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

Brief Fact Summary.

Ard Dr. Pepper Bottling Co. (Ard) sued Dr. Pepper Co. (Dr. Pepper) for breach of contract although a termination agreement provided Dr. Pepper the discretion to determine whether any contract term was violated.

Synopsis of Rule of Law.

A contract’s termination clause permits the terminating party to interpret whether the conditions permitting termination have been met.

Facts.

Ard Dr. Pepper Bottling Co. (Ard) bottled soda for Dr. Pepper Co. (Dr. Pepper). The contract contained a termination clause that allowed Dr. Pepper to determine whether any contract term was violated. Dr. Pepper terminated the contract twelve years later because Ard’s bottling equipment was not up to Dr. Pepper’s standards and Ard failed to promote Dr. Pepper’s products. Ard sued Dr. Pepper for breach of contract. The trial court granted judgment to Dr. Pepper.

Issue.

Whether a contracts termination clause permits the terminating party to interpret whether the conditions permitting termination have been met?

Held.

Yes. The judgment of the trial court is affirmed. The contract gave Dr. Pepper the right to terminate the agreement based on Dr. Pepper’s determination of Ard’s performance.

Discussion.

A contract’s termination clause permits the terminating party to interpret whether the conditions permitting termination have been met.