Standard sections

Every reasonable US residential propane supply agreement includes:

  • Parties — customer name, address, dealer name
  • Service description — bulk delivery to a specified tank at a specified location
  • Pricing structure — market-rate, fixed, capped, or pre-buy
  • Delivery type — auto-fill or will-call
  • Tank ownership — leased (dealer-owned) or customer-owned
  • Term — typically 1 year, sometimes 2-3 with longer pre-buy commitments
  • Auto-renewal clause — most contracts auto-renew unless notice is given
  • Exit terms — early termination fee, tank pickup fee, residual gas refund
  • Payment terms — invoicing schedule, accepted methods, late fees
  • Liability and indemnification — standard boilerplate

Sections to read carefully

Three sections do most of the practical work — and most of the disputes:

  • Pricing. If market-rate, how often can the dealer change prices? With how much notice? If fixed/capped/pre-buy, what's the lock-in?
  • Auto-renewal. How long is the notice window to opt out before renewal? Where is the notice sent? In writing or by email?
  • Exit terms. Tank pickup fee amount. Residual gas refund mechanism. Any liquidated damages clauses.

Negotiable items

More flexible than most customers realise. Worth pushing on:

  • Tank rent waiver at expected annual purchase volume
  • Tank pickup fee cap — agreed in writing at signing, not at exit
  • First-fill discount on the inaugural delivery
  • Auto-renewal disabled — month-to-month after initial term
  • Service-call rate for routine maintenance included or capped

Red flags

  • Unbounded price-change clauses — dealer can change rates at any time without notice
  • Punitive liquidated damages for early termination beyond the tank pickup fee
  • Tank rent surviving cancellation — prorated tank rent owed even after contract end
  • Multi-year terms with no exit clause — locks you in regardless of dealer performance

FAQ

Can I cancel a propane supply agreement?

Yes, subject to the contract's exit terms. Most US contracts allow cancellation with the standard tank pickup fee. Multi-year pre-buy contracts may have additional penalties if cancelled before the gallon commitment is fulfilled.

Are propane supply agreements always 1 year?

Most market-rate residential contracts run 1 year and auto-renew. Pre-buy contracts may run longer (1-3 years) to lock in the locked-rate commitment.

Going further