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Unformatted text preview: Contracts 11/10 Parol Evidence Rule Nanakuli Paving & Rock Co. v. Shell Oil Co., 9 th Circuit, 1981 Facts : Nanakuli was an asphalt paving contractor. It bought all its asphalt from 1963 to 1974 from Shell under two long-term supply contracts. It claims that Shell failed to price protect Nanakuli on 7200 tons of asphalt at the time Shell raised the price from $44 to $76. Nanakuli says price-protection, as a usage of trade, was incorporated into their 1969 agreement, as demonstrated by the routine use of price protection by suppliers to that trade and reinforced by the way Shell performed the 1969 contract up until 1974. The contract said Shells Posted Price at time of delivery. Procedure : jury verdict for Nanakuli $220,800. Shell breached its contract by failing to price protect. The judge set aside the verdict and granted Shells motion for judgment n.o.v. Nanakuli : (1) all material suppliers to the asphalt paving trade in Hawaii followed the trade usage of price protection and thus it should be assumed, under the U.C.C., that the parties intended to incorporate price protection into their 1969 agreement. This is so even though the written contract provided for price to be Shells posted price at time of delivery; (2) Shell was obliged to price protect Nanakuli, even if price protection wasnt incorporated into their contract, because price protection was the commercially reasonable standard for fair dealing in the asphalt trade. The U.C.C. requires observance reasonable standard for fair dealing in the asphalt trade....
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- Fall '08