AF7430 Chap.2 Contract Law Essentials for Screen Deals
Contract Law Essentials for Screen Deals
Four questions, in the order that disposes of a problem
A contract is an agreement that creates obligations the law will enforce or recognise, and every word of that carries weight. The chapter works through four questions and stops at the first no. Was there an offer rather than an invitation to treat. Was the acceptance final, unqualified and communicated. Are the terms certain enough to be given a meaning.
Did each side give something of value. Most weak answers argue about consideration on facts where acceptance already failed, which is a page of correct law attached to the wrong question.
Offer and acceptance are tested from the outside
An offer expresses a willingness to deal on stated terms, meant to bind the offeror the moment somebody accepts it.
An acceptance is a consent to those exact terms that is both final and unconditional. What binds is not what the offeror privately meant but whether the words or conduct could induce a reasonable person to believe there was an intention to offer, which is why a university that mistakenly sent out an offer of a place found itself arguing about that standard.
The exception is narrow: where the offeree knows the offeror did not intend to be bound, the objective test does not save the deal.
A contract is made only when acceptance is received, which is why broken telephone lines, drowned conversations and faxes that arrive without ink matter, and why a term treating silence as agreement does not manufacture one.
Certainty and consideration, the two that kill screen deals
Some agreements are too vague for any settled meaning to be attached to them.
A service of reasonable standard, or worse, a service subject to the director's satisfaction, looks like a term and is not, although custom and trade usage can rescue a phrase the industry genuinely has a settled meaning for. Consideration runs on three rules: something of value must be given, it need not be adequate, and past consideration and the performance of an existing duty are not good consideration.
The third is the one that surprises people, and it is the reason the deed exists as a form.
Signing, executing, and the instrument that is not an agreement
Only a natural person can sign; any legal entity can execute, usually by signing and affixing a company chop; and making a contract is wider than either, since it can be done verbally. No witness is legally required, though attestation is good practice.
An agreement contains mutual promises, while a deed represents the performance of an act, which is why the instrument that transfers property at completion is an assignment rather than another agreement to assign.
A deed is also the way to make a promise stick where no consideration moves, and it must be in writing, make clear on its face that it is a deed, be signed and be delivered.
Four ways a signed deal comes apart
Misrepresentation attacks a false statement of fact that induced the contract, and it excludes mere puffs, statements of opinion or belief, and cases where the other side made its own investigation.
Duress and undue influence attack improper pressure, whether physical, economic or arising from the relationship itself. Illegality refuses effect to a bargain involving a legal wrong or contrary to public policy, and the branch that matters here is restraint of trade, where four decided cases mark a boundary that is about mutuality rather than about length.
Frustration discharges the parties where a later event makes performance impossible, and not where performance has merely become expensive.
What this chapter covers
- 01
Offer against invitation to treat, and the objectivity test
- 02
Why acceptance has to be received, and what silence cannot do
- 03
Certainty, and where custom and trade usage rescue a vague phrase
- 04
The three rules of consideration, including the one that surprises people
- 05
Signing, executing and making, and the four formalities of a deed
- 06
Misrepresentation and its three limits
- 07
Duress, undue influence and the line between them
- 08
Restraint of trade across four decided entertainment cases
- 09
Frustration, and why an expensive contract is not a frustrated one
Silence, the usual rate, and a lost opportunity
- 3Take acceptance first and say why the silence clause fails.
- 3Take certainty second and identify what has no ascertainable meaning.
- 3Say what the director's real loss is and why the law of formation does not answer it.
Key terms
- Offer
- A statement of the terms on which somebody is willing to deal, meant to bind the moment it is taken up.
- Objectivity Test
- The rule that an offeror is bound where the words or conduct could induce a reasonable person to believe there was an intention to offer, regardless of private intention.
- Certainty
- The requirement that terms be definite enough for a court to attach a meaning to them. Custom and trade usage may supply content where the industry has a settled understanding.
- Past Consideration
- Value given before the promise it is said to support. It does not count, and neither does the performance of a duty already owed.
- Puff
- Sales talk that affords no ground of belief. It is not a representation, so it cannot found a claim in misrepresentation.
- Economic Duress
- Improper commercial pressure that makes a contract voidable. The test is whether the demand was improper, not whether the pressure was effective.
- Restraint Of Trade
- A public policy ground on which a court may refuse effect to a contract, resting on the principle that everybody should be left free, so far as is practicable, to earn a living.
- Frustration
- The discharge of both parties where an event after the contract makes performance impossible. Increased cost or inconvenience is not enough.
Contract Law Essentials for Screen Deals FAQ
Can a contract be made by staying silent?
Not by the offeree's silence alone. There is no deal until somebody accepts the offer and the offeror actually receives that acceptance, so a clause saying that no reply within five days will be taken as agreement does not create a deal.
The rule protects the person who said nothing, and it is the reason the failure of a telephone line or a fax matters: the offeree may have done everything right and the offeror still learned nothing.
Is a promise binding if the payment is trivial?
Yes, provided the payment is genuinely fresh. Consideration need not be adequate, so a promise bought for a nominal sum is bought, and courts do not police whether a bargain was a good one. What defeats the promise is consideration that is not new: value given before the promise was made, or the performance of something the promisor was already contractually bound to do.
That second rule is what defeats a producer's promise to share a departed colleague's fee among crew already obliged to finish the job.
When would a production use a deed instead of an agreement?
Where there is no consideration moving both ways, or where the instrument performs an act rather than promising one. A gift, a guarantee of another party's debt and a declaration that assets are held for someone else all have value flowing one way only, and a deed makes those promises enforceable.
The formalities are strict: it must be in writing, say on its face that it is intended as a deed, be signed by the person or a company representative, and be delivered.
Assessment move
Write the four formation questions on a card and run them against every scenario you meet for a week, including ones with no legal content, such as agreeing to meet someone. The point is not the answers but the reflex of asking them in order, because the single most common structural failure in this course's problem questions is arguing about a later element when an earlier one has already disposed of the facts.
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