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Ohio Appeals Court Reaffirms Decision in Hupp v. Beck Energy Corp.

The Seventh District Court of Appeals has reaffirmed its prior decision in Hupp v. Beck Energy Corp. In Belmont Hills Country Club v. Beck Energy Corp. and Bentley v. Beck Energy Corp., the appeals court relied on Hupp in holding that a conditional secondary term does not make a lease perpetual in nature and that the lease at issue contained an express waiver of implied covenants of reasonable development. Further, a lease that allows production in paying quantities to be determined “in the judgment of the lessee” does not create a perpetual because courts impose a good faith standard on the paying quantities determination. The court also held that the delay rental provision did not allow the lease to be held in perpetuity by making nominal payments.