Entertainment Law Question #17?

Here is a hypothetical situation in which there may be more than one correct answer. What do you think? (Again, this is not my homework. I have my own views and just want to see how they correspond with others who know more about law than me. See my other questions if you're interested. I've posted my own answers too.)

Wendy Writer has a contract with Big Publisher for her first novel. At the time that contract was entered into, Big asked Writer for the right to publish her next novel "on the same terms and conditions". Writer was not willing to grant Big the right to publish her next novel on those terms as she expected her first book to be a best-seller, and therfore, she hoped to get a better deal. As a result, Writer's agent got Big to accept an option on her next novel in return for "royalty rates and an advance to be negotiated and agreed to in good faith". Writer's first book becomes a best-seller. She then offers Big the right to publish her next book in return for an...

...advance of $1 million against royalties of 17.5% of the suggested retail price. Big counter-offered an advance of half a million against a 15% royalty. Writer rejects that counter-offer and accepts an offer from Megabook Publishers that pays her an advance of $750,000 against a 16% royalty. Big sues Writer for breach of contract.

What is the likely outcome of this case and why?

The likely outcome is that BP would not be successful. Okay, so first we have to determine what type of arrangement exists between BP and WW.

WW had contract with BP for first novel, but only an option to publish the second novel. (1) BP offers same terms of first novel for second novel, but WW rejects that offer. (2) WW, through agent, makes counter-offer through an option. (3) BP accepts the option. (4) WW offers the option to BP, BP rejects the offer. (5) WW contracts with MP.

Generally, an option can only be held open for three months when there is no consideration (i.e. BP didn't give anything to WW to keep that option), but thats irrelevant anyways because WW did in fact offer BP the right to publish the second novel under her terms. WW committed no wrong. The fact that BP did not agree to the terms does not constitute a breach of contract because BP only agreed to an option (a potential to create a contract) in the future.

Wendy wasn't required to make an offer to BP b/c she already did with the option. An option is just an opportunity to accept an offer. BP rejected the offer because they didn't like the terms and therefore their option ended. Once you kill an offer by rejecting you can't bring it back. Report It

and yup, I'm back ;-) Report It