                     UNITED STATES COURT OF APPEALS
                          FOR THE FIFTH CIRCUIT

                    _________________________________

                               No. 92-2171
                    _________________________________

                        BEIJING METALS & MINERALS
                       IMPORT/EXPORT CORPORATION,

                                                        Plaintiff-Appellee,

                                   VERSUS

                    AMERICAN BUSINESS CENTER, INC., ET AL.,

                                                                 Defendants,

                       AMERICAN BUSINESS CENTER, INC.,

                                                       Defendant-Appellant.

_________________________________________________________________

             Appeal from the United States District Court
                  for the Southern District of Texas

_________________________________________________________________
                         (June 15, 1993)

Before WIENER, BARKSDALE, and DEMOSS, Circuit Judges.

BARKSDALE, Circuit Judge:

     This appeal turns on the effect to be given two alleged oral

agreements made contemporaneously with execution of a written

payment   agreement.         American   Business      Center,   Inc.    (ABC),

challenges a summary judgment granted Beijing Metals & Minerals

Import/Export Corporation (MMB) on its severed claim to enforce the

payment agreement, contending, inter alia, that the district court

misapplied    the    parol   evidence   rule   and,    on   issues     such   as

fraudulent inducement, overlooked genuine issues of material fact.

We REVERSE and REMAND on the issue of fraudulent inducement and
those pertaining to the quality and quantity of goods; as to all

others, we AFFIRM.

                                      I.

        In 1988, MMB and ABC entered into a business relationship "in

order    to   cooperatively    develop     the   fitness    [weight    lifting]

equipment market in the U. S. and Canada".1           ABC agreed to furnish

MMB with "marketing information, customer names, product samples,

and design prints for the research and development of products that

[MMB] may be capable of manufacturing".            MMB, in turn, agreed to

"engage in production only" and to "not sell the products designed

and ordered by [ABC] to companies other than [ABC]".

     MMB also agreed that goods would be manufactured in accordance

with detailed specifications, and be of the highest quality.                 But,

according to ABC, from the very beginning, almost every shipment

contained     substantial   amounts   of    defective      and    non-conforming

goods;   it   notified   MMB   to   that    effect;   it    was    assured   that

substitute goods would be sent; and it was instructed to retain the

defective goods for later disposition.

     For the shipments from MMB to ABC, the agreement originally

required "documents against payment", obligating ABC to pay by

letters of credit or upon presentation of bills of lading, prior to

release of the goods from customs.          Accordingly, ABC paid for all

shipments prior to receipt.           In 1988, the parties changed the

payment terms to "document against acceptance", allowing ABC 90


1
     MMB is a company formed and existing under the laws of the
People's Republic of China.

                                    - 2 -
days to pay (D/A 90).        Of the shipments received on D/A 90 terms,

ABC paid only approximately two invoices, and subsequently refused

to pay for approximately 27 shipments totalling more than $1.2

million.2

      In July 1989, MMB notified ABC that if it did not respond with

a   payment   plan,    MMB    would    not    ship   scheduled   merchandise.

Accordingly, that August, Mike Lian, president of ABC, travelled to

Beijing,    China,    to   meet   with   MMB.3       After   several   days   of

negotiations, Lian signed an agreement, in which he acknowledged

that ABC owed MMB $1,225,997.78,4 of which $768,529.23 was overdue

as of August 15, 1989.            The agreement established a payment

schedule, obligating ABC to pay the amounts owed MMB in specified

installments.    Before he left Beijing, Lian made the first agreed

payment ($197,503.43) by check, post-dated to August 30.

      ABC maintains that the payment schedule was only part of the

total agreement; that MMB orally agreed to two other items: it

would ship goods to compensate for non-conforming and defective

goods and shortages and would begin making new shipments to ABC on

D/A 90 terms, beginning September 10, 1989.              Lian maintains that

MMB representatives admitted that ABC had a substantial claim for

defective and non-conforming goods, but that because the invoices


2
     For all shipments, ABC ordered approximately $1.6 million in
goods and made payments of approximately $300,000 - $400,000.
3
     Lian, a native of Taiwan, travelled to Beijing in connection
with a trip to Taiwan.
4
     The agreement also provided that ABC might owe approximately
$51,000 more.

                                      - 3 -
had been entered into the accounting and banking system, "the only

way they could make up the problems to ABC was by shipping future

goods on more favorable terms until the offsets were taken care

of". According to Lian, MMB representatives stated that the signed

payment agreement was necessary only to appease the bank and the

controller, which would allow MMB to continue shipments to ABC on

agreed-upon terms; that MMB representatives told him that the oral

agreements, i.e. replacement of goods and future shipments on D/A

90 terms,     could not be reduced to writing for "political reasons"

-- that "some people could go to jail over this situation"; and

that he "would not have signed the Agreement had he known that MMB

did not have the intention or the ability to perform their part of

the bargain".     Lian estimated that the total amount of defective

goods and shortages was $500,000.

     On September 1, MMB sent a letter to Lian by fax, which

stated, in part, that straight D/A 90 terms would not be permitted

and arguably indicated that this issue had been part of the total

agreement.5    Lian replied twice.   His first was that he could not

5
     The letter provided:

                 After you left the Peace Hotel Beijing, I
            tried very hard to convince the Bank, Finance
            Division, and Auditing Division personnel to agree
            to the installment plan. They were not satisfied
            with the result of our negotiations for the
            following reasons: ... (3) the terms of future
            payments must be changed to sight L/C.

                 I told them about: (1) the achievement we have
            made so far as a result of our cooperation in
            developing the market; (2) the future perspective
            of our business; and (3) the temporary difficulties
            that you are now facing. Afterwards, they approved

                                 - 4 -
operate on   a   letter   of   credit   basis.6   His   second,   in   late


          the installment payment plan on the past overdue
          amounts. Furthermore, I told them that ... the pay
          condition of sight L/C in the future will not work
          in this practical situation.       After repeated
          discussion, they finally agreed to maintain the
          favorable condition of D/A 90 days, but must be
          under the condition of L/C, so that debt and
          delayed payments can be avoided in the future.

               I have done my best and hope you will
          understand.... Based on my judgment, you have to
          accept this condition, otherwise we both will fall
          into an unresolvable pit.

(Emphasis added.)
6
     The first reply stated in part:

               I deeply regret hearing the decision made by
          the Finance and Audit Division of MMB.         They
          probably only looked at this problem from their own
          angle ....

               Besides, due to the agitation created by other
          persons and other companies, we have not received
          any shipment from you. Not only did you stop the
          source of supply to me, but also provided favorable
          D/A conditions directly to my clientele. My loss
          is tremendous.
                              . . .

               ... Please understand L/C sight or L/C 90 days
          is no different from hard cash. I have to spend
          hard cash to get the credit. If your corporation
          can't fully cooperate with me whole-heartedly, our
          teamwork may collapse sadly.

                                  . . .

               At this time, I hope your corporation will
          once again judge this problem from both finance and
          business angles, both yours and my situation, and
          the battle that is happening on the market. Then
          give me the favorable payment condition of D/A 90
          days and resume the supply to me. Only then, the
          temporary stoppage of our business can be ceased,
          all the needed capital can be gathered, the supply
          can be resumed, and the money that my customers
          owed me after a discount can be collected.

                                  - 5 -
September, referenced the alleged oral agreement for D/A 90 terms

and arguably also referenced the alleged oral agreement to provide

replacement goods.7

     Because ABC, in early September 1989, stopped payment on the

check issued in Beijing, and informed MMB that it would not honor

the payment schedule, MMB filed suit against ABC (and others not

parties to this appeal) to recover payment on the agreement.              The

substantive claim, styled as on a "sworn account", was later

described by MMB as an "account stated".        The defendants answered,

asserting various defenses to payment, including (1) fraudulent

inducement of both the payment agreement and the check issued in

Beijing;   (2)   duress;   (3)   breach   of   agreement   and   breach   of

contract; (4) breach of express and implied warranties; and (5)


7
     The second reply provided in part:

                This company originally planned to increase
           capital, circulate cash flow, and smoothly resolve
           the difficult situation including making payments
           and discounting merchandise.    However, what has
           occurred was not what I wished.            Certain
           unfavorable happenings have taken place.      I am
           reporting to you as follows:

                                  . . .

                2) Since your corporation could not follow
           what has been proposed in Beijing and could not
           make timely shipments to me before Spt. 10, using
           D/A 90 days payment condition, this company has to
           spend extra cash of $300,000 to purchase goods from
           other sources. (cash flow period is 4 to 5 months)

                3) Due to bad quality of merchandise,
           disagreement between documents and actual arrivals,
           and other major reasons, some of my customers have
           cancelled their orders, some made returns, and
           others delayed payments to us....

                                  - 6 -
offset.     ABC also counterclaimed against MMB (and others not

parties to this appeal) on several of the grounds asserted as

defenses and for a Deceptive Trade Practices Act (DTPA) violation.



       In January 1991, the district court stayed the action as to

all parties except MMB and ABC until the basic account claims were

adjudicated.        MMB moved for summary judgment.          In January 1992,

after a     hearing,    the    district    court   granted   the   motion,   and

subsequently ruled that "[t]he cause of action based on the sworn

account is severed from the main action" and that the "only issue

remaining     and     not     previously    stayed,    is    the   defendants'

counterclaim for breach of the oral agreement for future business".

A final judgment for approximately $1.7 million was entered for

MMB.

                                      II.

       ABC contends that the summary judgment is precluded by genuine

issues of material fact relating to its defenses and counterclaims.

It goes without saying that we review a summary judgment de novo,

e.g., Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir. 1992),

cert. denied, ___ U.S. ___, 113 S. Ct. 82 (1992); and it is

appropriate if the summary judgment record "show[s] that there is

no genuine issue as to any material fact and that the moving party

is entitled to a judgment as a matter of law".                Fed. R. Civ. P.

56(c); Celotex Corp. v. Catrett, 477 U.S. 317 (1986).               Affidavits

must set forth facts "as would be admissible in evidence".             Fed. R.

Civ. P. 56(e). Therefore, "conclusory assertions cannot be used in


                                     - 7 -
an affidavit on summary judgement".                Salas v. Carpenter, 980 F.2d

299,   305   (5th   Cir.   1992).      Finally,        we   draw    all   inferences

favorable to the non-movant.           Reid v. State Farm Mut. Auto Ins.

Co., 784 F.2d 577, 578 (5th Cir. 1986).

                                           A.

       MMB   sued   to   recover     the    amount      stated     in   the   payment

agreement, asserting that it represents a binding contract in which

MMB agreed to extend payment terms, and ABC agreed to pay its

outstanding obligations.       For summary judgment, MMB characterized

the agreement as an "account stated", which is "an agreement

between parties who have had previous transactions of a monetary

character that all the items of the account representing such

transactions, and the balance struck, are correct, together with a

promise, express or implied, for the payment of such balance".

Eastern Dev. & Invest. Corp. v. City of San Antonio, 557 S.W.2d

823, 824-25 (Tex. Civ. App.-San Antonio 1977, writ ref'd n.r.e.).

An account stated establishes a prima facie case for obligation

"without other proof of price, value, quantity, or specific items".

Id. at 826.

       ABC contested the account stated characterization, contending

that the written agreement reflects only one portion of their

three-part agreement to resolve all disputes regarding payment and

the quantity and quality of the goods: part one (written) -- ABC to

adhere to a payment schedule; part two (oral) -- MMB to ship

replacement     goods    to   make    up        for   non-conforming      goods   and




                                      - 8 -
shortages; and part three (oral) -- MMB to resume shipment of goods

on D/A 90 terms as of September 10, 1989.

     The district court held that the parol evidence rule prevented

the two oral agreements being a defense to ABC's obligations under

the written payment agreement.      It concluded that the written

agreement is an unambiguous "account restatement", and that nothing

in its four corners, or in the surrounding circumstances, indicates

the existence of collateral contingent agreements.       The court

focused on the fact that the payment agreement did not refer to

supply, and contained meaningful consideration (extended payment

time); that, at the time of the summary judgment hearing (three

years later), ABC was unable to quantify with specificity MMB's

obligation to ship replacement goods; that MMB's letter denying D/A

90 terms did not refer to the payment agreement; and that Lian's

subsequent letters did not characterize ABC's obligation under the

payment agreement as contingent.8

8
     We gleaned the foregoing findings from the district court's
colloquy with counsel during the summary judgment hearing; it did
not make findings of fact and conclusions of law.         Although,
pursuant to Fed. R. Civ. P. 52(a), they "are unnecessary on
decisions of [summary judgment] motions", and our review of the
summary judgment record is de novo, we have often emphasized that
findings of fact and conclusions of law are "permissible and often
quite helpful for appellate review". Boazman v. Economics Lab.,
Inc., 537 F.2d 210, 213 n.5 (5th Cir. 1976); see also Wildbur v.
Arco Chem. Co., 974 F.2d 631, 644 (5th Cir. 1992) (stating that a
district court must "explain its reasons for granting a motion for
summary judgment in sufficient detail for us to determine whether
the court correctly applied the appropriate legal test");
Williamson v. Tucker, 645 F.2d 404, 411 (5th Cir.), cert. denied,
454 U.S. 897 (1981) (noting that "an explanation of the basis of
the district court's decision can be invaluable even in cases where
Rule 52(a) clearly does not require findings of fact").       As we
noted in Chandler v. City of Dallas, 958 F.2d 85, 89 (5th Cir.
1992) (bench trial), "the preparation of sufficiently complete

                              - 9 -
       Under Texas law,9 it is well settled that the parol evidence

rule   generally   bars   enforcement    of    prior    or   contemporaneous

agreements introduced to vary, add to, or contradict terms of a

fully integrated written instrument.          See, e.g., Tripp Village v.

MBank Lincoln Centre, 774 S.W.2d 746, 749 (Tex. App.-Dallas 1989,

no   writ).    "[A]   written    instrument    presumes      that    all    prior

agreements of the parties relating to the transaction have been

merged into the written instrument", Weinacht v. Phillips Coal Co.,

673 S.W.2d 677, 679 (Tex. App.-Dallas 1984, no writ); in other

words, written agreements are presumed to be completely integrated.

Jack H. Brown & Co. v. Toys "R" Us, Inc., 906 F.2d 169, 173 (5th

Cir. 1990) (citing Hubacek v. Ennis State Bank, 317 S.W.2d 30 (Tex.

1958)).10     As   discussed    below,   although      ABC   may    rebut    this


conclusions of law augments our comprehension of the legal issues
on appeal". This is no less applicable where, as here, Rule 52(a)
does not require the court to make legal conclusions. Accordingly,
when a summary judgment is granted, we urge the district court to
provide findings of fact and conclusions of law.
9
     We apply Texas law in this diversity action. Salve Regina
College v. Russell, ___ U.S. ___, 111 S. Ct. 1217 (1991). In its
complaint, and thereafter, MMB relied on Texas law. ABC maintains,
instead, that MMB's claim is governed by the United Nations
Convention on Contracts for the International Sale of Goods (Sale
of Goods Convention), codified at 15 U.S.C. Appendix (West Supp.
1993). MMB insists that Texas law controls. As noted in Filanto
S.p.A. v. Chilewich International Corp., 789 F. Supp. 1229, 1237
(S.D.N.Y. 1992), appeal dismissed, 984 F.2d 58 (2d Cir. 1993),
"there is as yet virtually no U.S. case law interpreting the Sale
of Goods Convention".    We need not resolve this choice of law
issue, because our discussion is limited to application of the
parol evidence rule (which applies regardless), duress, and
fraudulent inducement; however, the district court may need to do
so on remand.
10
     ABC urges that we apply the parol evidence rule applicable to
the sale of goods, which, unlike the common law, does not presume
that an apparently complete writing is a total integration. See

                                  - 10 -
presumption, id. at 174, it failed to do so.       See id. (court

determines whether written instrument is complete).

                                1.

     In support of its contention that the payment agreement is

incomplete, ABC notes evidence that it had previously complained

about the quality of goods; that it travelled to Beijing to sign

the payment agreement; that in discovery, MMB representatives

admitted that, during the August 1989 meetings in Beijing, Lian

discussed the issues of non-conforming and defective goods in past

shipments (albeit for a minimal amount of time and not with

specificity); and that the earlier referenced fax sent by MMB

shortly thereafter referred to ABC's request for D/A 90 terms in

the context of their negotiations in Beijing.

     Although this evidence leads us to question why ABC signed the

payment agreement, we cannot say that it is incomplete. Underneath

the heading (as translated by ABC), "Agreement on installment

payments of overdue merchandise amount",11 the parties itemized the



Tex. Bus. & Com. Code Ann. § 2.202 comment 1 ("This section
definitely rejects: (a) Any assumption that because a writing has
been worked out which is final on some matters, it is to be taken
as including all the matters agreed upon"); Bob Robertson, Inc. v.
Webster, 679 S.W.2d 683, 688 (Tex. App.-Houston 1984, no writ).
Because the agreement, on its face, is limited to a payment
schedule for overdue invoices, and more closely resembles a
settlement agreement, as opposed to a sale of goods, we will apply
the parol evidence rule developed by Texas common law. Cf., Jack
H. Brown & Co., 906 F.2d at 170-173 (applying common law rule to
interpretation of settlement agreement concerning recovery of
damages for breach of contracts to purchase signs and mansards).
11
     The parties disagree over the translation of the payment
agreement. MMB contends that the heading should read, in part,
"AGREEMENT ON SETTLING PAYMENT OVERDUE". (Emphasis added.)

                              - 11 -
payment schedule, listing amounts due, invoice numbers, and revised

payment    dates.      And,   the     agreement          in   no    way   intimates    the

existence    of   contingent     extrinsic          agreements        regarding   future

shipments of goods.           Instead, it specifies that "[b]oth sides

participated in the negotiation, in a friendly manner, on the

problem of the amount overdue by the American Business Center, Inc.

to the Beijing Metals and Minerals Import and Export Corporation.

A unanimous agreement has been reached".                      (Emphasis added.)        Even

accepting ABC's translation of the agreement, ABC's proof is not

sufficiently persuasive to convince us to ignore the clear language

of the written agreement.        Compare Jack H. Brown Inc., 906 F.2d at

174   (agreement     incomplete       where       parties       admittedly      made   two

agreements     not   mentioned        and        where    agreement       was   facially

incomplete).      As this court recently stated:

            Both the parol evidence rule and the doctrine of
            integration exist so that parties may rely on the
            enforcement of agreements that have been reduced to
            writing.   If it were not for these established
            principles, even the most carefully considered
            written documents could be destroyed by "proof" of
            other agreements not included in the writing.

Id. at 176.

                                            2.

      In   addition,    the     two    alleged           oral      agreements   are     not

"collateral" to the written agreement.                    Evidence of a collateral

contemporaneous agreement "though it refer to the same subject

matter, and may affect the rights of the parties under the written

contract" may be proven if not inconsistent with the integrated

contract.     Conner v. May, 444 S.W.2d 948, 952 (Tex. Civ. App.-


                                       - 12 -
Austin 1969, writ ref'd n.r.e.).          To be collateral, the agreement

must be made for separate consideration, or "must be such as the

parties might naturally make separately and would not ordinarily be

expected to embody in the writing; and it must not be so clearly

connected with the principal transaction as to be part and parcel

thereof".   Weinacht, 673 S.W.2d at 680.            We examine the two claimed

oral agreements in turn.

       First, ABC asserts that MMB conceded that ABC is entitled to

an offset of roughly $400,000 for defective and non-conforming

goods, and thus agreed to ship replacement goods.                     But, this

extrinsic evidence contradicts the payment agreement, which states

that "[t]he total amount which the American Business Center, Inc.

owed   to   the    Beijing     Metals   and   Minerals     Import    and    Export

Corporation as a result of the D/A 90 day conditions, was U.S.

$1,225,997.78", and is therefore inadmissible.                See Rincones v.

Windberg, 705 S.W.2d 846, 849 (Tex. App.-Austin 1986, no writ)

("the parol evidence rule prohibits the admission of oral evidence

which alters the payment terms of a written contract").

       Second, ABC maintains that its obligation under the payment

schedule was contingent upon MMB's agreement to resume shipment on

D/A 90 day terms.         We agree with ABC that this alleged oral

agreement, standing alone, is not inconsistent with the payment

terms stated in the written agreement, because it is silent as to

future   sales.       However,    evidence     of    the   oral    agreement    is

nonetheless       inadmissible,    because     its     contingent    nature     is

inconsistent      with   the    unconditional    language     of    the    written


                                    - 13 -
agreement.   Cf. Jack H. Brown & Co., 906 F.2d at 176 ("[w]here a

written release is unambiguous, any attempt to prove that the

release was signed in return for additional consideration not

mentioned in the release violates the parol evidence rule").

     Moreover, we cannot conclude that a contingency of this nature

would naturally be made as a separate agreement.      As our court

stated, when presented with a quite similar factual context in Jack

H. Brown & Co., 906 F.2d at 176:

          It is implausible that Toys would have used
          explicit,   unconditional   release   language   in
          Markham's letter, while orally agreeing to make the
          release contingent on some vague guarantee of
          future business.    Nor can we believe that the
          alleged oral agreement is one that would be made
          separately .... This court recognizes that even the
          most sophisticated businessmen often deal with each
          other informally and verbally, but in circumstances
          such as these, even an unsophisticated businessman
          ... would either have protested the unconditional
          release language or insisted on getting the alleged
          oral agreement in writing.

     Accordingly, we conclude, as did the district court, that ABC

is barred by the parol evidence rule from introducing extrinsic

evidence to alter the terms of the written agreement.12

                                B.

     ABC asserts economic duress as a defense to its obligations

under the payment agreement, contending that MMB used political

unrest in China to convince Lian to sign it;13 and that MMB refused

12
     Because the parol evidence rule bars evidence of both alleged
oral agreements, we need not address the statute of frauds issue.
13
     In its answer, it pleaded only physical duress.      Then, in
opposition to summary judgment, it asserted, for the first time,
economic duress (and criticized MMB for not addressing it in its
motion). At the summary judgment hearing, the court concluded that

                              - 14 -
to reconcile the defective and non-conforming goods unless Lian

signed, thus leaving him with no choice but to do so or lose a

substantial amount of money.

     Texas law is well-settled that there can be no duress unless:

"(1) there is a threat to do something which a party threatening

has no legal right to do; (2) there is some illegal exaction or

some fraud or deception; and (3) the restraint is imminent and such

as to destroy free agency without present means of protection".

Deer Creek Ltd. v. North Am. Mortgage Co., 792 S.W.2d 198, 203

(Tex. App.-Dallas 1990, no writ). Additionally, the opposing party

must be responsible for the financial distress.         Id.

     We conclude that ABC failed to establish a material fact issue

on every element of the defense.          Specifically, it failed to

provide   probative   evidence   indicating    it   lacked    a   reasonable

alternative to signing the agreement.         According to ABC, if Lian

did not sign, it would be forced to accept defective and non-

conforming goods, driving it into financial ruin.            In so stating,

it wholly ignores the availability of pursuing its remedies under

Tex. Bus. & Com. Code Ann., §§ 2.711 - 2.717, or, if applicable,

the Sale of Goods Convention (articles 46-52).                Aside from a

general reference to "cash flow problems", and a reference to the

difficulty and expense of cover, there is no evidence in the

summary judgment record to indicate that ABC could not pursue its

legal remedies.   The above conclusory statements are insufficient

to establish a material fact issue.


there was neither.    On appeal, ABC raises only economic duress.

                                 - 15 -
     Therefore, we conclude that ABC failed to establish economic

duress.   See Palmer Barge Line, Inc. v. Southern Petroleum Trading

Co., 776 F.2d 502, 505 (5th Cir. 1985) ("the failure or refusal to

pay a contractual debt, without more, is insufficient to establish

economic duress"); Hurt v. Standard Oil Co., 444 S.W.2d 342, 347

(Tex. Civ. App.-El Paso 1969, no writ) (no duress where employee

could   have   instituted   suit     rather   than   accept   listed    early

retirement benefits).

                                      C.

     ABC asserts that the payment agreement is not enforceable

because it was fraudulently induced by MMB's materially false

representations that it would ship merchandise on D/A 90 terms and

ship replacement goods. Of course, parol evidence is admissible to

prove fraudulent inducement. See Zoeller v. Howard Gardiner, Inc.,

585 S.W.2d 920, 922-923 (Tex. Civ. App.-Amarillo 1979, writ ref'd

n.r.e.) (internal quotation omitted) ("When the issue of fraud is

raised ....    [a]ll   facts   and   circumstances    leading   up     to   and

connected with the transaction are, ordinarily, admissible").

     The elements for actionable fraud under Texas law are: (1) a

material representation was made; (2) it was false when made; (3)

the speaker knew it was false, or made it recklessly without

knowledge of its truth and as a positive assertion; (4) the speaker

made it with the intent that it should be acted upon; and (5) the

party acted in reliance and suffered injury as a result.             Cocke v.

Meridian Sav. Ass'n., 778 S.W.2d 516, 520 (Tex. App.-Corpus Christi

1989, no writ).    Of critical importance here is that a promise to


                                   - 16 -
do an act in the future is not fraud, unless it is made with the

intent not to perform.             M.J. Sheridan & Sons Co. v. Seminole

Pipeline Co., 731 S.W.2d 620, 624 (Tex. App.-Houston 1987, no

writ).

       ABC    contends    that     Lian's    affidavit     and   MMB's      actions

immediately following consummation of the agreement create material

fact issues on all the elements for fraudulent inducement.                       We

agree.       Lian's affidavit, with all reasonable inferences in his

favor, establishes that MMB representatives promised that it would

ship replacement goods to make up for defective and non-conforming

goods and would promptly begin shipping merchandise on D/A 90

terms; that these representations were false; that MMB made them

with the intent that they would be acted upon; and that they

induced Lian to sign the agreement to his detriment. The difficult

question is whether the summary judgment record reflects material

fact issues on whether MMB made representations with the intent not

to     perform,   and     whether    ABC     justifiably    relied     on     MMB's

representations.        We examine these issues in turn.

                                        1.

       Intent not to perform a promise at the time it was made may be

shown by circumstantial evidence, including the subsequent conduct

of the promisor.         Pulchny v. Pulchny, 555 S.W.2d 543, 545 (Tex.

Civ.    App.-Corpus      Christi    1977,    no   writ).    Needless     to    say,

"[i]ntent is a fact question uniquely within the realm of the trier

of fact because it so depends upon the credibility of the witnesses

and the weight to be given to their testimony" Spoljaric v.


                                      - 17 -
Percival Tours, Inc., 708 S.W.2d 432, 434 (Tex. 1986); thus,

"[s]ummary judgment is rarely proper".          Taylor v. Bonilla, 801

S.W.2d 553, 557 (Tex. App. 1990, writ denied).             Although the

failure to perform, standing alone, does not establish the issue of

fraudulent intent, "[s]light circumstantial evidence of fraud, when

considered with the breach of promise to perform, is sufficient to

support a finding of fraudulent intent".        Spoljaric, 708 F.2d at

435 (internal quotations omitted).

     The summary judgment record contains admissible evidence,

which, with all reasonable inferences in ABC's favor, establishes

that ABC had objected to the goods as defective and non-conforming;

that Lian travelled to Beijing to meet with MMB representatives;

that MMB agreed to resume shipments on D/A 90 terms and replace

defective and non-conforming goods, but stated they could not put

the agreements in writing because "some people could go to jail";

that, as a result, Lian, signed the payment agreement; and that,

almost immediately upon consummation of that written agreement, MMB

repudiated its promise, stating that the bank refused to agree to

D/A 90 terms without a letter of credit (which would require Lian

to procure a commitment from his bank to pay a draft drawn by

MMB).14   We conclude that the above evidence, particularly MMB's

refusal   to   put   the   agreements   in   writing,   followed   almost

immediately by its repudiation of one of them, creates a material

fact issue on MMB's intent to perform.

14
     Needless to say, sellers prefer a letter of credit over D/A
terms, in part, because banks generally are far more solvent than
buyers.

                                 - 18 -
                                    2.

     In addition, we conclude that a material fact issue exists

regarding Lian's justifiable reliance.           In order to establish

fraud, ABC must show that its reliance on MMB's representations was

justifiable as well as actual.           Haralson v. E.F. Hutton Group,

Inc., 919 F.2d 1014, 1025 (5th Cir. 1990) (applying Texas law),

modified on other grounds, 1991 U.S. App. LEXIS 1029 (Jan. 25,

1991). "`Justifiable reliance' represents a lesser burden on fraud

plaintiffs than what `reasonable reliance' might imply".             Id.

(internal   citations   and    quotations    omitted).    To   determine

"justifiable reliance", courts inquire whether, "given a fraud

plaintiff's individual characteristics, abilities, and appreciation

of facts and circumstances at or before the time of the alleged

fraud -- it is extremely unlikely that there is actual reliance on

the plaintiff's part".        Id. at 1026; see General Motors Corp.,

Pontiac Motor Div. v. Courtesy Pontiac, Inc., 538 S.W.2d 3, 6 (Tex.

Civ. App.-Tyler 1976, no writ) (quoted in Haralson, 919 F.2d at

1026) (internal quotation omitted) (plaintiff may not justifiably

rely on "representations which any [person of normal intelligence,

experience, and education] would recognize at once as preposterous

... or which are shown by facts within his observation to be so

patently and obviously false that he must have closed his eyes to

avoid discovery of the truth").

     MMB maintains that the summary judgment record reflects that

Lian's reliance was not justified because, in his deposition, he

admitted that he knew that the MMB representatives had no authority


                                  - 19 -
to bind MMB, and, that approval from both the Chinese bank and the

MMB controller was a condition precedent to future shipments.15   We

15
     The testimony reads as follows:

               Q:   And so you knew that before there would
          be   any   agreement   for  shipping  that   [MMB
          representatives] Mr. Yong, Mr. Jiang or Mr. Li
          would have to go to the bank first?

               A:   In my best knowledge, yes, they told me
          that they would show this and they were [sic] act
          right away.

               [COUNSEL]:   Did you understand that? Could you
          repeat?

               Q:   But you did know that they would have to
          go to their superiors before any kind of new
          shipping terms could be arranged?

                A:  In my best knowledge is like this: They
          know better about the regulation they have there
          and doing like this way, everything going to be,
          you know, just go smoothly and can be active right
          away.

               Q:   But you mentioned earlier they said they
          would have to go to their superiors and also to the
          bank; is that right?

               A:   Whatever the merchandise coming out, the
          document need to go through the a bank and that's
          why they need to show the -- show bank something
          like, well like case is like this, you know, it's
          not a problem, so, you know, they can go through
          the paperwork again.

               Q:   But you knew the bank would have to give
          its approval first?

               [COUNSEL]:   Did you know that?

               Q:   In my best knowledge is they need to go
          talk to the bank and controller in the company,
          yes. That's my best knowledge.

               A:   And so in order to have a written
          document that would show the future shipping terms,
          you would have had to have gone to either the bank

                              - 20 -
disagree.     The   testimony    is   arguably    consistent    with    Lian's

affidavit, in which he stated that MMB representatives told him

that the written payment agreement was needed "only for purposes of

appeasing the bank and the controller", and that both would allow

MMB to ship goods to ABC on the agreed terms.           According to Lian,

he "would not have signed the Agreement had he known that MMB did

not have the intention or the ability to perform their part of the

bargain" (emphasis added).

     In addition, we disagree with MMB's contention that it was

obvious that its representatives had authority to bind ABC as to

the payment schedule, but not as to agreements on future sales.

None of the prior written agreements regarding future business

listed the bank or the controller as a party, or specified that the

terms were subject to approval.       Moreover, the actual authority of

MMB representatives was peculiarly within their knowledge.                 Cf.

Trenholm v.    Ratcliff,   646   S.W.2d    927,   930   (Tex.   1983)    (pure

expressions of opinion are actionable "where the speaker purports

to have special knowledge of facts that will occur or exist in the

future").

     In sum, because ABC established material fact issues on every

element for fraudulent inducement, the district court erred in

disposing of this issue by summary judgment.




            or the controller, to your understanding?

                 A:   In my understanding is like this:           This
            is their internal procedure. Okay....

                                  - 21 -
                                         D.

      ABC asserted defenses and counterclaims based on defective and

non-conforming goods and short shipments, including breach of

express     and    implied    warranties,        breach    of     MMB's       and   ABC's

underlying      contract,     and    violation     of    the    DTPA.         The   court

concluded    that    the     payment    agreement       constituted       a   novation,

precluding ABC's objections to the goods.                       Because there are

material fact issues on the enforceability of that agreement, we

conclude that ABC's defenses and counterclaims that pertain to the

quality and quantity of goods received were prematurely dismissed.

Simply put, if the payment agreement was fraudulently induced, it

is not enforceable, and the parties are restored to their prior

positions on the underlying contract(s), to include defenses to the

amount owed on the outstanding invoices.

                                        III.

      For   the     foregoing       reasons,    the     summary    judgment         as   to

fraudulent inducement and to claims or defenses pertaining to the

quality and quantity of goods received is REVERSED; the judgment in

all other respects is AFFIRMED; and this severed claim is REMANDED

for further proceedings consistent with this opinion, to include,

as   to   the     payment    agreement,        extrinsic       evidence       not   being

admissible to alter its terms, but being admissible on whether it

was fraudulently induced.

                    AFFIRMED in Part, REVERSED in Part, and REMANDED.




                                       - 22 -
