Hunt Foods and Industries, Inc. v. Doliner

Appellate Division of the Supreme Court of New York
No reporter information provided (1965)

ELI5:

Rule of Law:

Under Uniform Commercial Code § 2-202, evidence of a contemporaneous oral agreement is admissible to supplement a written contract with consistent additional terms, unless the court finds the writing was intended to be a complete and exclusive statement of the agreement's terms.

Facts:

In February 1965, Hunt Foods and Industries, Inc. ('Hunt') began negotiations to acquire Eastern Can Company from George M. Doliner and his family, who owned 73% of the stock.
The parties reached an agreement on the price but had not yet agreed on other important terms, such as the form of the acquisition.
The negotiations were recessed for several weeks, and Hunt negotiators expressed concern that Doliner would use their offer to solicit a higher bid from another party.
To protect its position during the recess, Hunt demanded an option to purchase the Doliner family's stock.
George Doliner and his family signed a written agreement granting Hunt an unconditional option to purchase their stock for $5.50 per share on or before June 1, 1965.
Doliner alleges there was a contemporaneous oral agreement that the option would only be exercised if he solicited an outside offer for the company.
Upon resuming negotiations, the parties failed to reach a final acquisition agreement.
Hunt then exercised its written option, and the Doliners refused to deliver their stock, citing the alleged oral condition.

Procedural Posture:

Hunt Foods and Industries, Inc. (plaintiff) sued George M. Doliner (defendant) in the New York Supreme Court, Special Term (trial court), seeking specific performance of the stock option agreement.
Plaintiff moved for summary judgment, arguing the parol evidence rule barred defendant's defense based on the alleged oral condition.
The trial court granted summary judgment in favor of the plaintiff, Hunt.
The defendant, Doliner, appealed the grant of summary judgment to the Appellate Division of the Supreme Court of New York, First Department (an intermediate appellate court).

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Issue:

Does the parol evidence rule, as codified in UCC § 2-202, bar evidence of a contemporaneous oral condition precedent that does not directly contradict or negate an express term of a written stock option agreement?

Opinions:

Majority - Steuer, J.

No. The parol evidence rule under UCC § 2-202 does not bar evidence of this oral condition because it is not inconsistent with the written agreement. For an oral term to be 'inconsistent' with a written agreement, it must contradict or negate an express term in the writing, not merely add a condition precedent to the obligations. The court reasoned that an oral provision that prevents the ripening of obligations is not necessarily inconsistent in the sense used by the UCC. Citing the Official Comment to the UCC, the court noted that oral terms should only be excluded if they are such that they would 'certainly' have been included in the written document. Given the context of ongoing and incomplete negotiations, it was not certain that the parties would have included this specific condition in the standalone option agreement. Therefore, evidence of the oral condition is admissible, creating a triable issue of fact that makes summary judgment inappropriate.

Analysis:

This case provides a key interpretation of the Uniform Commercial Code's more liberal parol evidence rule, moving away from the rigid 'four corners' doctrine. It establishes that for an oral term to be excluded as 'inconsistent,' it must directly contradict an express written term, not merely supplement it. This decision makes it easier for parties to introduce evidence of oral conditions precedent, requiring courts to consider the commercial context and whether sophisticated parties would 'certainly' have included such a term in the writing. The ruling promotes a more flexible, context-sensitive approach to contract interpretation over a strict, literalist one.

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