Ard Dr. Pepper Bottling Co. v. Dr. Pepper Co.

202 F.2d 372 (1953)

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Ard Dr. Pepper Bottling Co. v. Dr. Pepper Co.

United States Court of Appeals for the Fifth Circuit
202 F.2d 372 (1953)

JW

Facts

Ard Dr. Pepper Bottling Co. (Ard) (plaintiff) got a license to bottle Dr. Pepper soda from the Dr. Pepper Co. (Dr. Pepper) (defendant). Under the licensing contract, Ard agreed to bottle Dr. Pepper using modern, mechanical, sanitary equipment. Ard also agreed to promote Dr. Pepper sales and to increase sales to the extent Dr. Pepper required. The agreement contained a termination clause allowing Dr. Pepper to terminate the contract if Ard violated any of the contract’s terms. The termination clause stated that Dr. Pepper’s good-faith determination of whether Ard had violated any term would control. Twelve years after Ard and Dr. Pepper entered the license agreement, Dr. Pepper terminated the agreement because: (1) Ard’s bottling equipment was no longer up to Dr. Pepper’s modern, mechanical, and sanitary requirement standards, and (2) Ard had failed to promote Dr. Pepper sales and to increase sales to the extent Dr. Pepper required. Ard sued Dr. Pepper for breach of contract. Dr. Pepper argued that it had terminated Ard’s license in good faith and with good reason. Ard admitted that it had not spent money on advertising for a couple of years because it had needed the money to keep up the bottling equipment. There was evidence that the water Ard used to bottle Dr. Pepper had bacteria in it, a problem Ard could have affordably fixed. The trial court ruled in favor of Dr. Pepper. Ard appealed, arguing that a jury should have determined whether Ard’s performance was satisfactory.

Rule of Law

Issue

Holding and Reasoning (Rives, J.)

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