A Breach of Contract: Nike vs Former Designers
A breach of contract is a pertinent factor in business law that faces most modern organizations. It is a lawsuit presented before a jury where one or both parties to a contract claim that it was breached. It is simply a failure to honor a contract without a legal justification as to why the party to the contract failed to honor the contract. This critical topic was well-revealed to me in 2014 when Nike, a renowned organization across the globe, sued former designers as having breached the contract of operations that they had laid out. According to Nike's legal team, three of its former designers hatched a plot to work with Adidas, which their worthy competitor in a bid to bring Nike down. The organization claimed that having worked with them; the former designers opted to design a studio in Brooklyn, a factor that would make the company experience irreparable losses.
Observing Various Ways of Breach of Contract
A breach of contract is observed in various ways. However, before really deciding to pick a case regarding the breach of contract, the jury has to first decide whether there really existed a contract between the plaintiff and the defendant[1]. The jury in Nike's case, for this reason, had to examine whether Nike and the former designers had any contracts established. This exposition showed that Nike is a footwear company and for this reason does not work with fulltime internal designers[2]. Rather, the company hires different designers from time to time on a contractual basis. As such, the three companies were undoubtedly in a contract with Nike.
The Particulars of the Contract Breached
Establishing that there existed a contract between the Nike and the former designers now led the jury to understand the particulars of the contract. The contracts signed by Nike's CEO, Mr. Dekovic, Mr. Dolee, and Mr. Miner, the defendants, had at least six pertinent particulars that they had abused. These particulars namely, duty, good faith, fair dealing, loyalty, trade secrets and civil conspiracy had been breached. The contract, fully signed and agreed upon instructed the defendants not to work with any other company as far as they worked at Nike. This call of duty was sufficiently abused while the defendants worked at Adidas despite being paid contractors at Nike.[3]
Violation of Duty, Good Faith, and Fair Dealing
The plaintiff argued that this was a loss on itself, as the company was paying designers who were not fully committed to realizing the strategic goals of the company. This came up despite the company being in the dynamic and fashionable footwear industry.
The three defendants had also agreed to work in good faith. In a more outright manner, working in good faith simply means working with a sincere intention. Should the three designers have been working with a good intention, they would not have picked up on Nike's closest competitor Adidas.[4] Building on this, the designers had also failed the condition of fair dealing with the deal between them and Adidas was not placing Nike on a fairground. Rather it was intended to weaken them as the designers were creating brands and studios that were similar to those they had designed at Nike and in close proximity to Nike. As such, these disadvantageous dealings placed Nike at a millennial disadvantage where losses were inevitable.
Request for Legal Intervention
Beyond suing the three former designers, Nike requested the court to issue a direction that the scheme stops once and for all seeing that being sufficient breach of contract was material in this case.[5]
Conspiracy and Irreparable Damages
It was indisputable that Adidas was in conspiracy with three defendants with an aim of stealing trade secrets and building upon them. Financial gain on the side of Adidas is replicated seeing that the company was willing and sufficiently paid for the case. As such, Nike expected the court to declare the dealings illegal. What was more surprising about the case is that Nike had a three years strategic plan that they expected the three designers would roll out. To their detriment, the strategic plans were already being rolled out at Adidas and hence the company had to scrap the plan and, draw and a totally different plan.
Reasons for Believing in a Breach of Contract
The jury found scores of reasons to believe in a breach of contract. One reason is that the defendants misappropriated misused and even after being fired, retained critical confidential information regarding Nike.[6] They also helped Adidas leverage and attract new customers most of whom were Nike's customers. The designers also purportedly helped Adidas built on Nike's unreleased technology inclusive of virtual testing and campaign materials. These compounded together formed the basis of the damage fee of $10 million that Nike opted to be paid.
Understanding the Consequences of a Breach of Contract
This case opened my scope of understanding in terms of what a breach of the contract really means. The understanding of a breach of contract as failure to only deliver the promised goods or services upgraded to the need to honor the terms and conditions of the contract. Nike, for instance, had worked successfully with the previous designers until they conspired with a competitor in a plot that would bring the company down. The lawsuit was a satisfactory breach of contract that materialized into irreparable damages on the side in Nike.
Bibliography
Brettman, Allan. 2018. "Nike Files Breach Of Contract Lawsuit Against Former Designers". Oregonlive.Com. http://www.oregonlive.com/playbooks-profits/index.ssf/2014/12/nike_files_breach_of_contract.html.
Cassar, V., " Buttigieg, S. C. (2015). Psychological contract breach, organizational justice and emotional well-being. Personnel Review, 44(2), 217-235.
[1] Cassar, V., " Buttigieg, S. C. (2015). Psychological contract breach, organizational justice and emotional well-being. Personnel Review, 44(2), 217-235.
[2] Brettman, Allan. 2018. "Nike Files Breach Of Contract Lawsuit Against Former Designers". Oregonlive.Com. http://www.oregonlive.com/playbooks-profits/index.ssf/2014/12/nike_files_breach_of_contract.html.
[3] Brettman, Allan. 2018. "Nike Files Breach Of Contract Lawsuit Against Former Designers". Oregonlive.Com. http://www.oregonlive.com/playbooks-profits/index.ssf/2014/12/nike_files_breach_of_contract.html.
[4] Ibid., 219
[5] Ibid
[6] Brettman, Allan. 2018. "Nike Files Breach Of Contract Lawsuit Against Former Designers". Oregonlive.Com. http://www.oregonlive.com/playbooks-profits/index.ssf/2014/12/nike_files_breach_of_contract.html
