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Posted: November 27th, 2022
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In March, retail chain Toys-We-Is signed a contract with PlayCo, a home playground equipment manufacturer. The contract provides for PlayCo to ship ToysWe-Is 1,000 of its exclusively licensed Space Trek Wars play forts at $10,000 each, for delivery on November 1. Toys-We-Is originally planned, in turn, to sell the play forts for $15,000 at retail. In July, however, a new installment in the Space Trek Wars movie franchise releases and it becomes a massive hit, increasing the demand for products associated with Space Trek Wars. Sensing an opportunity, Toys-We-Is launched an ad campaign built around these elaborate sci-fi themed play forts, which it now plans to sell for $20,000 as all indications are that the forts will be a high-end “it” toy for the holiday season.
On October 1, PlayCo informs Toys-We-Is that it is breaching the contract and will not deliver any of the forts. The real reason for this breach, it turns out, is that PlayCo decided it could sell the forts to the public itself through its website and reap all the profit. The president of Toys-We-Is, Latoya Ball, has come to your office about the situation. Ball says that while losing profit on the forts is bad enough, her greater concern is with the loss of reputation for the Toys-We-Is chain, which has built its entire marketing plan around Space Trek Wars and these play forts as the “crown jewel” product. Many customers would be drawn into the stores to gawk at the floor model, even though few will purchase it. That sort of foot traffic (especially parents with children) drives holiday sales. Ball wants to know if she can force PlayCo to honor its agreement with Toys-We-Is. Can she? Make sure your answer addresses UCC § 2-716 and its Official Comments 1 and 2.
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