Nautilus Marine Enterprises v. Exxon Mobile Corp.

[CONTRACT LAW]

In Nautilus Marine Enterprises v. Exxon Mobil Corp.,[1] the supreme court held that extrinsic evidence is admissible for interpreting the meaning of the words of a contract even when the language is not ambiguous.[2] In 2006, Nautilus Marine and Exxon Mobil entered into a Settlement Agreement originating from a prior lawsuit.[3] The parties, however, could not agree whether the prejudgment interest should be a simple or compound rate.[4] Nautilus’ attorney subsequently suggested the parties settle the principal damages and allow the court to determine the proper prejudgment interest.[5] The settlement agreement ultimately included language to the effect that interest would be “compounded annually.”[6] Nevertheless, both parties agreed that there was no discussion about the meaning of “compounded annually.”[7] On appeal, Nautilus argued that the parol evidence rule barred the court from considering extrinsic evidence for determining the meaning of the Settlement Agreement unless the language of the contract was ambiguous.[8] The supreme court affirmed the lower court’s decision, reasoning that the parol evidence rule only prohibited the enforcement of prior inconsistent agreements and that extrinsic evidence could be considered even when the language of the contract was not ambiguous.[9] The court further reasoned that allowing for extrinsic evidence would allow the courts to better interpret the contract and, thus, better meet the reasonable expectations of the parties at the time the contract was formed.[10] Affirming the lower court’s decision, the supreme court held that extrinsic evidence is admissible for interpreting the meaning of the words of a contract even when the language is not ambiguous.[11]

 



[1] 305 P.3d 309 (Alaska 2013).

[2] Id. at 316.

[3] Id. at 312.

[4] Id.

[5] Id.

[6] Id. at 313.

[7] Id.

[8] Id. at 315–16.

[9] Id. at 316.

[10] Id. at 317.

[11] Id. at 316.

Nautilus Marine Enterprises v. Exxon Mobile Corp.

[CONTRACT LAW]

In Nautilus Marine Enterprises v. Exxon Mobil Corp.,[1] the supreme court held that extrinsic evidence is admissible for interpreting the meaning of the words of a contract even when the language is not ambiguous.[2] In 2006, Nautilus Marine and Exxon Mobil entered into a Settlement Agreement originating from a prior lawsuit.[3] The parties, however, could not agree whether the prejudgment interest should be a simple or compound rate.[4] Nautilus’ attorney subsequently suggested the parties settle the principal damages and allow the court to determine the proper prejudgment interest.[5] The settlement agreement ultimately included language to the effect that interest would be “compounded annually.”[6] Nevertheless, both parties agreed that there was no discussion about the meaning of “compounded annually.”[7] On appeal, Nautilus argued that the parol evidence rule barred the court from considering extrinsic evidence for determining the meaning of the Settlement Agreement unless the language of the contract was ambiguous.[8] The supreme court affirmed the lower court’s decision, reasoning that the parol evidence rule only prohibited the enforcement of prior inconsistent agreements and that extrinsic evidence could be considered even when the language of the contract was not ambiguous.[9] The court further reasoned that allowing for extrinsic evidence would allow the courts to better interpret the contract and, thus, better meet the reasonable expectations of the parties at the time the contract was formed.[10] Affirming the lower court’s decision, the supreme court held that extrinsic evidence is admissible for interpreting the meaning of the words of a contract even when the language is not ambiguous.[11]

 



[1] 305 P.3d 309 (Alaska 2013).

[2] Id. at 316.

[3] Id. at 312.

[4] Id.

[5] Id.

[6] Id. at 313.

[7] Id.

[8] Id. at 315–16.

[9] Id. at 316.

[10] Id. at 317.

[11] Id. at 316.