This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Made and entered into this --------- day of------------, by and between A. B., of the ---------, County of ---------, State of ---------, party of the first part, and
C. D., of the ---------, County of ---------, -State of ---------, party of the second part:
Witnesses, that the party of the first part, for and in consideration of the sum of one dollar to him in hand well and truly paid by the said party of the second part, the receipt of which' is hereby acknowledged, and of the covenants and agreements hereinafter contained on the part of the said party of the second part to be paid, kept, and performed, has granted, demised, leased and let, and by these presents do grant, demise, lease, and let, unto the party of the second part, its successors and assigns, for the sole and only purpose of mining and operating for oil, gas, and laying pipe lines, and of building tanks, stations, and structures thereon to take care of said products, all that certain tract of land, situated in the County of ---------, State of ---------, bounded and described as follows: --------- [insert description], reserving, how-
•ever, therefrom one hundred feet around the buildings, on which no wells shall be drilled by either party, except by mutual consent.
It is agreed that this lease shall remain in force for the term of --------years from this date, and as long thereafter as oil or gas, or either of them, is produced therefrom by the party of the second part, its successors or assigns.
In consideration of the premises, the party of the second part covenants and agrees, first, to deliver to the credit of the party, his heirs and assigns, free of cost, in pipe line to which it may connect its wells, the equal one-eighth part of all oil produced and saved from the leased premises; and, second, to pay one-eighth of all the gas from each and every well drilled on said premises, the product from which is marketed and used off the premises, said payments to be made from each well within ---------days after commencing to use the gas therefrom, as aforesaid, and to be paid yearly thereafter while the gas from said well is used.
Second party covenants and agrees to locate all wells so as to interfere as little as possible with the cultivated portions of the farm, and, further, to commence operations on said premises within ---------months from date thereof, or pay at the rate of --------- dollars quarterly in advance for each additional
-------months such operation is delayed until such a well is completed, and it agrees that the completion of such a well shall be and operate as a full liquidation of all rental under this provision during the term of this lease.
It is agreed that the second party is to have the privilege to use sufficient water from the said premises to run all necessary machinery and fixtures placed on said premises, and, further, upon payment of --------- dollars, at any time by the party of the second part, its successors or assigns, to the party of the first part, his heirs and assigns, said party of the second part, its successors or assigns, shall have the right to surrender this lease for cancellation, after which all payments and liabilities thereafter to accrue under and by virtue of its terms shall cease and terminate, and this lease becomes absolutely null and void.
In witness whereof, etc.
This Is said to be a form in which Ingenuity Is exhausted in seeking: to form a contract which shall have no mutuality of obligation and still be valid. It was held by a divided court that, In spite of the omission of a covenant to complete a well in a given time, failure to commence operations and to proceed in a reasonable manner defeated the contract, if it was a contract and not an option. Jennings-Heywood Oil Syndicate v. Houssiere-Latreille Oil Co., 119 La. 793, 44 So. 481, 506.