Opinion ID: 1302814
Heading Depth: 1
Heading Rank: 1

Heading: Question to the Determined.

Text: Where parties enter into an agency contract, for a specific period of time, with a reservation that it could be cancelled before the expiration of that period by a sixty-day notice which must specifically set forth the default claimed, and permit the party claimed against sixty days within which to cure the default; can the contract be terminated for alleged failure of performance without giving the sixty-day notice of intention to end the agreement? The question is answered in the negative. It is argued by counsel for defendant that the provision for a sixty-day notice is not mandatory in that it contains the clause,    the party not at fault may give to the defaulting party 60 days written notice   . (Emphasis supplied). Whether the word may, as used in this clause of the contract shall be construed as imposing a mandatory duty upon the parties must be determined from the whole agreement, and the manifest intention of the parties as expressed therein must govern. It is always true that use of the word may imposes only a permissive right or procedure. It has been held that this word, when considered with the subject matter of a statute, means must or shall. Board of County Commissioners of Pueblo County v. Smith, 22 Colo. 534, 45 P. 357; People ex rel. Rollins v. Board of County Commissioners of Rio Grande County, 7 Colo.App. 229, 42 P. 1032. Generally, the rules applicable to the construction of constitutional provisions, statutes and contracts are the same. Jones v. Board of Adjustment, 119 Colo. 420, 204 P.2d 560. From paragraph 9 of the contract in the instant case it is clear that the parties intended to make exclusive provision for the termination of the agreement prior to the expiration date fixed by the instrument. To hold that use of the word may created no rights or duties, and that it amounted to no more than a permissive or optional procedure, would be to give no meaning whatever to an entire paragraph of the contract, and to interpret it as mere surplusage. Where, by reasonable construction of a clause in a contract, the words employed can be given effect, it is our duty to thus construe the words used. It is presumed that each part of the contract has a purpose, and a construction, which gives legal effect to every part thereof, will be adopted. Bedford v. Colorado Fuel & Iron Corp., 102 Colo. 538, 81 P.2d 752. Certainly the parties intended to accomplish something by the considered language employed. The intention to cover the field of cancellation for default of either party is clear, and this means that the sixty-day notice of intention to terminate is mandatory, notwithstanding the use of the word may. By the use of that word in the contract before us, the employer was given the option to serve the sixty-day notice if it considered the default of sufficient consequence to terminate the contract. If it elected not to give such notice then the default was waived. Counsel for defendant quote from volume 2 C.J.S., Agency, § 74, page 1157, as follows: Accordingly, an agency created for a definite term may nevertheless be rightfully revoked before its scheduled date of expiration, without liability on the part of the principal, where the agent fails to perform faithfully his express or implied duties as agent;   . It is apparent that the above quotation, and others cited by counsel for defendant, deals generally with the unquestioned right of the principal to discharge the agent for cause where there is no express provision in the contract placing limitations and restrictions upon the exercise of that right, or specifying the manner in which the right may be exercised. In volume 2 American Jurisprudence, page 45, section 49, we find the following apt statement: The right to cancel an agency contract may depend upon some reservation or stipulation in the agency contract itself. Such a reservation may in effect give the right of cancelation at the will of either party or upon the happening of some contingency or the nonperformance of some expressed condition.