Many individuals and businesses choose to create partnerships. Partnerships can help grow a business, combine resources, and bring together intelligent minds. As beneficial as partnerships can be, there can also be partnership disputes. Partnership disputes are common with businesses of all sizes, and some of the country’s largest beer companies are heading to court over one such dispute.
Pabst and MillerCoors have had a pretty close relationship. Since 1999, MillerCoors has been brewing all of the Pabst beer brands, which include Lone Star, Pabst Blue Ribbon, Old Style, and Natty Boh. This is called contract brewing and it allows small beer companies to meet demand by outsourcing the brewing process to larger companies with the technology and capacity to do so. The current partnership agreement is scheduled to end in 2020, but allows for two five-year contract extensions.
Negotiations regarding potential extensions have not gone so well. Pabst is alleging MillerCoors wants to stop brewing for them so they can take a better position in the market for themselves. Without MillerCoors, Pabst will face extreme hardship. There is only one beer company other than MillerCoors that is big enough to brew all of Pabst’s products and that’s Anheuser-Busch, but Anheuser-Busch does not do contract brewing. MillerCoors claims it does not have the capacity to continue to brew for Pabst and is not required to do so after the contract expiration in 2020.
The partnership dispute boils down to the inability of the companies to agree on how the contract extension should be negotiated. MillerCoors believes it has sole discretion to determine whether or not it will continue brewing for Pabst. Pabst, on the other hand, believes the companies are obligated to work “in good faith” to find a solution if Pabst wants to extend the agreement.
Luckily for Pabst, the companies were able to come to an agreement and settle out court. The trial had finished and had gone to jury deliberation, but a settlement saved Pabst from demise and preserved the partnership. While this may be considered a success, the reality is that the litigation has likely been costly for both companies and has generated a lot of negative press.
What Businesses Can Learn From Pabst and MillerCoors
An important lesson can be learned from the partnership dispute between Pabst and MillerCoors. Any business entering into a contract needs the document to be specific and thorough. The fact that the companies wound up disputing how negotiations should be handled indicates the contract was not sufficiently clear with regard to this process. Only by working with experienced contract attorneys can businesses ensure they are protected from future disputes.
Experienced Houston Contract Lawyers
Regardless of the size of your company, you can greatly benefit from utilizing an experienced contract attorney. The Houston contract lawyers at Feldman & Feldman have extensive experience drafting, reviewing, and litigating a variety of contract matters. Call us today to request a consultation.