## Facts

- Betaco, Inc., an aircraft acquisition and leasing company, sought to buy Cessna’s new CitationJet, which had not yet entered service.
- Cessna provided Betaco with (1) a cover letter describing comparative performance, (2) a multi-page executive summary with performance estimates, and (3) a written purchase agreement with detailed specifications and an integration clause.
- The cover letter stated the CitationJet was “much faster, more efficient, and has more range than the popular Citation I.”
- Betaco signed the purchase agreement and paid $150,000 in deposits toward the purchase price.
- Betaco later concluded that, with a full passenger load, the CitationJet would not have greater range than the Citation I, attempted to cancel, and demanded return of its deposit.
- Cessna refused to refund the deposit, relying on a liquidated-damages provision permitting retention of deposits upon buyer cancellation.
- Betaco sued in federal court (diversity), asserting an express-warranty theory based on the cover letter’s “more range” statement.
- The district court granted partial summary judgment that the purchase agreement was not fully integrated, the case went to a jury, and Betaco obtained a verdict for $150,000 plus interest.
- On the first appeal, the Seventh Circuit reversed the integration ruling and remanded for a factual hearing on integration; after a bench hearing, the district court again found non-integration, prompting a second appeal.

## Issues

1. Whether, under U.C.C. § 2-202, the written purchase agreement was a fully integrated contract that barred reliance on the cover letter as an additional express warranty.
2. Whether summary judgment was proper on the question of integration given competing evidence of the parties’ intent.
3. On post-remand review, whether the district court’s finding of non-integration was clearly erroneous.

## Decision

- The Seventh Circuit held in the first appeal that the parties’ intent regarding integration presented a genuine factual dispute, making summary judgment improper.
- The court vacated the judgment based on the jury verdict and remanded for a factual hearing to determine whether the writing was intended as the complete and exclusive agreement.
- In the second appeal, the Seventh Circuit held the district court’s post-hearing finding of non-integration was clearly erroneous.
- The court concluded the purchase agreement was fully integrated and that the cover letter could not supply an additional enforceable warranty term.
- The case was remanded with instructions to enter final judgment for Cessna.

## Legal Principles

- Under U.C.C. § 2-202, a court may consider evidence beyond the document’s text to decide whether the parties intended a writing to be a final and complete integration.
- If a contract is found fully integrated, extrinsic statements cannot be used to add to or vary the written terms, including by asserting an additional express warranty outside the writing.
- An explicit integration clause is strong evidence of full integration, particularly in transactions between sophisticated commercial parties with an opportunity to review the agreement.
- Integration is a fact-bound determination; summary judgment is improper where the record supports competing inferences about the parties’ intent.
- After an evidentiary hearing, a district court’s integration finding is reviewed for clear error and may be reversed when the record compels the opposite conclusion.

## Conclusion

The Seventh Circuit required factual development to determine integration under U.C.C. § 2-202, but ultimately held the aircraft purchase agreement was fully integrated; as a result, the buyer could not rely on a precontract cover-letter statement as an additional express warranty, and judgment was entered for the manufacturer.


Betaco, Inc. v. Cessna Aircraft Co., 32 F.3d 1126 (7th Cir. 1994)