Beer Marketer's Insights - GBIC Sez Terminated NJ Distrib Calculated Amount Due Incorrectly and Breached Contract

Guinness response to suit filed against it by NJ distrib Nash (see Feb 5 issue) makes two key points. First, GBIC disputes $4.2 mil for 200,000 cases that Nash sez it&#146;s due for termination. When Nash calculated critical "pre-tax income" figure that Guinness pays to terminated distribs, GBIC argues, it "ignored its single largest cost, i.e., the amount it paid GBIC to purchase the product." GBIC sez it owes $537,000. Guinness argues further that $4.2 mil figure would "if adopted, result in a penalty that would be unenforceable under New Jersey Law." But GBIC doesn&#146;t get more specific about why that would be a penalty or what law it&#146;s talking about. Second, GBIC insists that Nash breached the contract. GBIC counterclaims: Nash "routinely" sold GBIC brands "to one or more retail accounts that it knew would sell or supply the Products to a retail account or other person located outside the territory." In addition, GBIC charges that a "significant" number of accounts in Nash territory "refused to do business" with Nash. Others were "extremely critical" of Nash&#146;s service and "made it clear to GBIC they would be pleased to see a new distributor appointed to service their account." Also, Nash failed to maintain adequate inventory and failed to provide GBIC with "certain records" required by the contract, GBIC alleges. Net-net: Guinness claims Nash breached contract and GBIC is due damages "in an amount to be determined at trial." GBIC acknowledges that Nash "spent monies to build its Guinness" biz, but denies Nash claim that GBIC brands are unique "door openers" to get biz and that Nash "substantially responsible for developing and maintaining" GBIC brands&#146; goodwill in mkt. GBIC also admits that it didn&#146;t give prior warning that it would terminate Nash but "denies that there was no prior indication of any serious problems with respect to [Nash&#146;s] performance." Responding to Nash charge that GBIC mishandled co-op media monies, GBIC denies using any of that money to "defray operating costs," and suggests that Nash had agreed to contribute to media buys "outside of its immediate territory that would be viewed by customers within its territory."

GBIC Sez Terminated NJ Distrib Calculated Amount Due Incorrectly and Breached Contract

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