The Commerce Clause is found in the U.S. Constitution, section 8, article 1, clause 3. The clause grants the Congress power to control business and trade with Indian tribes, foreign nations, and several states. The Constitution details definite powers for the central government, the 10th amendment of this clause points out that the powers not listed in the Constitution are set aside for the states. The Congress has often used this clause to validate implementing legislative powers over the activities of their citizens and the states. This leads to ongoing and significant controversy over the balance of power between the states and the federal government. Historically, the Commerce Clause has been viewed as a constraint on states authority to regulate and an endowment of congressional powers. Dominantly, the Commerce clause is the prohibition obscured in the clause against nations passing legislation which excessively burdens or discriminates against interstate commerce. This clause has been used in several states to justify the implementation of federal laws. It applies in situations that do not implicate interstate exchange or trade on their face[1]

Pennzoil v. Texaco

Pennzoil who is the defendant made a certain offer to purchase controlling shares of the Getty Oil Company stock. In the substitute, Pennzoil entered into a contract with two basic Getty shareholders, signing a dispatch of contract that was substance to the Getty's approval board of directors. The contract was offered to the board of directors. The board articulated that it could not endorse the public doting to shareholders. It also rejected the Pennzoil's contract with the two basic shareholders. The panel made a hostage-offer that was precluded by the Pennzoil. Getty then started imploring bids from the rest of the companies. At the following board conference, with no certain bids by the rest of the companies, the panel made another pawn-offer to the Pennzoil. Pennzoil acknowledged, and both Pennzoil and Getty conscripted and issued media releases. Pennzoil's lawyers started drafting the official contract. The Journal of Wall Street described the Getty-Pennzoil contract, and the Pennzoil board meeting concerning the contract. Additionally, Pennzoil's lawyers remained in agreement with Getty concerning the contract. Meanwhile, Getty endured petitioning bids from the rest of the companies. Texaco had talked with the Getty and held several in-house conferences, researched on Getty, and employed an asset banker to signify it in the probable Getty acquisition. Texaco's panel voted to achieve a proposal. Texaco encountered with two basic Getty shareholders who both decided to sell their company shares to Texaco. Then the panel conducted a board conference and decided to withdraw its pawn-offer to Pennzoil and it accepted the Texaco's offer. It issued a media release concerning its contract with Getty. Pennzoil wrote to Getty and necessitated them to honor their contract. Getty signed a contract with the Texaco. Getty trooped suit for declaratory judgments that was not needed to rectitude the Pennzoil agreement. The court offered Pennzoil compensations for the Texaco's tortuous meddling with the agreement. Texaco appealed to the Appeals Court of Texas[2]

A main hindrance to Texaco Inc.'s struggle for continued existence was the fact that the Supreme Court ruled collectively that a Federal District Court was wrong in excusing the company from redistributing a bond worth more than ten billion dollars while it requested a damage reward which the Pennzoil Company had won against them in 1985. Texas state court was awarded $10.33 billion in the judgment. In the ruling, Supreme Court's decision overturned the Federal court order which banned Pennzoil from appealing to taking away the amount from the Texaco's assets as the appeal was pending. This appeal was not affected as it was headed from Texas Supreme Court. The decision did not affect the appeal directly. However, it greatly increased force on Texaco to resolve the complicated suit. This could impel Texaco toward insolvency procedures.[3]

A jury from Texas offered Pennzoil 10.53 billion dollars in November 1985. Finding that, the Texaco illegally affected with a union contract among Getty Oil Company and the Pennzoil in the year 1984. At this time, Texaco credited Getty for 10.1 billion dollars. A Texas appellate law court supported all 2 billion dollars of the prize on 12 February, 2013. Last weekend Texaco requested the appellate law court to rehearse the situation.


Bork, Robert, and Daniel E. Troy. "Locating the Boundaries: The Scope of Congress's Power to Regulate Commerce. Harvard Journal of Law & Public Policy 25, no. 849 (2002): 861–62.

Marks, R. E. Case Study: Texaco versus Pennzoil.2001.

Taylor, Stuart. Texaco Set Back By Supreme Court in Pennzoil Case The New York Times, April 7, 1987.

Robert Bork and Daniel E. Troy, "Locating the Boundaries: The Scope of Congress's Power to Regulate Commerce," Harvard Journal of Law & Public Policy 25, no. 849 (2002): 861–62.

Stuart Taylor,Texaco Set Back By Supreme Court in Pennzoil Case, The New York Times, April 7, 1987.

R. E.Marks, Case Study: Texaco versus Pennzoil, 2001.

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