A Case Analysis of a Valid Contract - Research Paper Example

Contract Law: A Case Analysis This paper is a contract law case analysis involving comedian David Chappelle versus Mustafa Abuelhija who claims he was under contract as Mr. Chappelle’s manager. It went before a New York District Court to see if a legally binding contract existed between the two men (thesmokinggun.com, 2005). This paper will first identify and explain the elements of a contract to see if such elements were in place in this case. Second, we will examine if Chappelle breached an existing contract. Finally, we will determine potential remedies available to Abuelhija if the contract was breached. The first part of our analysis determines the elements that make up a valid contract. There are four elements according to Clarkson, et.al (2006). These elements include: (1) an agreement which includes both an offer and an acceptance; (2) consideration or something of value that each party gives up; (3) contractual capacity or the realization that both parties must be competent and of legal age; and (4) legality which refers to the idea that the contract is not against any public policy laws (Clarkson, et.al, 2006). In the article “Essentials of a Contract”, Sucha Ollek elaborates that contract agreements do not have to be in writing. As long as there is an understanding and a “meeting of the minds” then verbal contracts are enforceable (Olleck, 2010). To determine an agreement, courts will usually look to not only words, but also to actions in trying to determine what a reasonable person would conclude under the circumstances (Olleck, 2010). In the article “Contract Law”, the author mentions that each side must be definite as far as what the terms of the agreement include. This is also termed mutual assent or a mutual agreement. The author further states that the offer must be genuine and not meant as a joke (Freeadvice.com, 2010). Clarkson, et.al (2006) describes both express contracts and implied contracts as being valid. In express contracts, the details are clearly listed either verbally or in writing (Clarkson, et.al, 2006). With implied contracts, the actions of the parties set the terms of agreement. The author further lists three elements that courts look to in order to see if an implied contract is in force. These include: (1) the plaintiff giving up goods or services; (2) the plaintiff expecting to be paid, and the defendant being aware that payment is expected; and (3) the defendant was given an opportunity to turn down the service or goods offered, but refused to do so (Clarkson, et.al, 2006) A first question is whether Abuelhija had a valid contract in this case. In the article at thesmokinggun.com, there are two contracts described. The first is a personal management contract where Abuelhija entered into a verbal agreement to receive consideration totaling 5 percent of Chappell’s revenue from personal appearances along with 10 percent of monies from other entertainment engagements (thesmokinggun.com, 2005). The second contract in question is in regards Abuelhija acting as producer for Chappell’s film in exchange for being given on-screen producer credit recognition (thesmokinggun.com, 2005). It appears that the required elements for a contract were present. There was an agreement in both cases even though the management contract was never in writing. The actions of both parties would indicate an implied contract since Abuelhija spent 10 months working in a manager role and helped Chappelle obtain deals worth up to 10 million dollars (thesmokinggun.com, 2005). Chappelle referred to Abuelhija as his personal manager, and has financial records stating terms of the agreement which the two individuals had reached (thesmokinggun.com, 2005). By this, we see that both an agreement was present, and consideration was being given by both sides. The same was the case with the second contract where Chappelle asked Abuelhija to take on a producer role and the responsibilities of such a role. There was an oral agreement in place where Abuelhija would get on screen producer credit in exchange for his work. A large amount of emails show where Abuelhija performed a large amount of work as producer as the two men had agreed to the performance (thesmokinggun.com, 2005). Hence, there is both a valid and binding agreement along with consideration given for the second contract as well. The next question would be if Chappelle breached the contract. It appears that Chappelle did breach the contract when he simply walked away from the scene and discontinued any work engagement tied to the film. He met later with Abuelhija only to terminate him without fulfilling the contract requirements as originally agreed upon. The only offering Chappelle made was a cash settlement of $40,000 (thesmokinggun.com, 2005). Since the contract was breached, there are remedies available to Abuelhija. One important point courts look to in settling contract agreements is to put innocent parties in the same position that they would occupy if the contract had been fully performed (Clarkson, et.al, 2006). This type of correction is also known as compensatory damage awards (Clarkson, et.al, 2006). This was the case in the article “Williams told to repay Dolphins $8.6 million” where the Dolphins star player was under a contract with the team, but simply quit and walked away (USAToday.com, 2004). No legitimate reasons were given by Williams for suddenly leaving and not upholding his performance agreement, so the courts ordered him to repay what the contract originally stated (USAToday.com, 2004). As a result, the primary remedy for Abuelhija would be to sue Chappelle for the amount of the original contract. In this case it would be 5 percent of Chappelle’s earnings while acting as his personal manager along with 10 percent of revenue from any type of entertainment agreements which Chappelle received during the time Abuelhija was his manager. This would also include 10 percent of ongoing royalty payments that Chappelle received during the 10 month timeframe where Abuelhija was acting as his manager. Abuelhija also could bring litigation to be awarded on-screen producer credits as stated under the second contract (thesmokinggun.com, 2005). In breach of contract cases, the courts often look to correct for any compensatory damages. This would usually entail covering all direct losses and costs. The usual relief is when the courts would replace monetarily with whatever is lost due to the breach of contract (Clarkson, et.al, 2006). Two other type of remedies that Clarkson, et.al (2006) mention are consequential damages and specific performance. Consequential damage awards would be given if the party in error is aware of circumstances where the harmed party would suffer additional losses beyond what the contract outlined. Specific performance awards would force the party in error to fulfill the act that the contract called for (Clarkson, et.al, 2006). Due to the nature of the agreement between Chappelle and Abuelhija, the most likely remedy appears to be compensatory damages. References Clarkson, K., Miller, R., Jentz, G., & Cross, F. (2006) “Contracts and E-Contracts.” West’s Business Law: Text and Cases 10th edition., p 210-357 Print. Mason, OH: Thomson Freeadvice.com (2010) “Contract Law”. Web. http://law.freeadvice.com/general_practice/contract_law/binding_contract.htm accessed 10 December 2010. Olleck, S. (2010). “Essentials of a Contract” Web. http://www.e-law.bc.ca/art_essential.html accessed 10 December 2010. Thesmokinggun.com (2005) “Ex-Manager to Chappelle: Pay Up, Bitch!” Web. http://www.thesmokinggun.com/archive/1213052dave1.html accessed 10 December 2010. USAToday.com (2004) “Williams told to repay Dolphins $8.6 million” Web. http://www.usatoday.com/sports/football/nfl/dolphins/2004-09-24-williams-breach-payment_x.htm accessed 10 December 2010. Read More