Exclusive - Gateway issues lawsuit against former partner

Norwood Adam faces #300,000 legal action over alleged breach of contract.

Direct PC vendor Gateway has issued a writ against server andof contract. networking distributor Norwood Adam Distribution for alleged breach of contract and failure to pay for goods purchased.

Gateway is suing its former distributor for #333,968.19, with interest of #5,690.43 and continuing interest of #73.20 per day, according to a High Court writ issued under its server unit name Advanced Logic Research (ALR).

The manufacturer claimed Norwood Adam breached its agreement by failing to pay for orders within a period of 90 days, under a contract signed on 1 May 1997.

A Gateway representative said the vendor would not comment on the writ because it was 'in the throes' of a legal matter. However, Tony Weaver, managing director of Norwood Adam, confirmed the distributor had been served a writ.

Weaver told PC Dealer last week: 'We have received a writ from Gateway and are preparing a much larger counterclaim for breach of contract.

'Norwood Adam will go to trial on the matter. We have been disgusted at the treatment we have received since Gateway bought the company (ALR), after eight wonderful years with its predecessor.'

Gateway bought server manufacturer ALR in June 1997 for $194 million and inherited its two-tier channel along with it, before finally merging the server unit in with the PC operations by July 1998.

At the time, distribution claimed it had not been informed of the move and it had been understood prior that Gateway would keep the two units separate.

Three months later, the vendor suddenly severed ties with distributors Norwood Adam and Northamber after it decided to retain direct resellers that would provide the value-add element for its direct fulfilment policy (PC Dealer, 21 October 1998).

Gateway renamed the ALR channel sales and marketing operation Gateway Partners.