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Betaco, Inc. v. Cessna Aircraft Co

    Brief Fact Summary. Betaco, Inc., (Appellee) brought this suit requesting Appellant return its $150,000.00 deposit on a CitationJet worth $2.495 million. A jury agreed that Appellant had made and breached its external warranty and the district court ordered the return of its deposit. Appellant appeals.

    Synopsis of Rule of Law. In assessing the intent of the parties in making a document a complete and exclusive statement of the terms of their agreement, the following factors should be considered: (1) the inclusion of merger or integration clauses in the document under consideration (2)the disclaimer of warranties, (3)whether the extrinsic term is one that the parties would certainly have included in the document had it been part of their agreement, (4)the sophistication of the parties, and (5) the nature and scope of both prior negotiations between the parties and any purported extrinsic terms.

    Facts. Appellee considered buying a CitationJet from Appellants. Appellant’s representative stated that this jet would have more range then its predecessor. Appellee requested more information about the jet and Appellant sent Appellee a packet of materials providing general information and performance estimates for the new plane and an unsigned but otherwise completed purchase order disclaiming all warranties except those set forth in the preliminary specifications. Those specifications stated the gross takeoff weight and the fuel range under specified conditions. Appellee decided to purchase the plane and put down $150,000.00 as a deposit. Later, Appellee decided that the anticipated range of the plane was unsatisfactory and canceled the contract. Appellant invoked a contractional provision entitling it to keep the deposit as liquidated damages.

    Issue. Whether the purchase order the parties signed was not fully integrated and therefore proof of an extrinsic term was therefore permissible

    Held. No. The purchase agreement was fully integrated and the proof of the extrinsic term was not permissible.

    Discussion. The inclusion of the integration clause in the purchase order is strong evidence that the parties intended the document to represent the entirety of their agreement. The clause is simple and straightforward and was not likely to be overlooked in an agreement that only covered two pages. Appellee acknowledged that in signing the contract, her verified that he had read it understood it and had the full authority to bind the company with his signature.
    The disclaimer of extrinsic warranties reinforces the integration clause by making clear what is implicit in the notion of a fully integrated contract, that no representation not documented in the written agreement itself is part of the parties’ bargain. It is entirely reasonable to charge Appellee and Appellant with the realization that when the contract spoke of “this Agreement” being the sole agreement between the parties and disclaimed all representations beyond it, it meant only those terms expressly incorporated within the two-page purchase agreement itself were part of the bargain. The document itself gave specific performance estimates, indicating if the parties intended for any additional representations as to the range of the jet to be included, they would have been made an explicit part of the purchase agreement.
    The performance estimates were quite specific as opposed to the vague and casual representation made by Appellant’s representative. It is implausible to think that Appellee would have understood these comments to be part of the same contract.
    Appellee is an experienced sophisticated purchaser with a professed concern about range and a staff available to crunch the numbers. It is difficult too believe that it would spend almost $2.5 million on a plane on a mere assurance that the plane had “more range.”
    All of this weighs heavily in favor of honoring the integration and warranty disclaimer clauses and precludes Appellee’s effort to read into the parties’ agreement an extrinsic term. What Appellee has attempted to do is to retroactively make part of its bargain with Appellant, its own expectations of the aircraft in direct contravention of the terms of the written agreement it signed.


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