The Law School Authority

Nelson v. Elway Case Brief

Summary of Nelson v. Elway

Facts: P was owner of two car dealerships, Auto and Toyota; GMAC provide all financing for both dealerships; in early 1991, agent for P began negotiations with D regarding the sale of Toyota; March 14, 1991 D’s signed an agreement with a closing date of April 15, 1991 for Toyota only; agent asked D if they were wiling to buy Auto as well, and a deal was reached {“Service Agreement”} that D’s would pay P $50 per car sold for seven years in exchange for a reduced selling price; Agreement was reduced to writing but was never signed by the parties; March 16, 1991 agreement signed for sale of Auto, w/o agreement terms; April 3, 1991, P alleges that D’s assured him that the orally agreed upon deal would be honored; April 8, 1991, GMAC told D’s that P was not to receive any proceeds from the sale of the dealership; D’s informed P that they would not honor the Agreement; P sued, seeking damages for breach of K;

P/S: D moved the trial court for summary judgment, which the court granted on all counts; P appealed. Ct. of Apps. Affirmed; P appealed

Issue: Whether the merger clauses in the Buy-Sell agreements prohibit the consideration of the intent of the contracting parties. (Whether the orally agreed upon Service Agreement is enforceable.)

Holding: Yes.  The merger clause preclude consideration of extrinsic evidence to ascertain the intent of the parties; FOR D

Rationale: The merger clauses completely manifest the intention of the parties that only those terms of the transaction reduced to writing and signed at the closing would be enforceable terms of the agreement.  It would be improper for the court to look outside the contract to determine the intent of the parties. The parties agreed to the terms of the Buy-Sell agreement and all other agreements, oral or written, are void.

DISSENT: The trial and appeals ct. erred by allowing summary judgment.  D’s case is adequately supported in the record and the merger agreement is a disputed issue of material fact.  Parties disagree regarding their intent to honor the alleged service agreement, and the dispute requires a factual determination.  Rule: courts should consider not only the language of the agreement but all extrinsic evidence relevant to the issue of whether the parties intended the written agreement to be a complete integration.


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