Business contracts often play a pivotal role in the future of any business. Based on these negotiations and agreements, companies set their goals and define their expectations for the next chapter.
When parties to a contract do not come to an agreement right away, though, there can be some fears about the fate of one or both entities. For instance, MillerCoors and Pabst Blue Ribbon battled up until just before a jury was to decide on their contract dispute before coming to a settlement that cements both companies' future in the brewing industry.
What was standing in their way
As sources like the Washington Post report observed, the competing companies have long been involved with each other. For nearly 20 years, MillerCoors has been responsible for brewing Pabst beers. That arrangement was set to expire in 2020 when there would be an option to extend the contract.
However, when Pabst notified MillerCoors that it was exercising its option, MillerCoors reportedly said that it did not have the capacity to continue brewing Pabst beers in addition to its own would not extend the contract.
Pabst challenged their assertion of limited resources in violation of the option provision and countered that MillerCoors' decision not to extend the contract was an attempt to put the smaller brewing company out of business. It filed a lawsuit against MillerCoors citing bad faith.
Reaching an agreement
The dispute made it to court and was heard in front of a jury tasked with making a decision on the contract dispute. However, while the jury was deliberating, the two companies reached their own settlement. The details of the settlement have not yet been made public, but Pabst will reportedly continue to be available for "many, many years to come."
Contract negotiations and crunch time
Contract negotiations can be highly sensitive and stressful. As such, preparation will be critical. It's important to think about the active contracts you may have up for option or renewal in the coming weeks and months and prepare accordingly. This is particularly critical if you have a sense that the other side may be positioning themselves to contest an option or renewal.