Employment Agreement Case Study

Employment Agreement.

This is a contract between Wolf Production Studios (hereinafter known as “Production Company”), and Mr. Luka Johnston (hereinafter known as “Director”).

1. Object of the Agreement.
1.1 The production company will employ the Director for making the film “The Stranger” (hereinafter the “Film A”) in accordance with the terms and conditions agreed in this Employment Agreement (hereinafter the “Agreement”).

2. Liabilities and Obligations of the Director and the Production Company.
2.1 The Production Company will be obliged to pay the Director 15% of the Films A revenue.
2.2 The Production Company will be obliged not to employ any other director other than Mr. Luka Johnston when making the sequels of the Film
Now imagine that the contract was breached by the other party. Explain the breach (you get to determine how the other party breached – use your imagination). Was this a material breach? What would you ask the court to do? State your claim to the court. What kind of remedy would the court likely provide - would the court order:
a. Damages – for what and how much?
b. An injunction – for what?
c. Specific performance – for what? Let us say that the Director made the Film in time and everything went fine, but it did not become a commercial success and barely paid off not reaching 150% of profit. We no longer work with the Director and everything is fine, but 3 years later the Director starts working on the sequel to the Film A he made with us, but with another production company, without even alerting us about it.

In this case, it was a material breach, since it is explicitly said in the agreement that the Offeree cannot work on the sequels with any production company except for ours (section 2.2, 2.3). The Director breached an essential part of the contract and we are obviously not happy about
We did not state in the agreement what the Director will be obliged to do, if he violates this certain part of the contract.)

4. Imagine there had been a mistake about the rights to merchandise. What kind of mistake would that be according to your agreement? What would the court do?

Let us say that the Director made the Film A with us. It became a huge success and later we have made 2 sequels together. The Director, knowing that we hold all the merhcandise licensing rights for the Film A, would wrongly assume that he has these rights for the sequels. But it is not the case, since the Film A as well as its sequels are a part of one Intellectual Property we have all the licensing rights of.

I guess, it would be an example of unilateral mistake. The one party, which is the offeree, mistakenly interpreted the meaning of the section 4.2 and entered the contract wihtout fully understanding the outcomes implied by it. In this case I think the court will suggest the contract reformation. Since the offeree misinterpteted the section 4.2 and the offeror was not aware that the misinterpetation might occur, the court would likely to decide to rewrite the contract (at least this certain section) in a way that better expresses the intentions of the