Can a retail store enforce an email agreement that states I will not sell my products to their top competitor if the store stocks my brand?
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Can a retail store enforce an email agreement that states I will not sell my products to their top competitor if the store stocks my brand?
A couple of years ago, I opened a wholesale account for a clothing store. I own a small clothing brand. They told me before they submitted their first order that they would only stock my clothing brand in their store if I agreed to not sell my products to another store that is their top competitor. The question was asked via email. I said okay. Now, they rarely restock my brand and I would like to cease selling my products to this store because their top competitor would like to place a large order and stock my brand. If I sell to the competitor store, can the first store sue me?
Asked on December 22, 2011 under Business Law, Texas
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
A contract is enforceable even if its evidenced by email--and that's what this was: a contract that if they stocked your brand, you would not sell to their top competitor. The issue about whether, in the facts of this case, they can enforce the agreement will come down to (1) the specific terms of the agreement--was there any requirement they buy a certain amount of inventory, for example?--and (2) whether you can show they are dealing in bad faith with you--that is, not actively promoting or stocking your brand, but simply buying enough to prevent you from selling elsewhere. Parties to a contract have an obligation to use good faith in honoring it. You should discuss this situation in depth with an attorney, since the facts are very critical (e.g. how much sales would be considered reasonable for a brand like yours in store like their store?), bringing with you this email, all other relevant correspondence, and any information about sales.
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