Reference no: EM131658464

Question: Case Problem with Sample Answer. Eden Electrical, Ltd., owned twenty-five appliance stores throughout Israel, at least some of which sold refrigerators made by Amana Co. Eden bought the appliances from Amana's Israeli distributor, Pan El A/Yesh Shem, which approached Eden about taking over the distributorship. Eden representatives met with Amana executives. The executives made assurances about Amana's good faith, its hope of having a long-term business relationship with Eden, and its willingness to have Eden become its exclusive distributor in Israel. Eden signed a distributorship agreement and paid Amana $2.4 million. Amana failed to deliver this amount in inventory to Eden, continued selling refrigerators to other entities for the Israeli market, and represented to others that it was still looking for a long-term distributor. Less than three months after signing the agreement with Eden, Amana terminated it without explanation. Eden filed a suit in a federal district court against Amana, alleging fraud. The court awarded Eden $12.1 million in damages. Is this amount warranted? Why or why not? How does this case illustrate why business ethics is important? [Eden Electrical, Ltd. v. Amana Co., 370 F.3d 824 (8th Cir. 2004)]