Young Living Essential Oils, LC v. Marin
2011 UT 64
| Utah | 2011Background
- Marin and Young Living entered into an integrated distributorship agreement in January 2005.
- Marin agreed to meet monthly performance guarantees through July 2005 and to perform as an experienced distributor.
- Young Living paid monthly advances to Marin, offset by commissions, to develop a marketing base; an integration clause stated no other representations were valid.
- Marin argued that Young Living failed to provide marketing materials by February 1, 2005, which allegedly excused his performance shortfalls.
- Marin alleged oral assurances of marketing tools and a mainstream marketing package, separate from the contract, were promised and later essential for meeting guarantees.
- The district court granted summary judgment for Young Living, holding evidence of marketing materials could not override the integrated contract; the court of appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the covenant of good faith and fair dealing may create an affirmative duty unrelated to the contract's terms | Marin: covenant imposes duty to provide marketing materials. | Young Living: no such covenant; inconsistent with contract terms; parol evidence applies. | No; covenant cannot create duties not anchored in contract. |
| Whether Marin's evidence constitutes course of dealing or parol evidence to support the covenant | Marin: evidence shows course of dealing justifies covenant. | Young Living: evidence is parol and inadmissible to vary integrated contract. | Not enough to establish a course of dealing to create a covenant. |
| Whether the parol-evidence rule bars Marin's affidavits claiming precontract inducements | Marin: statements relate to inducement and were made prior to or during contract formation. | Parol evidence bars side agreements contradicting integrated contract. | Parol evidence bars Marin's proffered side-deal evidence. |
Key Cases Cited
- St. Benedict's Dev. Co. v. St. Benedict's Hosp., 811 P.2d 194 (Utah 1991) (covenant informed by agreed common purpose and justified expectations)
- Oakwood Vill., LLC v. Albertsons, Inc., 104 P.3d 1226 (Utah 2004) (limits on implied covenant to avoid inconsistent obligations)
- Olympus Hills Shopping Ctr., Ltd. v. Smith's Food & Drug Ctrs., Inc., 889 P.2d 445 (Utah Ct.App.1994) (contracts cannot capture all understanding; fair dealing fills gaps)
- Market St. Assocs. Ltd. P'ship v. Frey, 941 F.2d 588 (7th Cir.1991) (function of covenant: give what parties would have stipulated)
- Kham & Nate's Shoes No. 2, Inc. v. First Bank of Whiting, 908 F.2d 1351 (7th Cir.1990) (avoid vague standard of good faith undermining predictability)
- Sw. Sav. & Loan Ass'n v. SunAmp Sys., Inc., 838 P.2d 1314 (Ariz.Ct.App.1992) (illustrates caution in extending duty on good faith)
- Carns v. Bassick, 175 N.Y.S. 670 (1919) (good faith cannot permit deliberate hindrance of performance)