We are a retail store. One of the companies that we buy from also sells their product via home parties. They have recently announced that they will be forcing us to sell their product at 20% more than home party sales reps. Their reasoning is that the home party reps feel that stores have an unfair advantage because it is more convenient for people to shop at a retail location. The company currently does about 80% of its business via home parties and 20% via retail stores. Is is legal to require us to sell their products at a higher price for the reason of giving consumers an incentive to buy their products somewhere else?
2 Answers from Attorneys
Very good points. I would be interested to see if this is even allowed under the terms of the original contract that is still in effect. Even if the contract is silent about this, contract law generally requires that the parties are attempting to make a good faith effort to facilitate the contract, and as you very astutely pointed out, this new condition is designed to hurt your ability to perform under the contract. Further, its not supported by consideration and appears to almost make these competitors, i.e., people throwing the home parties, to be third-party beneficiaries where you get nothing in return. Please call me to discuss.
Vaseem S. Hadi
The other attorney is right on point here. In addition, there may be various antitrust issues, in particular price fixing, to consider. Consult with a good business attorney in your area for specific advice.
Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise
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