Toys"R"S&Amazon.Com

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Toys R Us.com, LLC v. Amazon.com Docket No. C-96-04 (Superior Ct. N.J., March 1, 2006) After a lengthy trial, the Court found that defendant Amazon.com had breached an agreement it had entered into with plaintiff ToysRUs.com LLC ("Toys R Us"), by permitting third parties to sell toys on Amazon's web site. Finding that this breach went to the substance of the parties' agreement - which as interpreted by the Court provided that Toys R Us was to be the sole third party toy retailer on Amazon's web site - the Court granted Toys R Us's request that the agreement be terminated. Notwithstanding its finding that such a breach had occurred, the Court did not award Toys R Us damages. The Court also rejected counterclaims asserted by Amazon, arising out of Toys R Us's alleged failure to maintain levels of inventory sufficient to meet customer demand. The Court's 132 page decision provides a window into the negotiation of a highly complex transaction, in which the parties have competing visions of the structure of the transaction, and settle on contractual language that does not fully express those visions, or resolve the parties' conflict. In resolving this dispute, the Court elected not to base its determination on the literal meaning of the words ultimately accepted by each side. Instead, it strove to find their intentions in entering into this Agreement, and to give effect to those intentions. In so doing, the Court found that it was the parties' intention, under their agreement, to make Toys R Us the exclusive toy retailer allowed to market on Amazon.com. While it found that none of the wrongs Amazon allegedly committed, standing alone, constituted a technical breach of the parties' agreement, the Court concluded that taken together, they constituted a breach of this central provision, and mandated termination of the agreement. Plaintiff Toys R Us and its

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