof of his signature. Do the signed checks satisfy the signature requirement of the statute of frauds even though Back did not sign the original agreement?

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Dynamic Business Law

ISBN: 9781260733976

6th Edition

Authors: Nancy Kubasek, M. Neil Browne, Daniel Herron, Lucien Dhooge, Linda Barkacs

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