Contract Regulations

Question 1

Relationship between the parties, generally

Answer 1

In most cases, the relationship is contractual (no fiduciary rights or obligations)

Plaintiff usually pushing for relationship to be considered fiduciary, because they can recover punitive damages

Question 2

Mellencamp v. Riva Music Takeaways

Answer 2

FACTS
P is suing his publishers for not accounting to him properly and not using enough effort to exploit his catalogue

P argued there was a fiduciary relationship, but court said no this is contractual.

TAKEAWAYS
Every contract contains an implied covenant of good faith and fair dealing

A party to an agreement cannot conduct themselves in such a way as to interfere with or deny the other party to the agreement the benefits of the agreement.

This implied covenant does not turn the relationship into a fiduciary one

Question 3

Fiduciary Duties

Answer 3

A fiduciary duty:

(1) May be imposed by law in certain confidential relationships or

(2) May arise by agreement- often an implied agreement where one person voluntarily assumes a position of trust and confidence. Fairness, good faith, loyalty.

Question 4

Rather v. CBS Corp. Takeaways

Answer 4

Rather fired by CBS, brings 2 causes of action:

1. Wrongful Termination
   * BUT there was a “Pay-or-Play” provision
   * This gives you the right to terminate w/o cause, as long as you pay the remainder of the compensation due under the contract
2. Breach of Fiduciary Duty
   * Rather argued that his relationship with CBS was a fiduciary relationship because he worked there for 40 years and is the anchor of the evening news
   * BUT court said no this is a contractual employer/employee relationship

Question 5

Wolf v. Superior Court 1 Takeaways

Answer 5

Disney acquired rights from Wolf in his Book “Curious Case of Roger Rabbit” and made a movie

Wolf argued:
Disney control all the money, it is fiduciary relationship

COURT SAID NO, it is a creditor/debtor relationship which is contractual.

Question 6

The court’s discretionary power to enforce agreements

Answer 6

Can a court imply any terms or provisions to make an enforceable agreement?

Seeing case
- Court implied the level of effort that needs to be exerted: “reasonable efforts”

Mellencamp
- P said the music publishers needed to use their best efforts to exploit his catalogue

BUT when there is an exclusive transfer of rights in exchange for a royalty, the implied covenant imposes a REASONABLE effort on the transferee.

Question 7

Illusory Promises

Answer 7

If one party to a contract has broad, discretionary power, then arguably that may constitute an illusory promise

Question 8

Zilg v. Prentice-Hall, Inc. Takeaways

Answer 8

P enters into publishing agreement w Prentice Hall

Broad promise from publisher regarding publication of the book

Is there an enforceable agreement? Court said:
- Publisher does have broad discretion, BUT implied covenant requires you exercise these powers so that the book has a reasonable chance of being successful w it’s intended audience
- Court not bothered by marketing budget and number of books printed being broad. Still a chance for book to be reasonably successful w implied effort.

Question 9

Third Story Music Inc. v. Waits Takeaways

Answer 9

Here, there is broad language and P entered into an agreement figuring D will distribute the albums

BUT in the contract, D specifically had the discretion to refrain from doing anything.

The court holds this is not an illusory promise because WB gave an annual advance of 6k so there is consideration and therefore we don’t need to imply a covenant and we will not override the express term in the agreement.

Question 10

Locke v. Warner Bros.

Answer 10

Court said: we aren’t going to question your creative judgement, WB (it is your business what you choose to develop)

BUT the evidence shows you had no intention of putting any of her projects into development- NOT good faith

Question 11

Contract Formation

Answer 11

1. Meeting of the Minds
2. Valid Consideration
3. Legal Objective
4. Legal Capacity

Question 12

Are oral agreements as enforceable as written agreements?

Answer 12

Oral agreements ARE just as enforceable as a written agreement, UNLESS:

1. A statute of regulation requires there to be a writing
2. If the parties agree that there must be in writing, executed by all parties in order to be bound by it

Question 13

Cheever case

Answer 13

Court implied an important provision to make an enforceable contract

Ms. Cheever was meant to pick a certain number of stories, for a certain length, but the parameters were not specified/ terms broad and indefinite
- Court said: when terms are too indefinite, no way to find a meeting of the minds
o Purpose of a contract is to reflect the intent of the parties
- Here, too indefinite