Breach of Contract, Case Study Example

Abstract

In 2004, comedian Dave Chappelle was sued by his former manager for breach of contract. During the course of this paper, we will examine the grounds for determining a contractual obligation, the specifics of the case, and the resulting legal decision.

Valid Contractual Elements

According to Freeadvice.com’s 2004 article “Key Elements of a Binding Contract”, a contract is binding if three main criterions are met: competency (being of sound mind and of age to enter into a legal contract), consideration (having stakes in the contract for both groups or parties involved), and mutual assent (earnestly agreeing on clear terms).  Still, a written agreement is the easiest to prove and uphold.

An accepted offer is not an agreement until both parties are clear as to the terms of the deal, which is known as mutual assent, meeting of the minds, or consensus ad idem. Furthermore, the agreement must not contain ambiguities or extra conditions to be met. Clear language is helpful to this end, usually to the effect of simply saying, “We have a deal” or “I agree”- only after the meeting of minds has occurred. If the offer is not accepted- but still considered, then the deal becomes a muck of gray area, and is subjective as to the requirements of upholding an old and non-renewed contract offer (Ollek, 2004).

Chappelle Breach

Comedian Dave Chappelle had retained the managerial and all-around services of Mustafa Abuelhiga- during which time Abuelhiga negotiated multi-million dollar deals for Chappelle. After the mind-bogglingly successful negotiation of a fifty million dollar contract renewal with Comedy Central, Chappelle abruptly returned and fired Abuelhiga, who then (in 2005) sued for wrongful termination and payments owed. In all, the original amount to which Abuelhiga claimed entitlement was over eight hundred thousand dollars. However, when the dust from the courtroom tussle settled, the former manager stands to make millions after being awarded a percentage of Chappelle’s profits during the contracts signed during that ten-month period. Abuelhiga further claimed that Comedy Central paid Chappelle a non-refundable 4.5 million dollars when the TV show’s contract was renewed (“Ex-Manager to Chappelle: Pay Up!”, 2005).

Chappelle and Abuelhiga did have a clear and binding oral contract, according to the preliminary statement, which entitled the manager to five percent of Chappelle’s personal appearances and ten percent of revenue from entertainment contracts closed during his employment. Chappelle had also agreed to pay a ten thousand dollar monthly advance on the commissions which Abuelhiga was entitled. The other main point in the plaintiff’s case involves receiving credit for his role in producing the film Dave Chappelle’s Block Party (“Ex-Manager to Chappelle: Pay Up!”, 2005).

Upon closer review of the background of the case, it is revealed that Abuelhiga was a successful comedy club manager when Chappelle hired him at a mere $2,000 per month salary. Over the next two years, the plaintiff’s base salary was raised to $6,000 per month. He was Chappelle’s right-hand man- negotiating big deals, organizing tours, and even travelling to many sites as an unofficial assistant to the comedian (“Ex-Manager to Chappelle: Pay Up!”, 2005).

In another 2004 case involving breach of contract, professional athlete and newly-signed team celebrity Ricky Williams was ordered to repay 8.6 million dollars after he withdrew from his contract with the Miami Dolphins football team and retired without prior notice- or even an indication that he was considering retirement (“Williams told to repay Dolphins $8.6 million”, 2004). Chappelle eventually agreed to pay Abuelhiga ten percent of the profits from each major deal negotiated by the former manager: the movie, the stand-up film, and the Comedy Central TV show. In 2008, he was sued by Abuelhiga again for non-payment (“Ex-Manager to Chappelle: Pay Up!”, 2005).

Conclusion

Chappelle has made millions and millions. From the interpersonal knowledge of the companies who had negotiated with Abuelhiga on Chappelle’s behalf to the many times that the comedian and his manager met to negotiate the terms of the deal, it was clear that the celebrity’s former manager was entitled to more than the salary already paid him- as well as the fact that Abuelhiga had taken on increasing amounts of personal, managerial, and legal responsibility on Chappelle’s behalf as part of his increasing importance in the professional areas. As the old saying goes, there is no such thing as a free lunch; Abuelhiga was entitled to a much larger salary than he was being paid (“Ex-Manager to Chappelle: Pay Up!”, 2005). In short, the only questionable aspect of the manager’s claims is the addition of $75,000 in damages that was requested in the 2008 suit. How much good is that award going to do if the ex-boss won’t pay up anyway?

References

Anonymous (2004). Key elements of a binding contract. FreeAdvice. Retrieved from http://law.freeadvice.com/general_practice/contract_law/binding_contract.htm.

Anonymous (2004). Williams told to repay Dolphins $8.6 million. AP USA Today. September 24. Retrieved from http://www.usatoday.com/sports/football/nfl/dolphins/2004-09-24-williams-breach-payment_x.htm

Anonymous (2005). Ex-manager to chappelle: pay up! The Smoking Gun. Retrieved from http://www.thesmokinggun.com/archive/1213052dave1.html

Ollek, Sucha S. (2004) essentials of a contract. E-law. Retrieved from http://www.e-law.bc.ca/art_essential.html