Sterling, Inc. is a manufacturer of state-of-the-art computers. For the
past ten years, Sterling...

Question

Sterling, Inc. is a manufacturer of state-of-the-art computers. For the 
		past ten years, Sterling has acquired all of its microchips from NoBugs 
		Corporation, the only producer of chips meeting Sterling's high 
		specifications. The relationship has been mutually profitable. Sterling 
		could not have built its reputation as an industry leader without 
		NoBugs's reliable and consistently high-quality products; Sterling's 
		business has enabled NoBugs to grow rapidly while providing its 
		investors with an attractive rate of return.

Some months ago, 
		several of Sterling's computers
		exploded shortly after installation. Upon investigation, Sterling 
		discovered that tiny imperfections in NoBugs's microchips had aggravated 
		a dormant design defect in the computers, causing the explosions. 
		Analysis of the chips indicated that they wereindeed below 
		specifications and that the imperfec­tions were caused by a slight 
		miscalibration of NoBugs's encoding 
		equipment. NoBugs recalibrated the equipment and promptly 
		resumed production of perfect chips. Sterling's losses from the 
		explosions—lost profits, out-of-pocket costs associated with 
		compensating customers for the explosions, and injury to business 
		reputation—are estimated to exceed 
		$20 million. Sterling andNoBugs disagree on the amount of the 
		loss for which NoBugs should be 
		responsible. Sterling has a strong legal case 
		for breach of contract 
		against NoBugs. Sterling'sCEO is considering a lawsuit. She asks 
		you to prepare a report discussing 
		litigation strategy and the 
		advantages and disadvantages of litigation; and discussing pretrial planning should the company 
		opt for litigation. Draft that report.

David · Accepted Answer

Sterling Inc. vs NoBugs Corporation 
Sterling Inc. had gained high repute in market by having strategic business relation with NoBugs 
Corporation. It’s state of the art computer manufacturing business has been highly supported by 
the consistently high quality microchips of the NoBugs. As NoBugs was the only supplier who 
was able to meet with the Sterling’s high specifications, thus both of the companies remain in 
contract for more than ten years. Mutually agreed business terms proved to be rewarding for both 
of them, where each has earned revenue with attractive rate of return. Sterling Inc. and NoBugs 
Corporation, both has agreed to enter into contract, on mutually beneficial business terms, where 
NoBugs was responsible for providing high quality microchips, with no defects and Sterling Inc. 
will help it in achieving high business growth.  
 Overall business of both the companies was running smoothly from past ten years, but 
few months ago Steling’s business started facing trouble because of the growing cases of 
explosion in the computers manufactured by Sterling Inc.

Sterling, Inc. is a manufacturer of state-of-the-art computers. For the past ten years, Sterling has acquired all of its microchips from NoBugs Corporation, the only producer of chips meeting...

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