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Two business giants go to court over contractual matters

A contract exists when willing parties come together and decide to make a deal about goods or services. Contracts must be entered into freely and on a good faith basis. Additionally, the parties to a contract must have the ability to enter into a contract. Minors, individuals that are mentally incapacitated and the like are not legally allowed to enter into contracts on their own behalf and the court will find agreements such as these voidable. Legally, enforceable contracts require offer, acceptance and consideration. Moreover, the parties to the contract are intending to accept the legal consequences that go along with entering into a contractual relationship.

Sometimes parties do not enter into contracts in good faith or try to get out of a contract situation the wrong way. This is when a breach of contract could occur. It was recently reported that Goodyear is claiming Sears acted in such a fashion when they decided to not live up to their contract regarding a special type of tire.

Apparently, Goodyear and Sears had an agreement that Goodyear would manufacture a specific tire for Sears and that Sears would sell the tire exclusively at Sears' stores. According to Goodyear, not only did Sears give Goodyear forecasts of the number of tires it would purchase, but Sears also gave a 12-month forecast of the sales. Seemingly, in Goodyear's estimation, they had a contract with Sears. However, Sears told Goodyear that it would be getting its tires from elsewhere and would not accept anymore Goodyear specialty tires. This led to Goodyear suing for breach of contract.

In business litigation, specifically breach of contract cases, the burden of proof is on the company alleging the breach. First of all, the courts have to recognize that there was an enforceable contract meaning that their needs to be offer, acceptance, consideration and mutual assent. Once this is established, the court will look at the facts and circumstance surrounding the breach of contract claim as well as any relevant evidence.

The courts have the final say in contract matters, and those dealing with contract issues such as breach of contract should understand whether they have any legal remedies in their situation. Obtaining guidance could help determine what actions they can take and whether the contract is in fact enforceable.

Source:, "Goodyear sues Sears for breach of contract," Miles Moore, November 7, 2014

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