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Contracts Keyed to Fuller
Alaska Northern Development, Inc. v. Alyeska Pipeline Service Co.
Citation:
666 P.2d 33 (1983)Facts
In late 1976, David Reed, president of Alaska Northern Development (AND), began discussions with Alyeska personnel regarding the purchase of surplus Caterpillar parts. After negotiations, Reed prepared a letter of intent dated December 10, 1976, proposing to purchase “the entire Alyeska inventory of Caterpillar parts” with the price term left blank. Alyeska responded with its own letter of intent dated December 11, 1976, which contained the critical language “subject to the final approval of the owner committee.” Reed and Alyeska’s manager Rickett later agreed on a price of sixty-five percent of Alyeska’s cost, which was filled in the December 11 letter. In March 1977, the owner committee (composed of the oil companies that owned Alyeska) rejected the proposal. AND filed suit claiming that the parties understood the “subject to approval” language to mean that the owner committee would only review whether the price was fair and reasonable, not that they had unlimited authority to reject the deal. Alyeska maintained that Reed was never advised of any such limitation on the committee’s authority.
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