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guaranteed to receive. The $50,000 cap applied to any single
housefile mailing of more than 500,000.
5. In almost all of Herge’s group of contracts the exempt
organization could terminate the fundraising contract with some
form of advance notice. The longest notice so required is 120
days and the shortest is 30 days. Often these contracts provide
that an exempt organization that terminates its fundraising
contract becomes liable for mail campaign losses. In contrast,
the Contract does not make any provision for petitioner to
terminate it by giving notice or for cause. On the contrary, the
Contract provides that, during its entire 5-year term, W&H would
be petitioner’s exclusive fundraiser, and specifically forbids
petitioner to “retain or use the services of any other person or
company to provide counsel or advice to [petitioner] in
conducting its direct mail solicitations.”
Thus, W&H had an effective way to limit its risk if the
Contract did not prove to be productive--W&H could reduce or
eliminate the monthly draws that it allows petitioner to take and
it could end the advances used to fund future mailings for
petitioner. Once petitioner had grown accustomed to this
lifeline, petitioner could not remain viable without continued
infusions; W&H could figuratively pull petitioner’s plug and
thereby effectively rid itself of future losses or insufficiently
profitable obligations. Petitioner, on the other hand, had no
exit. Presumably, petitioner could have refused to authorize
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