When business deals go bad, the parties have the option of suing for breach of contract, depending on how much money was at stake and whether they can prove the other party failed to uphold their end of the bargain. But those who consider taking their grievances to court would be well advised to make sure they were the only injured party. Otherwise they could find themselves being forced to pay the people they’re trying to sue, which is exactly what happened to Play Beverages and CirTran after they filed a lawsuit against Playboy for an alleged breach of contract.
In fall of 2006, Playboy entered into a license agreement with Play Beverages that gave exclusive international distribution rights to the beverage company. The contract was for 20 years and included an option for the parties to renew the agreement ever five years.
Almost a year after this contract was signed, Play Beverages signed a contract with CirTran giving it limited rights to the manufacture and distribution of Playboy’s energy drink.
By the time they filed their lawsuit against Playboy, Play Beverages and CirTran allege they had successfully launched Playboy’s beverage in more than 30 countries and acquired distributors for an additional 80 countries. Despite these gains, the plaintiffs admitted they had not managed to meet the minimum sales target required by the license agreement. Continue reading