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Breach of contract suit filed by tire manufacturer

On Behalf of | Nov 12, 2014 | Contract Disputes |

It captures the attention of the American business community when two retail behemoths square off on a business dispute, and this issue is no exception. Florida business insiders may already be aware of the pending breach of contract suit filed by tire magnates Goodyear against nationwide department store franchise Sears. The complaint was filed on October 27 of this year and is still being processed by a federal district court. 

According to the complaint, back in 2009, Sears and Goodyear entered an agreement wherein Goodyear would manufacture a special co-branded line of tires to be sold exclusively by Sears outlets. The tires were to make use of several patented technologies owned by Goodyear and Sears respectively. By January of this year, Sears had forecasted the sale of nearly 330,000 sets of these tires, information Goodyear took to mean their relationship would continue.

As arranged, Sears allowed bidding on its tire business in April, and Goodyear representatives were certain they would win the bid again, based on the fact that Sears was continuing to supply them with rolling 12-month sales predictions. However, Sears chose to award the business to a different company, leaving Goodyear with an overabundance of some 200,000 co-branded tires they were forbidden to sell external to the Sears franchise. Goodyear is now seeking damages for the price of these tires, estimated to be nearly $2 million. 

Exclusivity agreements of this type are often very specific in their terms, as a failure to abide by contractual obligations can lead to serious losses for one or both parties. Florida business owners understand how this line of logic relates to the breach of contract case at hand. If Sears is found to be in breach of their agreement with Goodyear, it is likely they will be paying for the preponderance of tires currently sitting in Goodyear facilities.

Source: rubbernews.com, “Goodyear sues Sears for breach of contract“, Miles Moore, Nov. 7, 2014