Bad Frog Brewery, Inc., sells its beer to wholesale distributors and directly to large retail chains like Publix. Its most popular beer is regular beer because of its great taste and high alcohol content. However, its light beer is not so popular and has been a drag on Bad Frog profits.
To boost sales of its less popular light beer, Bad Frog conditions the sale of its regular beer on the retail buyer's agreement to buy its light beer. To get such retail buyers to cooperate with this arrangement, Bad Frog gives an extra 5% trade discount for each light beer transaction. Because the Bad Frog light beer is not as popular as the regular beer, retailers experience oversupplies of light beer.
To induce customers to buy the oversupply, retailers are having to offer deep discounts on the light beer.
1. What type of arrangement between Bad Frog and its retail buyers is this?
2. a. What law applies to this arrangement?
b. What are the elements of the law?
c. Does Bad Frog's arrangement with retail buyers violate the law? Explain how.
3. Assume that Good Frog Brewery, Bad Frog's chief competitor, finds out about Bad Frog's arrangement and sues under applicable law.
a. In what court would Good Frog bring its lawsuit?
b. What type of damages can Good Frog seek as a remedy in the lawsuit?