Following requests in class that I sketch a sample, model answer to the second assignment, I promised to supply one model paragraph. I invested a little more time than expected in writing something up. Here is a top-to-bottom version of how an answer to the assignment might have been presented. To be clear: This is only one version of an answer, and an incomplete version at that. For example, below I have relied essentially on Section 201 of the Second Restatement, but it would be equally plausible to organize the answer around the plain meaning rule, from Lou’s standpoint, and then to consider the likely application by WJM of the rule on contract interpretation and parol evidence described by the court in Taylor. An answer that used those legal principles, instead of the rule I included below, would lead to an analysis of the facts that is substantially the same as the one presented, I think. But the outcome of the case (i.e., who should win) is not the point to take away; reasonable minds could differ on that. And reasonable minds could and probably should find additional legal arguments to raise and consider on the facts. The point to take away is the structure of how the material is presented.
[If you wish, state a conclusion as the introduction:]
I counsel Lou that his potential case against WJM is weak, because he will have a hard time proving that WJM knew or should have known of Lou’s present interpretation of the agreement at the time that the parties signed it. Here’s why.
[Set up the problem:]
Lou’s claim against WJM is based on the following provision in the parties’ agreement: ““If the Chuckles Project is produced by WJM as a motion picture, Lou shall be employed by WJM to render all customary services as producer, in exchange for ten (10) percent of the gross revenues associated with distribution of the motion picture.” Lou argues that WJM produced the Chuckles Project as a motion picture but failed to employ Lou as producer; accordingly, Lou is entitled to 10 percent of the picture’s gross revenues. We anticipate that WJM will argue that WJM was required to hire Lou as producer only if WJM agreed to make the movie as a result of its initial review of the Chuckles Project. We anticipate that WJM will support this interpretation with the argument that a different provision of the agreement provides that if the film is not placed elsewhere and WJM is not reimbursed for its expenses before the end of the Turnaround Period, Lou’s rights regarding the Project cease and WJM becomes the owner of the Project. WJM will likely argue that the Turnaround Period has expired and its development costs have not been reimbursed; accordingly, WJM is entitled to make the movie with the producer of its choice and not pay anything to Lou.
[Set up the rule that is relevant to the problem:]
The success of Lou’s claim depends on Lou’s application of the principles of contract interpretation where the parties disagree about the meaning of a contract term. Where the parties have applied different meanings to a promise or an agreement, then the provision in question is interpreted according to one party’s meaning if, when the contract was made, that party did not know of any other meaning attached by the other and the other knew of the meaning attached by the first party, or that party had no reason to know of any different meaning attached by the other, and the other had reason to know the meaning attached by the first party. Restatement (2d) section 201; Frigaliment.
[Apply the rule to the facts of the problem:]
Applying that principle, Lou has two methods of proving the case that he should have been hired by WJM regardless of the expiration of the Turnaround Period or repayment of WJM’s costs. He must show either (1) that WJM knew that Lou expected to be hired as producer of the Chuckles Project if and whenever WJM made the film, and that he (Lou) did not know that WJM believed that the contract required hiring Lou only if WJM made the Chuckles movie as a result of its initial review; or that (2) WJM had reason to know of Lou’s intended meaning, and Lou had no reason to know of WJM’s meaning.
Each argument will be difficult for Lou to sustain. Lou is an “A-list” Hollywood producer, famous and successful for his work with comic book movies. It is reasonable to suppose that he was familiar with Hollywood contracts and with “first look” producing contracts in particular. Even if Lou was not personally familiar with contracting language and contracting customs, it is reasonable to suppose that Lou had sophisticated agents and counsel who are familiar with both things. It is reasonable to suppose that WJM, likewise, was familiar with movie industry contracts and customs and had access to sophisticated lawyers. Moreover, the initial facts provide that both parties knew, by industry custom, that the contract language was intended to provide a level of financial reassurance to WJM in connection with the studio’s costly up-front investigation of the wisdom of making the movie, and that Lou would be paid either by WJM, or by a second studio that might pick up the project if WJM passed on it. The “termination of rights” provision will be offered by WJM as evidence that the contract advances that customary understanding.
Further research, such as further interviews with Lou and possible depositions of key WJM executives and/or industry experts, may flesh out that story and possibly provide more compelling evidence that Lou did not know of WJM’s interpretation and had no reason to know of it, and that WJM knew or should have known of Lou’s interpretation. WJM’s interpretation of the “termination of rights” provision may be challenged on the ground that it creates ambiguity that needs to be resolved via further testimony. The need for further testimony in general, however, suggests that as the matter now stands, the evidence appears to be (at best) equally divided, for and against Lou. On analogous facts regarding the weight of the evidence, the plaintiff in Frigaliment was denied relief.
Therefore, I would advise Lou that he has a weak claim.