Segal Wholesale, Inc. v. United Drug Service
2007 WL 2323483, 933 A.2d 780, 2007 D.C. App. LEXIS 487 (2007)
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Rule of Law:
Under the parol evidence rule, evidence of a prior oral agreement is inadmissible to contradict a term, such as price, that is unambiguously set forth in a series of confirmatory writings (e.g., invoices) that constitute a partially integrated agreement.
Facts:
- In June 2000, representatives from Segal Wholesale, Inc. ('Segal') and United Drug Service ('UDS') made an oral agreement for UDS to sell tobacco goods to Segal's stores.
- The parties disputed the terms of the oral pricing agreement; Segal claimed the price was to be 'two cents below the competition’s best price' for the duration of the relationship, while UDS claimed this price was only for the initial shipment.
- For approximately two years, Segal placed weekly orders, and UDS delivered the goods accompanied by invoices that clearly stated the price for each item.
- During this two-year period, Segal accepted all shipments and paid the prices as stated on the corresponding invoices.
- The business relationship ended after Segal was offered a much lower price by another wholesaler.
- After ending the relationship, Segal refused to pay UDS for the final shipment of goods it had received.
Procedural Posture:
- United Drug Service ('UDS') filed a breach of contract claim against Segal Wholesale, Inc. ('Segal') in the Superior Court.
- Segal filed a counterclaim against UDS for breach of contract, alleging consistent overcharging.
- At trial, the jury found in favor of UDS on its claim but deadlocked on Segal's counterclaim.
- The trial court declared a mistrial on Segal's counterclaim.
- UDS renewed its motion for judgment as a matter of law regarding Segal's counterclaim.
- The trial court granted UDS's motion, dismissing Segal's counterclaim on the basis of the statute of frauds.
- Segal, as appellant, appealed the dismissal of its counterclaim to the D.C. Court of Appeals, where UDS was the appellee.
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Issue:
Does the parol evidence rule bar a party from introducing evidence of an alleged prior oral pricing agreement that directly contradicts the unambiguous price terms set forth in a series of invoices that the party received and paid for over a two-year course of dealing?
Opinions:
Majority - Kramer, J.
Yes. The parol evidence rule bars evidence of a prior oral agreement that contradicts the terms of a partially integrated written agreement. Although the trial court erred in dismissing the claim based on the statute of frauds, the dismissal was proper under the parol evidence rule. The sales invoices, while not a complete integration of the entire contract, were a final written expression of the parties' agreement with respect to the terms they contained, including quantity and price. Because Segal's claim of a different oral pricing agreement directly contradicts the clear and unambiguous price terms on the invoices—terms which Segal assented to by performance for over two years—evidence of that alleged oral agreement is inadmissible. Without this evidence, Segal has no legally sufficient basis for its claim, making judgment as a matter of law appropriate.
Analysis:
This decision reinforces the significance of written terms in commercial dealings under the Uniform Commercial Code (UCC), even when those terms are found in sequential documents like invoices rather than a single master agreement. It clarifies that a series of invoices, coupled with a course of performance (i.e., payment), can create a partially integrated contract, rendering their explicit terms immune to contradiction by alleged prior oral agreements. The case serves as a strong precedent for giving finality to the terms on which parties transact business over time, preventing one party from later attempting to unwind a long history of transactions by claiming a different, unwritten understanding existed at the outset.
