Lee v. Joseph E Seagram and Sons Case Brief

Summary of Lee v. Joseph E Seagram & Sons
U.S. Ct. of App. [1977]

Relevant Facts: The Pl/ee, Lees owned 50% interest in a wholesale liquor distributorship. Seagram is a distiller of alcoholic beverages. The Lees carried numerous Seagram brands and a large portion of sales were generated by Seagram lines. The Lees and other owners wanted to sell their interests. Mr. Lee discussed this with Yogman VP of Seagram. Lee offered to sell but conditioned the offer on Seagram’s agreement to relocate Mr. Lee and sons in a new distributorship of their own in a different city. Evidence supports this as having been done. A mo. later another representative began negotiations, the purchase of the assets was consummated pursuant to a written agreement. The promise to relocate was not reduced to writing.

Legal Issue(s): Whether the oral promise to provide another distributorship would be an expectable term of the contract for the sale of assets by Capital, in which the Pls only have a 50% interest, considering the history of their relationship with Seagram?

Court’s Holding: No, it is a separate and independent contract.

Procedure: Appeal by df of jury verdict for pl breach of K. Affirmed.

Law or Rule(s): Certain oral collateral agreements are not w/i the prohibition of the parol evidence rule “b/c if they are separate, independent, and complete contracts, although relating to the same subject, they are allowed to be proved by parol, b/c they were made parol, and no part thereof committed to writing.

Court Rationale: In customary business practices, oral agreements can be treated as separate and independent of the written agreement. Collateral agreements such as shareholder employment, survive the closing of a corporate deal, are often set forth in separate agreements. An agreement to obtain a new distributorship for certain persons, not parties to the contract, would not ordinarily be integrated into an instrument for the sale of corporate assets. There was a close relationship of confidence and friendship between Mr. Lee and Yogman, whose authority to bind Seagram has not been questioned. The written agreement does not contain the customary integration clause. There are no contradictions of the terms of the sales agreement. The writing dealt w/ the sale of corporate assets, the oral w/ the relocation of the Lees. The oral does not vary or contradict the money consideration recited in the contract as flowing to the selling corp.

Plaintiff’s Argument: (EE/Lee) The oral agreement was a collateral agreement and since it is not contradictory of any of the terms of the sales agreement, proof of it is not barred by the parol evidence rule.

Defendant’s Argument: (ant/Seagram) The oral agreement was part and parcel of the subject matter of the sales contract and that failure to include it in the written contract bars proof of its existence.

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