At the end of 2011, things seemed to be perfectly fine between the major retailer Macy's and Martha Stewart Living Omnimedia. The two companies were five years into an agreement that built Martha Stewart's name back up in the wake of her tax evasion scandal and subsequent prison sentence.
And then Stewart made an interesting move: she entered into an agreement with J.C. Penney, Macy's retail rival, and also allowed J.C. Penney to purchase a portion of her company.
As a result, Macy's and MSLO are currently engaged in a bitter legal battle over the contract they signed. While Macy's contends that Martha Stewart broke the terms of their deal (which allowed Macy's to exclusively sell Martha Stewart products), MSLO is countering by saying that Macy's actually breached the contract (by pricing the Martha Stewart products in a poor way). MSLO then contends that this breach means Macy's had no right to enact a five-year extension on their agreement, and, presumably, MSLO had the right to move on to J.C. Penney.
It is a somewhat complicated story with even more convoluted legal storylines. Both businesses will have to validate the contract they signed and prove that their claims are legitimate within the confines of the contract. That is not as easy as it sounds. Contractual disputes like this require a business or organization to consult an experienced business law attorney.
In many cases that mirror this one, an out of court settlement will be reached. This can benefit both parties as less time is spent in court and the details of the case can be protected.
Source: Bloomberg, "Macy's CEO says he hung up on Martha Stewart when she delivered news of J.C. Penney deal," Chris Dolmetsch, Feb. 26, 2013
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