## Facts

- Alaska Northern Development, Inc. (AND) sought to buy Alyeska Pipeline Service Company’s surplus Caterpillar parts inventory.
- AND’s president, David Reed, submitted a December 10, 1976 letter of intent proposing to buy the entire inventory but leaving price blank.
- Alyeska responded with a December 11, 1976 letter of intent that also left price blank and added: “subject to the final approval of the owner committee.”
- Reed received an unsigned draft of the December 11 letter, had counsel review it, then met with Alyeska’s contracts manager, William Rickett.
- Reed and Rickett agreed on a price of 65% of Alyeska’s price; Rickett inserted that term into the December 11 letter and signed it.
- In March 1977, Alyeska’s owner committee rejected the proposal.
- AND claimed the owner-committee clause meant only that the committee would review whether the price was fair and reasonable, not that it could reject the transaction.
- AND sued for breach of contract (and later sought reformation and punitive damages), offering extrinsic evidence to support its limited reading of the approval clause.
- The superior court ultimately granted summary judgment to Alyeska on the contract claim, ruling the parol evidence rule barred AND’s contradictory extrinsic evidence.

## Issues

1. Whether the December 11 letter of intent was integrated as to the “subject to the final approval of the owner committee” clause.
2. Whether AND’s proffered extrinsic evidence limiting the committee’s role to price review contradicted an integrated term and was therefore barred by the parol evidence rule.
3. Whether the approval clause was reasonably susceptible to AND’s interpretation such that ambiguity precluded summary judgment.
4. Whether, given the approval clause, a binding contract could exist absent owner-committee approval.

## Decision

- The Alaska Supreme Court affirmed summary judgment for Alyeska on the breach-of-contract claim.
- The court held the December 11 writing was integrated with respect to the owner-committee approval clause, even if the agreement was only partially integrated overall.
- AND’s extrinsic evidence that the owner committee’s authority was limited to price approval contradicted the integrated “final approval” term and was inadmissible under the parol evidence rule.
- The phrase “subject to the final approval of the owner committee” was not reasonably susceptible to AND’s narrower interpretation.
- Because owner-committee approval was a condition precedent, the committee’s rejection prevented contract formation; therefore, there was no breach as a matter of law.

## Legal Principles

- A writing may be partially integrated; an integrated term may not be contradicted by prior or contemporaneous oral understandings.
- Under the parol evidence rule, extrinsic evidence may supplement or explain a partially integrated writing only if it does not contradict the integrated language.
- Inconsistency exists when a proposed additional term lacks reasonable harmony with the writing’s language and the parties’ obligations.
- “Subject to final approval” language generally creates a condition precedent; if the condition does not occur, no binding obligation arises.

## Conclusion

The court treated the owner-committee approval language as an integrated, unambiguous condition precedent and excluded AND’s contrary oral-limitation evidence, leaving no genuine factual dispute and requiring judgment that no enforceable contract formed when the committee disapproved the transaction.


Alaska N. Dev., Inc. v. Alyeska Pipeline Serv. Co., 666 P.2d 33 (Alaska 1983)