Tuesday, December 3, 2013

Zapatha v. Dairy Mart, Inc. case brief

Zapatha v. Dairy Mart, Inc. case brief summary
408 N.E.2d 1370 (1980)


CASE SYNOPSIS
Defendant appealed the decision entered in plaintiffs' favor in the Hampden Superior Court (Massachusetts), holding that defendant did not act in good faith, that the termination provision in plaintiffs' franchise agreement with defendant was unconscionable, and that defendant's termination of the agreement without cause was an unfair and deceptive act.

CASE FACTS
Defendant entered into a franchise agreement with plaintiffs. The termination clause allowed either party, after 12 months, to terminate the agreement without cause on 90-days written notice. Defendant read and explained the termination provision to plaintiffs. Plaintiffs signed the agreement. Thereafter, defendant submitted a new franchise agreement to plaintiffs for execution. Plaintiffs refused to sign. Defendant sent plaintiffs written notice that the franchise agreement was being terminated effective in 90 days. Plaintiffs sued defendant.

PROCEDURAL HISTORY
The trial court found that the termination was due to plaintiffs' refusal to sign the new agreement and that the termination was without cause and unconscionable, violated defendant's duty of good faith, and was an unfair and deceptive act. Defendant appealed.

DISCUSSION

  • On appeal, the court reversed. 
  • The 90-day notice provision in the termination clause was reasonable, and there was no unfair surprise concerning the termination clause. 
  • The termination clause was not obscurely worded or buried in fine print. 
  • There was no oppression in the inclusion of the termination clause, and defendant acted in good faith when it exercised the termination provision.

CONCLUSION
The court reversed, holding that defendant lawfully terminated its franchise agreement with plaintiffs because there was no showing that, in terminating the agreement, defendant engaged in any unfair, deceptive, or bad faith conduct.

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