Tuesday, June 26, 2012

Reasons to not enforce a contract... Vanilla Ice, David Bowie and Suge Knight

Hypo: David Bowie calls Vanilla Ice to inform Ice that he wants the rights to Ice's hit "Ice Ice Baby,” because he believes the song directly ripped off his song "Under Pressure." Bowie tells Ice that he knows for a fact that Ice copied the material because he has a witness that was in the recording studio when Ice recorded the song. Bowie doesn't actually have this witness and although Ice knows that the two songs are completely different he agrees to sign an agreement to sign over the rights in order to stay out of a losing lawsuit. Bowie faxes a contract to Ice and Ice signs it. After all, he has plenty of hits coming.

Right after Ice hangs up the phone, Suge Knight bursts into Ice's apartment with two hulking thugs with two hulking handguns ordering that Ice sign "Ice Ice Baby" over to him. Knight believes that Ice stole the music from one of the artists that Knight represents. Ice refuses and tries to explain that he already agreed to turn the rights over to Bowie. Knight, doesn’t hear the explanation and, infuriated, grabs Ice by the neck, pulls him towards the balcony and hangs Ice off the balcony until he agrees to sign the contract that Knight brought.

Analysis: Neither contract would be enforced. Shocking, right? But do you know why? I just found out today.

The contract with Bowie is invalid due to misrepresentation. Misrepresentation requires (1) a statement of "fact" before the contract, (2) by one of the contracting parties or her agent, (3) that is false, and (4) induces the contract.

(1) The statement of fact Bowie made was that he had a witness that Ice stole the material.

(2) Bowie, one of the parties to the contract, made the statement.

(3) The statement was false because Bowie didn't actually have the witness.

(4) Ice agreed to the contract as a result of the misrepresentation. He would not have signed if Bowie had not lied that he had a witness.

The contract with Knight might be a little more obvious. This contract would not be enforced due to physical duress. Ice need only prove that the threat was made and that it caused him to agree. For an agreement or contract to come to fruition, and thus be enforceable, mutual assent or a "meeting of the minds" must occur. This meeting is missing here. The only reason Ice agreed was that he had been hung out the window so his sound mind can't be said to have met that of Knight’s.

Still, in both situations Ice will have to prove that the other parties have unclean hands. This might be easier said than done, and further, Ice might never bring the suit due to fear of the two parties. I hear Bowie is tougher than he looks.

Remedies: If the contracts were considered enforceable then both Bowie and Knight would have rights to remedies from Ice.

Both would probably request specific performance, the exchange of rights to the intellectual property. However, this remedy presents a problem because both cannot own the property so both cannot receive this equitable remedy.

If the Knight contract was considered enforceable then Knight would be considered a bona fide purchaser as long as he didn't know about the previous deal with Bowie. While Ice tried to explain the matter to Knight, he never got the point across so Knight's hands remain clean. Because Knight currently owns the rights, has possession of the contract, it would be unfair to rip them from his fingers so the court won't do that.

Thus, Bowie has a right to remedy by money damages. Bowie would be entitled to expectation damages, a comparison of the dollar value of the performance (the intellectual property's value) with the breach, and the dollar value of the performance with the breach.

Because Bowie has no dollar value without the performance he will be given the intellectual property's fair market value and balance will be restored to the force.

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