Budget Wrench Co. sold its wrenches to a variety of retail outlets at $1 each. Stony Hardware purchased a large quantity of the wrenches and used them over a six-month period as a special advertised sale item, priced at 25 cents each. Budget Wrench Co. requested Stony Hardware to stop selling its wrenches as a "special" sale item, but Stony Hardware refused to do so. Budget Wrench Co. need not sell additional supplies of wrenches to Stony Hardware, because it was selling the wrenches as a loss leader.

Question

Quizplus · Accepted Answer

Once Budget Wrench Co. has sold the wrenches to Stony Hardware, Stony Hardware has the right to set their own resale prices. However, Budget Wrench Co. is not obligated to continue supplying Stony Hardware with products if they disagree with their resale practices, such as selling the wrenches as a loss leader.