Opinion ID: 779886
Heading Depth: 2
Heading Rank: 2

Heading: Termination of the Distributorship Agreement.

Text: 37 We may affirm a district court's order, including an order granting summary judgment, on any basis supported by the record, even if that ground was not considered by the district court. Cochenour v. Cochenour, 888 F.2d 1244, 1246 (8th Cir. 1989). A further basis for granting National Cart summary judgment on Viking's breach of the distributorship contract claim is that the contract was of indefinite duration and therefore terminable at will or the term of duration had ceased. National Cart contended below that the letters exchanged in January, 1996, did not constitute a contract because the letters did not contain all of the essential terms, such as duration. The district court did not address this contention even though it was raised. It was addressed on appeal by the parties. 38 The distributorship contract constitutes a contract for the sale of goods which is governed by the Uniform Commercial Code (UCC). See Minn.Stat. § 336-2-102; AKA Distributing Co. v. Whirlpool Corp., 137 F.3d 1083, 1085 (8th Cir.1998) (distributorship agreement is a contract for the sale of goods under Minnesota law). Pursuant to the Minnesota UCC: 39 (1) The time for shipment or delivery or any other action under a contract if not provided in this article or agreed upon shall be a reasonable time. 40 (2) Where the contract provides for successive performances but is indefinite in duration it is valid for a reasonable time but unless otherwise agreed may be terminated at any time by either party. 41 (3) Termination of a contract by one party except on the happening of an agreed event requires that reasonable notification be received by the other party and an agreement dispensing with notification is invalid if its operation would be unconscionable. 42 Minn.Stat. § 336.2-309. The absence of a specific duration is not essential to a contract under the UCC since the UCC supplies the rule in the absence of language in the contract setting forth duration. In the absence of a specific termination date, the distributorship is terminable at will. Minn.Stat. § 336.2-309(2). See Hayes v. Northwood Panelboard Co., 415 N.W.2d 687, 691 (Minn.App.1988). Under Minnesota law, National Cart was required to give reasonable notice of termination. Reasonable notice is that period of time necessary to close out accounts and minimize losses. Sofa Gallery, Inc. v. Stratford Co., 872 F.2d 259, 263 (8th Cir.1989). National Cart did agree to honor Viking's orders until September 30, 1999, and did in fact honor such orders into mid-October. The district court found, and its finding is based upon Ogren's testimony, that any claimed losses to Viking were in fact lost profits. The notice provided by National Cart was reasonable, as a matter of law, under the circumstances. 43 Viking argues that the duration of the distributorship contract was not indefinite because the agreement specified a continuing obligation as long as Viking did not sell competing corrals to Target. Viking argues that, under Minnesota law, such a contract could not be terminated unless one party fails to perform. 44 The January 1996 correspondence between the parties says nothing about the duration of the alleged arrangement. Thus, the contract would ordinarily be terminable at will under Minn.Stat. § 336.2-309. The letters state, however, that in return for Viking's promise not to sell other corrals to Target and Shopko, National Cart would not sell directly to Target or Shopko. The letter reflects an understanding that any arrangement between the parties would continue as long as Viking continued to supply National Cart's corrals to Target. Minnesota law recognizes that section 336.2-309 does not permit unilateral termination at will in cases where the contract provides that it will continue as long as one party performs satisfactorily. See, e.g., Benson Cooperative Creamery Ass'n v. First District Ass'n, 276 Minn. 520, 151 N.W.2d 422, 427 (1967). Cf. W.K.T. Distrib. Co. v. Sharp Elec. Corp., 746 F.2d 1333, 1335 (8th Cir.1984) (applying Minnesota law and discussing the difference between contracts terminable at will and contracts that are to continue as long as one party performs); UFE Inc. v. Methode Electronics, Inc., 808 F.Supp. 1407, 1413 (D.Minn.1992) (an agreement to enter into a requirements contract necessarily contains a durational term within the meaning of section 336.2-309(2)). 45 Based upon the foregoing analysis, the contract at issue here would not have been terminable at will by either party. However, the contract provides that as long as Viking is selling National Cart's corrals to Target, National Cart will never attempt to sell directly to Target. The undisputed evidence in the record, in the light most favorable to Viking, is that Target was no longer willing to do business with Viking. 4 Thus, even under Viking's interpretation of the duration of the contract, the duration of the contract had expired, thus excusing National Cart's further performance. 46 National Cart did not breach the distributorship contract with Viking, either because it was terminable at will or because it had expired before National Cart's notice. 47