|
A merger clause in an agreement containing an arbitration provision does not require arbitration of disputes arising out of a different agreement between the parties when the agreements in question are independent, the Eighth Circuit Court of Appeals held.
In Suburban Leisure Center, Inc. v. AMF Bowling Products, Inc., No. 06-1865, 2006 WL 3332965 (8th Cir. Nov. 17, 2006), Suburban brought an action for damages after AMF cancelled an oral contract between the parties.
The oral agreement gave Suburban the right to use AMF’s trademark to sell AMF pool tables in Suburban stores. The parties also entered into a written e-commerce agreement, which stated that Suburban would deliver and install AMF products in a designated geographical area. The e-commerce agreement contained an arbitration clause; the oral agreement did not.
AMF petitioned the court to compel arbitration pursuant to the e-commerce contract, arguing that a merger clause in the e-commerce agreement incorporated the oral agreement and made the arbitration clause applicable to disputes arising out of the oral agreement.
Applying Virginia law, the Court noted that the merger clause simply required application of the parol evidence rule to the parties’ agreement, and the parol evidence rule “does not exclude parol proof of a prior or contemporaneous oral agreement that is independent of, collateral to and not inconsistent with the written contract.” Shevel’s Inc.-Chesterfield v. Se. Assocs., Inc., 320 S.E.2d 339, 343 (Va. 1984).
Because the oral agreement and the e-commerce agreement were two distinct agreements, independent of each other and not inconsistent, the Court held that the arbitration clause in the e-commerce agreement did not require disputes arising out of the oral agreement to be submitted to arbitration.
Subscribe to a free weekly update on ADR case law and
legislation
|