U.S. Court of Appeals, 5th Circuit
Beijing Metals & Minerals Import-Export Corporation v. American Business Center Inc. et al.




A Chinese seller and a US (Texas) buyer concluded a contract for the purpose of introducing within the North-American market weight lifting equipment produced by the seller. Subsequent to a dispute the parties entered into a modified written agreement for payment. When the seller requested payment, the buyer refused to pay alleging that two contemporaneous oral agreements, relating to the seller's obligation to deliver the goods, had been concluded.

At first instance the Court did not allow the buyer to prove the oral agreements on the basis of the 'parole evidence rule'. On appeal the seller argued that Texas law applied while the buyer argued that CISG applied. The court provided: '[we] need not resolve this choice of law issue because our discussion is limited to application of the parole evidence rule (which applies regardless).'



This appeal turns on the effect to be given two alleged oral agreements made contemporaneously with execution of a written payment agreement. American Business Center, Inc. (ABC), challenges a summary judgment granted Beijing Metals & Minerals Import/Export Corporation (MMB) on its severed claim to enforce the payment agreement, contending, inter alia, that the district court misapplied the parol evidence rule and, on issues such as fraudulent inducement, overlooked genuine issues of material fact.


Under Texas law (see note n. 9), it is well settled that the parol evidence rule generally bars enforcement of prior or contemporaneous agreements introduced to vary, add to, or contradict terms of a fully integrated written instrument. See, e.g., Tripp Village v. MBank Lincoln Centre, 774 S.W.2d 746, 749 (Tex. App.-Dallas 1989, no writ). '[A] written instrument presumes that all prior agreements of the parties relating to the transaction have been merged into the written instrument', Weinacht v. Phillips Coal Co., 673 S.W.2d 677, 679 (Tex. App.-Dallas 1984, no writ); in other words, written agreements are presumed to be completely integrated. Jack H. Brown & Co. v. Toys 'R' Us, Inc., 906 F.2d 169, 173 (Sth Cir. 1990) (citing Hubacek v. Ennis State Bank, lS9 Tex. 166, 317 S.W.2d 30 (Tex. 1958)) (see note n. 10). As discussed below, although ABC may rebut this presumption, id. at 174, it failed to do so See id. (court determines whether written instrument is complete).



9) We apply Texas law in this diversity action. Salve Regina College v. Russell, __ U.S.__, 111 S. Ct. 1217 (1991). In its complaint, and thereafter, MMB relied on Texas law. ABC maintains, instead, that MMB's claim is governed by the United Nations Convention on Contracts for the International Sale of Goods (Sale of Goods Convention), codified at 15 U.S.C. Appendix (West Supp. 1993). MMB insists that Texas law controls. As noted in Filanto S.p.A. v. Chilewich International Corp., 789 F. Supp. 1229, 1237 (S.D.N.Y. 1992), appeal dismissed, 984 F.2d 58 (2d Cir. 1993), 'there is as yet virtually no U.S. case law interpreting the Sale of Goods Convention' . We need not resolve this choice of law issue, because our discussion is limited to application of the parol evidence rule (which applies regardless), duress, and fraudulent inducement; however, the district court may need to do so on remand.

10) […].}}


Published in English:
- 993 Federal Reports, 2nd series, 1178 (1993)
- 1993 U.S. App. LEXIS 14211

Commented on by:
- H.M. Flechtner, More U.S. Decisions on the U.N. Sales Convention: Scope, Parol Evidence, 'Validity', and Reduction of Price Under Article 50, 14 Journal of Law and Commerce, 153-176 (1995)
- D.H. Moore, The parol evidence rule and the United Nations Convention on Contracts for the International Sale of Goods: justifying Beijng Metals & Minerals Import/Export Corp. v. American Business center, Inc. [1993 F.2d 1178 (5th Cir. 1993)], Brigham Young University Law Review, 1347 (1995)}}