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Jane T (LLC)
Jane T (LLC), Lawyer (JD)
Category: Legal
Satisfied Customers: 8435
Experience:  Experienced attorney; contracts, internet, business, finance, employment, RE, consumer, & more.
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You are licensed to sell prints & posters and you ...

Resolved Question:

You are licensed to sell prints & posters and you contract with the licensor to sell these prints at a specified minimum price. You pay the licensor a royalty on the items sold,but you have customers that you give discounts to and there are times that the selling price is less than the licensors minimum price. When the royalties are paid to the licensor they receive a detalied list of the items sold and the price for which the items were sold. For many years the licensor has accepted the royalties without questioning the fact that some of the items were sold below the minimum contracted price. Now the licensor is threatening a law suit based on a breach of contract for the instances that there were items sold below the contrated minimum price. Does the licensor have a valid case in which they can sue for a breach of contract?
Submitted: 9 years ago.
Category: Legal
Expert:  Jane T (LLC) replied 9 years ago.

DearCustomer

The reason you cannot find a "definative answer" in any legal text is because, until a judge makes an ultimate determination, there is no "definative answer." I will try to explain why that is the case with the facts or information you provide.

First, you have a written contract. When a written contract states that certain licensed items are to be sold at a minimum price, unless the contract says "except for contracts you have that force you to sell them at lower prices" (or words to that effect), a failure to sell them at the agreed minimum price is a breach of contract by the seller. BUT - and this is where the issue begins to get muddy - there are two possibilities:

(1) The written contract does NOT have a clause in it which says "any failure to pursue legal action or any past waiver of a breach or this contract will not act as a waiver or forgiverness of future breaches" (or words to that effect). In that case, then any time the party that requires that a minimum sales price be used, forgives the failure of the seller to sell at that minimum price will likely act as a full waiver of that requirement and they cannot later say they changed their minds because their prior conduct has liekly acted as a waiver of that requirement.

(2) The written contract DOES have a clause in it which says "any failure to pursue legal action or any past waiver of a breach or this contract will not act as a waiver or forgiverness of future breaches" (or words to that effect). This is where it gets even muddier.

(a) In this case, then a court can plainly look to the language of the contract ans say, well, this contract clearly says they can act anyway they want to in the past, but that does not prevent them from enforcing their rights later. Therefore, any sales made at less than the minimum price will likely be found to be in breach of the contract.

(b) OR, a court may say, you know, the contract does say they are allowed to waive but later file for breach BUT, they have waived so often that their waiver on this minimum price deal can be seen to have over-taken the contractual clause and they have lost their right to sue for breach of this item.

To know which way a court will decide is impossible. As you can see, a court has choices to make and how it makes that choice involves the arguments the parties make, what prior cases the parties present to the court, and who the court thinks has the better argument, as well as how courts in that state (or, if the case ends up in federal court - courts in that district) have decided the issue and whose approach the court prefers.

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