Opinion ID: 6189
Heading Depth: 4
Heading Rank: 2

Heading: Parol evidence as to alleged oral agreements and/or modifications

Text: 47 Omnitech also put forth breach of contract theories based upon alleged oral representations and subsequent oral modifications to the parties' agreements, contending that the district court, in dismissing Omnitech's breach of contract claim, overlooked substantial evidence before the jury that the Letter of Intent was not the only contract between the parties, and that it did not encompass all of the contractual commitments between Clorox and Omnitech. Specifically, Omnitech alleges that Clorox executives Biebl and Scisco made oral promises that Clorox would not enter the insecticide category without Omnitech and that such promises were contractually binding. In the district court's view, any oral agreement of this type was precluded by the merger clause because the provision (i) accurately reflected the entire spectrum of the parties' agreement as of the date of execution, and (ii) defined the agreed-upon means by which the parties' contractual obligations could be modified. 16 48 The written agreements between the parties include an express integration clause, reflecting that the entire agreement between the parties had been reduced to writing in those instruments and that it can be modified only by written agreement executed by authorized representatives of the parties hereto. 17 While we by no means interpret the merger clause, per se, to preclude any parol evidence as to other possible agreements and/or representations between the parties, the facts of the instant case compel a conclusion that the merger clause correctly reflected the parties' intentions and should thus be enforced as written. See, e.g., Johnson v. Orkin Exterminating Co., Inc., 746 F.Supp. 627, 633 (E.D.La.1990). First, Omnitech was represented by its own counsel, who apparently negotiated quite vigorously on its behalf. In fact, the negotiations between Omnitech and Clorox had been on-going since February of 1989, at which time Omnitech, presumably on advice of counsel, rejected Clorox' original proposed non-disclosure agreement, since it did not adequately protect Omnitech's proprietary information. Subsequent drafts of the agreement were hotly disputed, and Omnitech's input was quite apparent in the final agreement. For example, Omnitech demanded, and was given, a concession that it be able to retain its current market shares of the Dr. X product by limiting the license granted to Clorox both categorically and geographically. Omnitech was both capable and successful in protecting its position. 49 Further, the record demonstrates that Omnitech was quite aware that Clorox was investigating an array of options with respect to the insecticide industry. By the time of the parties' first contact, Clorox had already investigated several other companies and had conducted its own in-house research to determine the best way for it to enter the market. Indeed, one of its prospects, Seabright, was intended to be included as a signatory to the non-disclosure agreement subsequently executed by the parties. Clorox' interest in other products in the insecticide category therefore was known to Omnitech at the time the contracts were executed. 50 Finally, although Cortes himself testified that his purpose for the non-disclosure agreement was that Clorox would not compete against us, it hardly seems possible that his understanding would not have been so recorded when other, more minor agreements were carefully included. In light of these circumstances, it is difficult to believe that Omnitech somehow overlooked or presumed an understanding it now professes to be a critical part of the parties' agreement--i.e., that Clorox promised not to enter the insecticide category or market without Omnitech. 51 With respect to subsequent oral modifications to the agreements, the only evidence of record is testimony that Scisco repeatedly assured Omnitech representatives that Clorox was committed to make Omnitech a part of any venture into the insecticide market. We agree with the trial court that Omnitech could not have reasonably believed Scisco had the authority to amend the parties' agreements when it was clear to Omnitech, as conceded by its president at trial, that Scisco did not have the authority to bind Clorox. 18 See, e.g., Tedesco v. Gentry Dev. Corp., Inc., 540 So.2d 960, 963 (La.1989) ([A]pparent authority operates only when it is reasonable for the third person to believe the agent is authorized and the third person actually believes the agent is authorized.). Therefore, the trial court properly removed this claim from the jury.