After resolving its contract dispute with one supplier for Craftsman tools, Sears Holdings has filed another lawsuit against another. The company claims that negative press coverage is leading its suppliers to demand early cancellation of contracts, or unreasonable terms.
Western Forge manufactures hand tools in the United States, and has been one of the manufacturers for the Craftsman brand for over 50 years. Check your Craftsman brand screwdrivers, pliers, wrenches, chisels, or other hand tools: If they’re marked “WF,” they’re from Western Forge.
The Chicago Tribune reports that the companies’ contract was set to expire in April. Sears claims that it told Ideal, the current parent company of Western Forge, that it wanted to extend the contract starting back in February. Ideal representatives acted like this would be the case, Sears complains, and then the company told Sears that it wasn’t interested in re-upping abruptly on the last weekday in April.
Sears says that this move was unfair, writing in the lawsuit that “after several weeks of assurances by Ideal intended to lull Sears into the belief that Ideal would agree to extend the agreement, Ideal abruptly informed Sears that it will not agree to extend the contract beyond its term.”
Instead, the company claims, the contract was abruptly cut off, and Ideal didn’t provide the six months of “transition” services that are required in the contract. The company kept supplying tools for about a month, then, according to the lawsuit, “informed Sears that it will fulfill Sears’ orders only if Sears agrees to onerous payment terms that were not part of the agreement and that were unilaterally imposed by Ideal.”
Sears considers this a breach of contract, and has now filed suit in county court against Ideal. Its lawsuit against a supplier of electric tools, One World, has been resolved since a May 15 blog post from manifesto-writing chairman and CEO Eddie Lampert and lawsuit filed against the supplier.
Lampert framed the conflict as Sears defending itself against companies seeking to take advantage of its weak position.
“There have been examples of parties we do business with trying to take advantage of negative rumors about Sears to make themselves a better deal – a deal that is unilaterally in their interest,” he blogged about the One World contract dispute. “In such a case, we will not simply roll over and be taken advantage of – we will do what’s right to protect the interests of our company and the millions of stakeholders we serve.”
“Wait a minute,” you might be saying. “Didn’t Sears sell the Craftsman brand? Why are they still fretting over deals with tool suppliers?” Yes, the brand was sold to Black & Decker, but Sears retains the right to keep making and selling Craftsman tools using its existing suppliers and without paying royalties to Black & Decker for 15 years after the deal closed.