This is not legal advice, obviously, especially since you are not affiliated with Apple:
That kind of contract is specifically forbidden by most kinds of American contract law because of a lingering free labor ideology. The concern is that if Apple changed its mind about whether it wanted to ‘work for’ the third-party commitment company, it might not have 10 billion dollars, and so it would face a choice between work or bankruptcy; that kind of choice can be too close to indentured servitude, and indentured servitude is un-American. The logic gets pretty ridiculous when the party in question is a huge corporation that doesn’t have to sign a contract like that if it doesn’t want to, but “deterring rival tablet manufacturers” isn’t necessarily a good thing either—we want some competition in the consumer technology marketplace.
It could also be something like “Apple will auction off some of it’s property (a subsidiary, intellectual rights to something valuable, some real estate …) to the highest bidder if it doesn’t manufacture 100K iPads”, with the condition that it can’t sell that property before 2020, but can otherwise use it normally. This keeps most of the advantages of the 10 billion dollars as incentive, without the side effect of risking bankrupcy or tying the money down.
Could they sign up a contract for with one or more of the companies supplying the individual iPad components for 100K pieces a year until 2020, with a hefty penalty for breach of contract, and loudly publicise the deal? They’d lose the option of switching suppliers in case a better one came along, but it may be worth it given the strategic payoff.
(That is assuming the company in question doesn’t have a vertical monopoly, controlling all production steps from the ore mines to quality testing, which is a very reasonable assumption for nearly every physical product)
I think you can see the problem with the policy of tying up an amount of money you can’t afford to lose: that you probably need that money to run your normal business, and that the interest on an equivalent loan would probably cost more than the plan was worth to you.
This is not legal advice, obviously, especially since you are not affiliated with Apple:
That kind of contract is specifically forbidden by most kinds of American contract law because of a lingering free labor ideology. The concern is that if Apple changed its mind about whether it wanted to ‘work for’ the third-party commitment company, it might not have 10 billion dollars, and so it would face a choice between work or bankruptcy; that kind of choice can be too close to indentured servitude, and indentured servitude is un-American. The logic gets pretty ridiculous when the party in question is a huge corporation that doesn’t have to sign a contract like that if it doesn’t want to, but “deterring rival tablet manufacturers” isn’t necessarily a good thing either—we want some competition in the consumer technology marketplace.
It could also be something like “Apple will auction off some of it’s property (a subsidiary, intellectual rights to something valuable, some real estate …) to the highest bidder if it doesn’t manufacture 100K iPads”, with the condition that it can’t sell that property before 2020, but can otherwise use it normally. This keeps most of the advantages of the 10 billion dollars as incentive, without the side effect of risking bankrupcy or tying the money down.
Could they sign up a contract for with one or more of the companies supplying the individual iPad components for 100K pieces a year until 2020, with a hefty penalty for breach of contract, and loudly publicise the deal? They’d lose the option of switching suppliers in case a better one came along, but it may be worth it given the strategic payoff.
(That is assuming the company in question doesn’t have a vertical monopoly, controlling all production steps from the ore mines to quality testing, which is a very reasonable assumption for nearly every physical product)
What if the contract specified that it would pay 10 billion dollars only if it could afford to?
Then if it looked like they would have to pay, they could tie up all their money in irrevocable long-term investments.
OK, they could put $10 billion in a trust that they would be required to give up if they didn’t manufacture enough iPads.
I think you can see the problem with the policy of tying up an amount of money you can’t afford to lose: that you probably need that money to run your normal business, and that the interest on an equivalent loan would probably cost more than the plan was worth to you.