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Article Review
Business face a number of potential legal issues that affect the way they operate. Businesses potential legal issues include intellectual property, privacy, ethics, and security. Legal disputes always cost money to resolve. The money needed to resolve a legal dispute puts strain on businesses. Some legal disputes can drag on for years, for example in the case of Kraft vs. Starbucks a case that began in November 2010 and was finally resolved in November 2013.
Article Synopsis
In 1998 Kraft and Starbucks made a deal. Kraft gained the sole rights to sell Starbucks bagged coffee in retail outlets. “Kraft first began marketing Starbucks roast and ground coffee in 1998 and succeeded in building a highly profitable CPG business, from a base of approximately $50 million to approximately $500 million in 2010” (PR Newswire, 2013, P. 1). In November 2010 Starbucks informed Kraft they intended to break their contract. Starbucks would no longer allow Kraft exclusively to market and produce Starbucks coffee. Kraft initially tried to place on injunction on Starbucks to prevent the breach of contract but the court ruled in favor of Starbucks. In November 2013 in binding arbitration Mondelez International, which spun off from Kraft in 2012, was awarded 2.7 million in damages.
Legal Issue
The conflict between Kraft and Starbucks is a legal issue. Starbucks and Kraft entered into a legal and valid contract. Kraft made an offer to Starbucks to be exclusively market, produce, and sell bagged Starbucks coffee, and Starbucks accepted the agreement. Starbucks exhibited nonperformance to the agreement by not following the terms of the agreement. Originally Kraft wanted to place an injunction to stop Starbucks from the breach of contract unt...

... middle of paper ...

...ed the legal dispute by honoring the contract with Kraft. The breach of contract is illegal and unethical. Starbucks made the decisions that the legal consequences of breaching their contract with Kraft was worth it. Each business must weigh the cost of every option and decide which direction to take. Most companies avoid legal disputes to reduce operating costs.

Works Cited

Leo, S. (2013). Five common legal issues faced by businesses. Retrieved from http://www.businessdictionary.com/article/538/common-legal-issues-faced-by-businesses/
PR Newswire. (2013, November 12). Arbitration ends coffee contract dispute. Retrieved from http://search.proquest.com/docview/1450046726?accountid=458
The New York Times. (2011, February 25). In dispute against Starbucks, court dismisses Kraft’s claim. Retrieved from http://www.nytimes.com/2011/02/26/business/26starbucks.html?_r=0

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