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ARB, Inc. v. E-Systems, Inc.

United States Court of Appeals for the District of Columbia Circuit
663 F.2d 189 (1980)


Facts

ARB, Inc. (ARB) (plaintiff) was a media-research company. ARB negotiated a contract with E-Systems, Inc. (E-Systems) (defendant) for an electronic system. ARB sent E-Systems a draft contract that included a provision for cover damages. Under this provision, if E-Systems breached the contract and ARB had to pay extra to buy substitute items to cover for the missing contract items, then E-Systems would be responsible for the price difference. E-Systems asked to have the cover-damages provision removed, and ARB agreed to delete it. The final contract included an integration clause that identified the written contract as “a complete and exclusive statement of the terms of the agreement.” Later, ARB sued E-Systems and proved E-Systems breached the contract. However, ARB was denied cover damages on the ground that ARB’s right to cover damages had been bargained away during the contract negotiations. ARB appealed, arguing the decision on damages violated the parol evidence rule found in § 2-202 of the Uniform Commercial Code (UCC).

Rule of Law

Issue

Holding and Reasoning (Tamm, J.)

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