General

Settlement reached in Starbucks, Kraft Foods contract dispute

Back in 1998, Starbucks reached an agreement with Kraft Foods for distribution of the famous coffee in grocery stores. The deal was a major breakthrough for both companies — Starbucks received a major distribution boost and Kraft had a prized commodity to offer grocery stores. The deal generated $500 million in sales in 2010, and it seemed that was well between the two companies.

But later in 2010, Starbucks decided it was time to end the contract they had with Kraft. They offered Kraft $750 to cancel the deal — but Kraft wouldn’t back down. They took Starbucks to court over the contract dispute.

Recently the case was settled to the tune of $2.75 billion, an amount that Starbucks will pay Kraft to officially end the contract. That’s no small sum, but it was the figure that mediators reached.

Contract disputes like this can arise all the time in the world of business. Maybe not with such lucrative figures attached to it, but they do happen often. One company simply wants out of a contract (and there are myriad reasons why the business could make such a decision) and they take measures, appropriate or otherwise, to end the deal.

What’s important in these cases is for the companies involved to consult an experienced attorney to help them either agree a deal or prepare for court. Is a settlement possible? How will one company pay the other? What will the receiving company do with that money? There are many questions that need to be answered, and all the while the companies want to be compliant with the rules and regulations they are bound to.

Source: New York Times, “Starbucks to Pay Kraft $2.75 Billion, Ending Broken-Deal Dispute,” Stephanie Strom, Nov. 12, 2013

Fri Aug 24, 6:24pm