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How we resolve our disputes

Entries in ambiguity (1)

Monday
Apr192010

Cure-ious

In a unanimous decision, the Wisconsin Supreme Court upheld a ruling that Volvo had to rescind a notice terminating the franchise of one of its truck dealers. Initially, the dealer decided to sell its Volvo truck franchise and took steps to eliminate its efforts to sell Volvo trucks. This admittedly violated its franchise with Volvo. However, about a year later, the dealer decided not to sell its Volvo franchise. Nevertheless, Volvo issued a notice to terminate the franchise because sales had decreased dramatically and the dealer’s actions had breached the franchise agreement. As required by state law, Volvo gave the dealer time to cure the breach. The dealer claimed that it complied with the requirements to cure the breach, but Volvo disagreed. The state agency charged with hearing such disputes agreed with the dealer and Volvo appealed. The Wisconsin Court of Appeals affirmed and so did the Supreme Court. Essentially, the dealer claimed that by recommitting itself to promoting Volvo’s trucks, it cured the breach. Volvo argued that the breach was not cured because the dealer had not restored matters to the way they were before the breach. The courts agreed with the dealer, using the technical legal definition of “cured” rather than the dictionary definition that Volvo preferred. Substantial performance — a term all law students learn in law school — is what the law required. The courts found it was unreasonable to expect the dealer to return to the status quo ante, as Volvo desired.

What is curious about this case is that Volvo was not satisfied with getting a longtime successful dealer back in its fold. It wanted to punish the dealer for temporarily straying from the farm. Obviously, the courts agreed that it should have left well enough alone. I wonder if it was worth the time and expense of litigation to resolve this one ambiguity in the law.