Although most of the business world is all about competition, in some instances it actually makes more sense for some businesses to create partnerships instead. This strategic move is considered mutually beneficial because the companies are benefiting from the hard work that their partner is putting in.
As you may realize, these partnerships are established and maintained by a carefully drafted contract that both companies have agreed to. But not all contracts are the same though. Each one is tailored to the needs and wants of the companies, meaning some contracts can be incredibly complex with specific terms that must be adhered to. Any violation of these terms can jeopardize the partnership or even lead to litigation.
We can see this issue illustrated perfectly by a recent breach of contract between Arby's and Pepsi. According to reports, as part of the contract agreement between the two companies, Arby's is required to feature Pepsi products in two of its television ads each year. But with the company so focused on its new tagline of "we have the meats," this part of the contract was accidentally overlooked for most of 2014. This meant that if Arby's didn't comply with the terms of the contract, litigation could have been in their future.
To avoid this contention though, Arby's not only came up with a way to meet its contractual obligation but apologize to Pepsi for its negligence in the form of an advertisement that showed nothing but a full glass of Pepsi cola. Some of our Melbourne readers may have already seen the ad on YouTube.
The ad paid off, helping both companies to avoid potential litigation. For our Florida readers, this case stands as an example of an amicable way to avoid litigious disputes that can arise out of a breach of contract.
Source: The Wall Street Journal, "Arby's Forgets Advertising Deal With Pepsi, Makes Apology Ad Entirely About Pepsi," Steven Perlberg, Dec. 1, 2014