A reseller of athletic apparel entered into a contract with a large retailer to resell aged and customer-returned athletic wear products. The agreement contained a right of refusal and other provisions, including an automatic extension provision. The agreement was extended several times over a period of 14 years. The parties continued to deal with each other after the final expiration, but eventually, the retailer pulled out of the arrangement. The reseller sued, arguing that the retailer’s behavior in continuing to sell it product served to extend the term of the agreement. The district court disagreed and dismissed the case. The appellate panel affirmed, finding that the contract was not ambiguous and that the reseller’s interpretation of the agreement was not reasonable.
Finish Line Sports is a large retailer of athletic shoes, apparel, and accessories. Division Six specializes in the resale of both aged and customer-returned athletic wear products. In 2001, Finish Line and Division Six entered an agreement by which Division Six received the exclusive right to purchase aged and customer-returned merchandise from Finish Line. The agreement provided for an 18-month term that could be extended by written agreement of the parties prior to the expiration of the term or any extension thereof. The agreement also gave Division Six a right of first refusal if Finish Line received a bona fide arms-length offer from a third party to purchase its surplus merchandise within six months prior to the term’s expiration. If Finish Line did not receive such an offer, the agreement would automatically renew for an additional eighteen-month term. Continue reading ›