Opinion ID: 1214537
Heading Depth: 2
Heading Rank: 3

Heading: Distribution Agreement

Text: The trial court found that the distribution agreement was not ambiguous and that it was fully integrated. The trial court ruled, therefore, that parol evidence was not admissible to contravene the written contract. Although the appellants do not raise an issue on appeal which directly addresses the integration issue, we must consider this matter in order to correctly decide the issues which were raised by the appellants. The appellants contend that the distribution agreement was not fully integrated because it did not define the types or quantities of products which would be produced and marketed under that agreement. They argue that the trial court, therefore, should have allowed parol evidence to be admitted at the trial. The determinations of whether a contract is integrated and what effect a court will give to parol evidence are matters of substantive law. 16 AM.JUR.2D Conflict of Laws § 132 (1979); RESTATEMENT, supra, at § 140. In accordance with our earlier decision on the choice of law issue, we will apply Pennsylvania law to determine whether the distribution agreement was fully integrated. Under Pennsylvania law, [w]here parties, `without any fraud or mistake have deliberately put their engagements in writing, the law declares the writing to be not only the best, but the only evidence of this agreement.' Snyder Brothers, Inc. v. Peoples Natural Gas Company, 450 Pa.Super. 371, 676 A.2d 1226, 1231 (1996) (quoting Gianni v. R. Russell & Co., Inc., 281 Pa. 320, 126 A. 791 (1924)). In Snyder Brothers, Inc., the Pennsylvania court went on to state: All preliminary negotiations, conversations and verbal agreements are merged in and superseded by the subsequent written contract ... and unless fraud, accident or mistake be averred, the writing constitutes the agreement between the parties, and its terms cannot be added to nor subtracted from by parol evidence. 676 A.2d at 1231 (quoting Union Storage Co. v. Speck, 194 Pa. 126, 45 A. 48 (1899)). [1] Under the parol evidence rule, neither oral testimony nor prior written agreements are admissible to explain or vary the terms of a fully integrated written contract. Gemini Equipment Co. v. Pennsy Supply, Inc., 407 Pa.Super. 404, 595 A.2d 1211, 1215 (1991). The parol evidence rule is particularly applicable to contracts which contain integration clauses. See Snyder Brothers, Inc., 676 A.2d at 1231; National Cash Register Company v. Modern Transfer Co., Inc., 224 Pa.Super. 138, 302 A.2d 486, 489 (1973). In this case, the distribution agreement contained an integration clause which stated: 11.4 Entire Agreement: This Agreement, including exhibits, constitute[s] the entire agreement between the Parties relating to the subject matter hereof and cancels and supersedes all prior agreements and understandings, whether written or oral, between the Parties with respect to such subject matter. In addition to the integration clause, the distribution agreement prohibited oral modification or waiver of any of the agreement's terms. The distribution agreement also defined the period during which the contract would remain in effect and outlined the parties' rights and obligations. See Gemini Equipment Co., 595 A.2d at 1216. According to the distribution agreement's plain language, the parties intended for the agreement to be a complete recitation of their understandings. The lack of a specification of the types or quantities of products which were to be produced did not render the distribution agreement incomplete. See id. Given the nature of the agreementResource Technology submitted product lot specifications to Fisher Scientific and Fisher Scientific certified the lots which it acceptedit would have been virtually impossible to specify the types of products which would be produced or to set an absolute quantity quota. The September 7, 1988, facsimile set forth only an expected case scenario for the quantities which would be produced and marketed during the term of the contract. While the parties could have included that earlier document as a part of their distribution agreement, they did not, and the integration clause in the distribution agreement expressly canceled all prior agreements and understandings. We conclude, therefore, that the contract was fully integrated and that parol evidence was not admissible to add to or subtract from the written distribution agreement.