Brief Fact Summary. A city contracted to provide certain towns with a sewage facility. The sewage facility at some point was operating substantially above capacity. An individual attempting to develop certain land into residential homes, applied to the city for permits to extend certain sewage lines.
Synopsis of Rule of Law. This case does not lend itself to a specific rule, see the held section.
In the absence of an express term fixing the duration of a contract, the courts may inquire into the intent of the parties and supply the missing term if a duration may be fairly and reasonably fixed by the surrounding circumstances and the parties intent.View Full Point of Law
Issue. Is the Defendant bound to expand the sewage plant or accommodate the Plaintiff's or anyone else's increased demands on the sewage system?
Held. No. The court concluded "that the city is presently obligated to maintain the existing plant but is not required to expand that plant or construct any new facilities to accommodate plaintiff's substantial, or any other, increased demands on the sewage system." The court first discusses the duration of the agreement. The court rejects the contention that the court was perpetually bound by the 1924 agreement, because the agreement did not show that the parties had that intention. The court also rejects the assertion that the contract is terminable at will, just because it does not include a specific duration. The court found that even though the duration was not specified, the court can supply the missing term based on the parties' intent. In construing the parties' intentions, the court determined performance is to continue for a reasonable time.
• The court then held "that it is reasonable to infer from the circumstances of the 1924 agreement that the parties intended the city to maintain the sewage disposal facility until such time as the city no longer needed or desired the water, the purity of which the plant was designed to insure." The court then discussed the scope of the city's obligation. The court recognized that the city obligated itself "to build a specifically described disposal facility and to extend the lines of that facility to meet future increased demand." If more lines were added to the facility the system would become overloaded. The city did not obligate itself to build a new facility or extend the facilities capabilities to areas presently served or being developed if the existing system would become overloaded.
Discussion. This case offers a good example of how courts determine the duration and scope of a contract if these characteristics are not clear from the words in the contract.