Young Living Essential Oils, LC v. Marin, 2011 UT 64 (October 2011)
http://www.utcourts.gov/opinions/supopin/YoungLiving102111.pdf
Business Law Topics:
Contract Integration, Duty of Good Faith and Fair Dealing, Parol Evidence
Continue reading to view a summary of the relevant facts, rules and case holding...
Facts:
Carlos Marin (“Marin”) entered into a distributor agreement with Young Living Essential Oils (“Young Living”) whereby Young Living agreed to pay Marin monthly minimum advancements conditioned upon Marin meeting certain performance guarantees. Eventually Marin failed to meet the performance guarantees and Young Living sued him under the agreement for the difference between the advancements he received and the commissions he actually earned. As a defense, Marin argued that his inability to meet the performance guarantees was caused by Young Living’s failure to provide him with certain marketing materials. The agreement at issue did not mention the marketing materials and contained an integration clause stating that no other representations or understandings would be valid under the contract. Nevertheless, based on alleged oral promises and representations, Marin argued that Young Living’s failure to provide the marketing materials constituted a breach of the duty of good faith and fair dealing.
Procedural Posture:
Trial court granted summary judgment on contract claims to Young Living, Marin appealed. Court of Appeals affirmed.
Good Business Law Rules:
1. “[W]e have recognized an implied duty [of good faith and fair dealing] that contracting parties refrain from actions that will intentionally destroy or injure the other party’s right to receive the fruits of the contract.” ¶9.
2. “A court may recognize a covenant of good faith and fair dealing where it is clear from the parties’ course of dealings or settled custom or usage of trade that the parties undoubtedly would have agreed to the covenant if they had considered and addressed it. No such covenant may be invoked, however, if it would create obligations inconsistent with express contractual terms.” ¶ 10.
Holding:
Since the agreement expressly stated that it was fully integrated and did not include any obligation of Young Living to provide the allegedly promised marketing materials, the duty of good faith and fair dealing could not be used to write such a term into the agreement where there was no evidence of course of dealings or settled custom.