Opinion ID: 1179586
Heading Depth: 2
Heading Rank: 1

Heading: Output Contract/Excluded Evidence

Text: The superior court concluded that the contract was not an output contract under AS 45.02.306(a). [2] It also concluded that whether or not the contract was an output contract, the evidence Nautilus sought to admit was not relevant. Because output in 1993 was considerably less than VFDA's estimates based on historical output, Nautilus contends that VFDA should be liable to it for this allegedly unreasonable disproportionality. Under the contract, VFDA was obligated to sell Nautilus 50,000 pink salmon, as available, after the first 50,000 pounds were sold to the highest bidder. If no fish were available, VFDA's obligation was zero. Nautilus's argument that the evidence it proffered was relevant in determining whether the amount of fish provided by VFDA was unreasonably disproportionate to the commercial expectations of the parties is unpersuasive. [3] As the superior court observed, the terms of the contract in this case define the obligations of the parties. And nothing that I see in that contract calls ... these numbers, the VFDA projections, into that calculation. While it is true that VFDA's projections were contained in its solicitation for bid proposals, [4] these projections do not appear in the contract itself, and quantity issues are dealt with fully in the integrated contract. [5] The contract states a maximum limit on VFDA's obligation to Nautilus: 50,000 fish per day as available. It also clearly states that, due to the nature of salmon returning to a fishery, VFDA cannot guarantee the time, numbers, and quality of the fish returning. These provisions demonstrate that the parties understood that the number of fish available on any given day could reasonably vary anywhere between a minimum of zero fish to a maximum of 50,000 fish per day, since VFDA's obligation depended on availability. The admissibility of extrinsic evidence hinged on whether the contract defined the parties' commercial expectations as to quantity. Because the contract contained limits on the parties' expectations on quantity, evidence of estimates, projections, and historical output was irrelevant, and therefore properly excluded by the superior court. [6]