Seder & Chandler, LLP
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Business contract and employee agreement language is crucial

When billions of dollars and world-renowned brands are involved, more than the stock market numbers are at risk. Corporate reputations and the possibility of doing future business with new partners are also at stake. That's why developing contracts that protect the livelihood of your Massachusetts company, now and in the future, are vital.

Contract dispute court documents filed recently by Macy's Inc accuse Martha Stewart Living Omnimedia of violating a 2006 agreement to sell her branded products exclusively in their stores until 2018. But Martha Stewart Living just entered into another contract with J.C. Penney Co Inc., to sell products in new "Martha Stewart stores," or kiosks, within J.C. Penney locations. J.C. Penney purchased a 17% share in MSLO in December and it plans to open the new "Martha Stewart stores" inside their retail locations in 2013.

Exclusive rights and its definition are under question in Macy's preliminary injunction to stop Martha Stewart from violating their contract. Martha Stewart's attorneys say both contracts can exist because of a legal loophole in the Macy's contract that allows Martha Stewart to sell its products in any "Martha Stewart store," even if that store is located within another umbrella store like J.C. Penney. Macy's disagreed with their argument noting that the J.C. Penney outlets with be staffed by J.C. Penney employees. Macy's also concluded that the new contract devalues their Martha Stewart product offerings, as they are no longer exclusive to Macy's customers.

Martha Stewart Living said that Macy's intent is to "extend its commercial agreement" with MSLO. Watch for results from the preliminary injunction hearing this month.

Source: Thomson Reuters News & Insight, "Macy's sues Martha Stewart Living," Karen Freifeld, Jan. 23, 2012

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