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Design firm files a breach of contract suit against J.C. Penney

As Texas residents know, business disputes come in all shapes and sizes. In a recent case, a lawsuit between two companies comes in the form of a square.

Hudson + Broad Inc., a visual design firm, has filed a suit against J.C. Penney Co. alleging breach of contract and misappropriation of trade secrets. According to the suit, J.C. Penney backed out of an agreement for the design company to produce lighted square frames on display at the entrances of J.C. Penney's stores.

The company alleges that the design of the large square Plexiglas LED light displays is proprietary. Furthermore, the suit claims that J.C. Penney agreed to buy 1,800 of them to be installed at department stores across the country after they were shown during the store's rollout of its new "Fair and Square" marketing plan. The frames were designed to change colors to allow for a unique color scheme every month.

However, the visual design company says that instead, the department store informed the firm on April 3 that it was contracting production of the LED displays to another outside company.

While there are no further details regarding the companies' specific agreement, the department store stands to lose a lot if the design firm is successful in this suit. In this case, the business seeks $20 million in compensatory damages and $20 million in punitive damages.

Sometimes, business agreements naturally fall through. However, if an arrangement breaks due to the fault or breach of an involved party, this may lead to contract liability.

Source: Dallas Business Journal, "Visual marketing firm sues J.C. Penney for $40M," Lance Murray, April 25, 2012