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Lee v. Joseph E. Seagram & Sons, Inc. | 552 F.2d 447 (1977)

Contemporary contract litigation often involves the parol-evidence rule, which prevents parties from introducing evidence of prior agreements that contradict, modify, or supplement the terms of a written contract. However, the rule only applies if a written contract is intended as a complete and finalized expression of the parties’ agreement. So how do courts determine whether parties intended their written contract to be complete and finalized? The Second Circuit tackled this question in the case of Lee versus Joseph E. Seagram and Sons, Incorporated.

Harold Lee and several of his family members owned Capitol City Liquor Company, a wholesale liquor distributor. In May of Nineteen Seventy, Lee approached Jack Yogman, an executive at Seagram and Sons, Incorporated, and offered to sell Capitol City to Seagram if Seagram agreed to set up Harold and his sons in their own distributorship in a different city. Yogman accepted. Lee had a long-standing business relationship with Seagram and had known Yogman for many years. Lee signed the sales contract in September of Nineteen Seventy, but the written contract made no mention of the new distributorship.

When Seagram failed to secure a new distributorship after fifteen months, Lee and his sons filed a claim for breach of the oral agreement.

Seagram moved for summary judgment, but the district court denied the motion and ruled that the parol-evidence rule didn’t preclude evidence of the oral agreement. The jury awarded the Lees more than four hundred thousand dollars in damages, and Seagram appealed to the Second Circuit.

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