In the recent Delaware Supreme Court decision of Sunline Commercial Carriers, Inc. v. CITGO Petroleum Corp., No. 185,2018 (Del. Mar. 7, 2019), at issue between the parties to two related contracts was the computation of the termination date.  The parties had contracted for defendant/appellee CITGO to ship oil using the trucking company of the plaintiff/appellant Sunline.  The Delaware Superior Court granted summary judgment in favor of CITGO, finding dispositive a provision in one of the agreements that specified a one year term.

On appeal, the High Court found that ambiguity existed because the same agreement also contemplated renewals, required notice to terminate, and contemplated a review of pricing terms prior to the one-year period.  To add to the confusion, the same contract stated that it would remain effective until a second related contract, with a later default termination date, was terminated.

Accordingly, the High Court found that the agreement “is ambiguous, and the parties are entitled to a trial where they can attempt to prove, using parol evidence, their interpretation of the contract.” Slip op. at 17 (citing GMG Capital Invs., LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776, 783 (Del. 2012) (“But, where reasonable minds could differ as to the contract’s meaning, a factual dispute results and the factfinder must consider admissible extrinsic evidence.”).  As such, the case was remanded for trial which permitted extrinsic evidence of the interpretation of the relevant terms of the contracts, in light of the ambiguity.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.