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In exchange for Save Mart's commitments, American Greetings
agreed to provide Westpac with the following: (1) A credit of
$100 per lineal foot dedicated to American Greetings products in
newly constructed stores or newly acquired stores not carrying
American Greetings products; (2) an annual discount equal to 5
percent of the increase in purchases made in the prior year over
that made in the year before the prior year; (3) a 1.5-percent
discount on total net receipts to American Greetings from Save
Mart purchases, creditable each quarter; (4) additional discounts
totaling $1,250,000 “in lieu of periodic volume discounts”,
creditable upon execution of the agreement; and (5) a 5-percent
advertising allowance based on the sale of everyday and seasonal
counter cards.
Whereas the contract called for the $1,250,000 discount to
be made in the form of a credit, the parties subsequently agreed
that payment would be made in cash. The parties also agreed that
the cash payment would be made to Westpac instead of directly to
Save Mart.3
Save Mart and American Greetings terminated their contract
before Save Mart satisfied its volume purchase commitment.
Although the contract contained no express provision requiring
3 Evidently, the payment was assigned from Save Mart to
Westpac because Westpac's owners had agreed to pool the advance
payments which they received under this and other long-term
purchase contracts.
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Last modified: May 25, 2011