## Facts

- Ford approved DeValk Lincoln Mercury, Inc. (DLM) as a Lincoln–Mercury dealership in 1977 and entered standard Sales and Service Agreements governing the parties’ relationship.
- DLM’s performance declined, and in 1979 DLM resigned its dealership; Ford accepted the resignation.
- The parties negotiated the wind-up of the dealership, including Ford’s contractual repurchase of inventory and other termination-related matters, but disputes remained unresolved.
- The Sales Agreements included (1) a release mechanism tied to the dealer’s demand for specified termination benefits and (2) a dispute-resolution clause requiring appeal to Ford’s Dealer Policy Board before pursuing other legal remedies.
- Plaintiffs did not submit their dispute to the Dealer Policy Board.
- Plaintiffs sued Ford asserting claims under the Automobile Dealers’ Day in Court Act (ADDCA) and state-law theories including breach of contract, breach of fiduciary duty, and fraud.
- The district court granted summary judgment to Ford on the remaining claims; plaintiffs appealed, focusing on the release, alleged waiver, and alleged “substantial compliance” with the Dealer Policy Board requirement.

## Issues

1. Whether the Sales Agreements’ release clause was ambiguous or otherwise unenforceable so as not to bar plaintiffs’ claims.
2. Whether Ford waived reliance on the release (or related contractual defenses) through post-resignation negotiations and conduct, despite an anti-waiver clause.
3. Whether the Dealer Policy Board clause created a condition precedent to suit and, if so, whether plaintiffs could satisfy it through “substantial compliance” rather than an actual appeal.
4. Whether the release and/or failure to meet the condition precedent barred plaintiffs’ ADDCA and state-law claims.

## Decision

- The Seventh Circuit affirmed summary judgment for Ford on all remaining claims.
- The court held the release clause was clear and unambiguous and became effective automatically when DLM demanded specified termination benefits; any written release requirement served only to memorialize the release.
- The court held Ford did not waive the release or other contractual defenses; the anti-waiver provision required an express waiver, and continued negotiations were insufficient.
- The court held the Dealer Policy Board provision was an express condition precedent to litigation; plaintiffs’ failure to invoke the Board barred suit.
- The court rejected plaintiffs’ “substantial compliance” argument, concluding that substantial performance doctrine does not excuse failure to satisfy an express condition precedent to suit.

## Legal Principles

- Unambiguous contractual release provisions are enforced according to their terms; where drafted to take effect upon a party’s election or demand for contractual benefits, the release may operate without a separate, later-triggering writing.
- A contractual anti-waiver clause limits waiver by conduct; absent an express waiver consistent with the contract, continued negotiations do not forfeit contractual defenses.
- A dispute-resolution clause expressly labeled a condition precedent to “any other remedy” requires strict compliance unless a recognized excuse applies (e.g., express waiver, prevention, impossibility).
- Substantial performance doctrine generally applies to promissory obligations, not to nonoccurrence of an express condition precedent to filing suit.

## Conclusion

The Seventh Circuit enforced both the termination-related release and the Dealer Policy Board condition precedent in the dealership agreements, holding that Ford neither waived those provisions nor could plaintiffs bypass them through negotiations or “substantial compliance,” and it affirmed summary judgment for Ford on all remaining claims.


DeValk Lincoln Mercury, Inc. v. Ford Motor Co., 811 F.2d 326 (7th Cir. 1987)