Dinn, Hochman & Potter, LLC

Contract disputes could affect CVS and Marsh supermarkets

Contracts are an important part of most Ohio businesses. As a business expands or acquires other businesses, contracts are used to establish the specific terms and conditions under which the acquisition will take place. Each party then expects the other to honor the terms of the contract; when this does not happen, contract disputes are likely to occur.

In April 2016, the drug chain CVS purchased the inventory and accounts from pharmacies operated by Marsh Supermarkets. The contract for this purchase included a price of $38 million and included a clause that stated that these supermarket locations would not operate pharmacies for a period of at least five years. Marsh supermarkets has now filed for bankruptcy, and two other companies are interested in purchasing the company.

The two companies interested in purchasing Marsh have indicated that their interest is contingent upon being able to operate pharmacies in these locations. Apparently, Marsh's understanding of the contract with CVS is that Marsh is the only entity prohibited from operating pharmacies in these locations; a subsequent purchaser is not prohibited. This has caused a contract dispute, and CVS is attempting to halt the bankruptcy hearing about the proposed sale of Marsh.

Contracts are the legal documents businesses use to make sure that all terms and conditions are clearly understood by all parties. For this reason, it is often wise to have legal counsel review all contracts prior to entering into them. When the contract terms and conditions are not adhered to, contract disputes arise. At times, these disputes can be resolved between the two parties; other times, the dispute becomes a matter before an Ohio court or, as in this instance, a federal bankruptcy court.

Source: ibj.com, "CVS, owners of Lockerbie Marketplace object to Marsh store-sale plan", Greg Andrews, June 14, 2017

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