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Sixth Circuit Rejects Dealer's Encroachment Claim Where Contract Did Not Contain an Exclusive Territory Provision
Posted in Encroachment

The United States Court of Appeals for the Sixth Circuit has affirmed a Michigan federal court’s grant of summary judgment to defendant ExxonMobil Oil Company, turning aside the appellant-dealer’s encroachment claims because the parol evidence rule barred oral evidence regarding Exxon’s alleged promise to provide the dealer with an exclusive territory. Partner & Partner, Inc. v. ExxonMobil Oil Corp., 2009 WL 1184796 (6th Cir. May 4, 2009). 

In upholding the district court’s decision, the Sixth Circuit noted that neither the original sales agreement between Exxon and the dealer nor the subsequent PMPA Agreement between the dealer and its distributor contained a provision granting the dealer an exclusive territory. The Sixth Circuit found that Exxon was within its contractual rights to allow a nearby gas station to rebrand itself as a Mobil station, in direct competition with the dealer. The appellant’s only evidence of its supposed exclusive territory was alleged oral representations by Exxon. The Sixth Circuit determined those representations were barred by the parol evidence rule as well as the integration clause in the sales agreement between the parties. It also rejected the dealer’s motion to amend its complaint to include breach of the Michigan Franchise Investment Law, finding that Exxon did not have a franchise relationship with either the distributor or the dealer. 

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The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

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