Opinion ID: 1363777
Heading Depth: 1
Heading Rank: 2

Heading: viability of original contract

Text: The first argument we consider is whether the superior court erred in deciding that the original contract was in force and effect at the time the amendment was approved. McKinnon contends that the extension of time granted by the Commissioner to determine whether Alpetco had met the benchmark requirements of the contract was invalid. McKinnon also contends that the Commissioner abused his discretion when he later determined that Alpetco had met the requirements within the eighteen-month period specified in the contract. Finally, McKinnon contends that the contract automatically terminated before the amendment was approved because Alpetco had not met the benchmark requirements. McKinnon thus concludes that the amendment was invalid and the state has no contractual obligation or right to sell any royalty oil to Alpetco. We think it is clear that the extension of time granted by the Commissioner was valid. We therefore need not consider whether the Commissioner was correct when he determined that Alpetco had met the benchmark requirements or whether the contract would have automatically terminated if Alpetco had not met the requirements. The original contract specifically permitted the Commissioner to extend for six months the period within which Alpetco was to meet the eighteen-month benchmark requirements. Before the eighteen-month period elapsed, the Commissioner granted such an extension to give him and his staff sufficient time to determine whether Alpetco had met the requirements and to give Alpetco time to meet them in the event it had not done so. Until the six-month extension period elapsed, it was impossible for Alpetco to be in breach of contract or for the contract to automatically terminate due to any failure to meet the benchmark requirements because whether or not this occurred could only be determined at the end of that period. Inasmuch as the amendment was approved before that time, it is apparent that the contract was in force and effect at the time of the amendment. By the terms of another provision in the contract, compliance with the benchmark requirements could be held in abeyance during the time the legislature considered approving any amendments to the contract. McKinnon seems to argue that because an abeyance of performance could have been granted under this provision of the contract, it was improper for the Commissioner to grant a six-month extension under the other provision. We do not agree. Nothing in the contract suggests that when the provision for suspending performance can be utilized the provision for granting an extension cannot be used. If the parties intended this result, the contract could have been drafted to express it. McKinnon also suggests that the Commissioner's extension was invalid because the contract was already a dead letter at the time the extension was granted. We reject this argument as well. Pursuant to its terms, the contract, as far as is relevant here, could not terminate until the eighteen-month period had elapsed. Even if there were some merit to McKinnon's assertion that Alpetco had not met the benchmark requirements by that time and could not do so in the foreseeable future, the contract remained viable until the last day of the eighteen-month period. The extension granted before that day was sufficient to keep the contract viable until the amendment was approved.