Warning
Info
- - tl;dr
- - ICRA
- - Facts & Holding
- - DeepDive
0 0
United States Court of Appeals for the Second Circuit - 601 F.2d 609
Tags: Contracts, Best efforts
tl;dr:
A brewery bought a failing brewery’s label and promised to promote its sales and give royalties, but instead sales substantially decreased. The acquiring brewery breached the contract because it did not use its best efforts to promote the brand.Video Summary
Case Summary
In Bloor v. Falstaff Brewing Corp. (1979), contract law was clarified regarding the "best efforts" clause.
James Bloor (plaintiff), a representative of the P. Ballantine & Sons brewery, sued Falstaff Brewing Corporation (defendant) for breach the best-efforts clause in their contract.
Falstaff entered into a contract on March 31, 1972, to buy Ballantine’s brewing labels, trademarks, and other property except the brewery for a total of $4 million plus a 50-cent royalty for each barrel of Ballantine beers sold until 1978. Falstaff promised to use its best efforts to promote and maintain a high volume of Ballantine’s sales. Falstaff then went through a period of decline. They subsequently decreased Ballantine’s advertising budget, closed four of their six retail distribution centers, and discontinued various illegal practices that had been used to sell Ballantine products. Falstaff made a substantial financial recovery, but Ballantine’s sales declined.
Bloor brought suit, alleging that the breach of the best-efforts clause entitled them to liquidated damages. The trial court awarded damages to Bloor for Falstaff’s breach of the best-efforts clause, but denied the claim for liquidated damages. Both parties appealed.
The Second Circuit Court of Appeals agreed with the lower court's decision, holding that the best efforts clause necessitates good faith action based on individual capabilities and situational considerations. Substantial discontinuance, it ruled, must involve a near-total halt in distribution rather than just reduced sales.
Overall, Bloor v. Falstaff serves as an example of how courts interpret the best efforts clause, a common but ambiguous contract term. The case also demonstrates how courts can balance party interests to prevent unreasonable demands or penalties and apply contract law principles to complex business situations, fostering fair and efficient results.
DeepDiveHighlight a legal term to see the definition
The case involves a breach of contract dispute between James Bloor and Falstaff Brewing Corporation over the purchase of Ballantine brewing labels, trademarks, accounts receivable, and distribution systems. The court upheld Bloor's claim that Falstaff breached the best efforts clause and awarded damages, but dismissed the claim for liquidated damages. The defendant was obligated to continue producing bread crumbs in good faith until the contractual right of cancellation was exercised. The defendant could only cease production of the bread crumbs if its losses from continuing production would be more than trivial. The court held that a bankruptcy or genuine imperiling of the defendant's entire business caused by the production of the bread crumbs would warrant cessation of production, but not a yield of less profit than expected. The defendant's obligation to use good faith in continuing production applied even though bread crumbs were only a part of its enterprise. The court's ruling did not relieve the defendant of its obligation to use best efforts to promote the sale of Ballantine products, even if it caused "more than trivial" losses. The appellate court found that the lower court did not impose an unreasonably high standard on Falstaff in fulfilling its obligation to use best efforts to promote and maintain high sales of Ballantine products. Falstaff breached its duty to use best efforts in promoting and maintaining high sales of Ballantine products by closing the North Bergen depot, choosing distributors who owned competing brands, and prioritizing sales of its own brands. The court concluded that Falstaff's actions constituted a breach of its duty to use best efforts as stated in the Van Valkenburgh decision.
LSD+ Case Briefs
Features
- DeepDive for detailed case analysis
- Over 50,000 existing case briefs
- Instant briefs for another 6,000,000 cases
- Highlight dictionary for legal term definitions
- Social learning with chat and high points
Over 50,000 Cases Briefed
LSD+ gives you access to over 50,000 case briefs, more than anyone else. Be the first to email us the website of a case brief product that offers you more case briefs and we'll give you a free year of LSD+.
14-Day Free Trial
Unlimited access. Read as much content as you want during your trial with no device limitations. Cancel any time during your trial and keep access for the full 14 days.
Integrated Legal Dictionary
Lawyers and judges love to use big words. And Latin, for some reason.
Highlight a legal term in LSD Briefs and get an instant, plain English definition. Try highlighting contract or specific performance. No need to search or read through a list of definitions, simply highlight the words you don’t know and our LSDefine integration will instantly give you a definition to any of over 30,000 legal terms.
DeepDive
DeepDive allows you to explore legal cases like never before. DeepDive offers multiple levels of case summaries, which empowers you to quickly and easily find the information you need to stay on top of readings. Easily navigate through summary levels and click on any text to get more detail, all the way down to the original legal case text.
Brief anything. Instantly.
Our proprietary state-of-the-art system can instantly brief over 6,000,000 US cases. That means we can probably brief that case that your professor assigned last night when she sent you a poorly scanned pdf and told you to read every third paragraph. Or maybe she uploaded it to Canvas and didn’t really tell you to read it, but you know you probably should. Tenure does wild things to good people.
Social Learning with Chat and High Points
Study groups are a great way to learn and explore a case. LSD has chat rooms for each case to let you ask questions across the community and hear what other students struggled with and how they put it all together. Learn the key points of every case from other LSD+ users and share your knowledge with LSD High Points.
Real-Time Brief Feedback
Don’t settle for mistakes in briefs that have been there for 10 years and never fixed. Find an issue or something missing from a brief? Down vote and we will make improvements. All of our case brief editors graduated from from T14 law schools.