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In March, retail chain Toys-We-Is signed a contract with PlayCo, a home playground equipment manufacturer. The contract provides for PlayCo to ship Toys-We-Is 1,000 of
- In March, retail chain Toys-We-Is signed a contract with PlayCo, a home playground equipment manufacturer.
- The contract provides for PlayCo to ship Toys-We-Is 1,000 of its exclusively licensed Space Trek Wars play forts at $10,000 each, for delivery on November 1.
- Toys-We-Is originally planned, in turn, to sell the play forts for $15,000 at retail.
- In July, however, a new installment in the Space Trek Wars movie franchise releases and it becomes a massive hit, increasing the demand for products associated with Space Trek Wars.
- Sensing an opportunity, Toys-We-Is launched an ad campaign built around these elaborate sci-fi-themed play forts, which it now plans to sell for $20,000 as all indications are that the forts will be a high-end "it" toy for the holiday season.
- On October 1, PlayCo informs Toys-We-Is that it is breaching the contract and will not deliver any of the forts.
- The real reason for this breach, it turns out, is that PlayCo decided it could sell the forts to the public itself through its website and reap all the profit.
- The president of Toys-We-Is, Latoya Ball, has come to your office about the situation.
- Ball says that while losing profit on the forts is bad enough, her greater concern is with the loss of reputation for the Toys-We-Is chain, which has built its entire marketing plan around Space Trek Wars and these play forts as the "crown jewel" product.
- Many customers would be drawn into the stores to gawk at the floor model, even though few will purchase it.
- That sort of foot traffic (especially parents with children) drives holiday sales.
- Ball wants to know if she can force PlayCo to honor its agreement with Toys-We-Is.
What would probably be the correct answer to Ms. Ball, and why?
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