The Court of Appeals held that Amway could not, under the terms of its agreement, modify the rules affecting transfers of downline distributors on a case-by-case basis. The Bakers had formed a significant downline network with Amway. They began distributing additional products, other than Amway, causing great dissatisfaction among their downline distributors. The downline distributors wanted to change to another supplier citing lack of attention to Amway products by the Bakers. The Amway distribution agreement provided that such a transfer could not take place without the downline distributor being inactive for 2 years. Amway allowed the downline distributors to change, citing Amway’s right to amend the distribution rules unilaterally, and waiving the 2-year clause. The court held that the language of the rule was drafted such that any changes would have to apply to all distributors, and could not be modified on an individual basis. To allow such a construction of the contract would have rendered it illusory.
Full case and case summary also available at: http://www.mlmlegal.com/legal-cases/Michaels_v_Amway.php
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