Under U.S Copyright Law When Is A Musical Work Created Commercial Law – Cancellation of Contract – Re-Payment of Deposit – Advertising Marketing

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Commercial Law – Cancellation of Contract – Re-Payment of Deposit – Advertising Marketing

The case of Ogilvy & Mather Ltd v Silverado Blue Ltd [2007], we dealt with issues concerning the plaintiff’s right to cancel a contract subject to any losses caused to the defendant. The plaintiff was an international advertising, marketing and public relations office. She contracted with the defendant, a visual effects production company, to produce a commercial for Unilever.

According to Article 14 of the engagement contract, the agency was entitled to cancel all or part of the production. In the event of such cancellation, the defendant was entitled to collect amounts for work performed, until the cancellation notice was received.

It was agreed, as part of the terms of the contract, that the advertisement would be produced within a specified time frame. The contract price can be paid in two installments, one before the start date and the balance after the advertisement is completed. The first payment was paid by the claimant shortly after the contract was signed. However, it became clear less than two weeks later that market research conducted on the production was not positive. Therefore, the plaintiff canceled the agreement with the defendant.

The plaintiff started proceedings against the defendant for the first case. The plaintiff claimed that they asserted their rights in accordance with Article 14 to cancel the contract. In response, the defendant claimed that the contract was not canceled but only delayed or postponed.

Problems arose as to the point at which the agreement was terminated. If the agreement was not cancelled, it would have been necessary to determine whether the defendant was entitled to set off any amounts against the first payment that would otherwise be paid to the plaintiff.

The court ruled that in this case, the agreement was effectively canceled in accordance with Article 14 of the contract. Therefore, the plaintiff had the right to return the deposit, however, subject to the claims that the defendant had according to the cancellation clause.

The defendant did not meet the burden of proof in establishing losses that destroyed or reduced the plaintiff’s right to return the deposit. They failed to show that they had suffered specific losses before the contract was cancelled. Therefore, the verdict will be in favor of the plaintiff, and therefore the defendant is required to return the deposit.

Please contact us for more information on assessing damages due to termination of contract at enquiries@rtcoopers.com

Visit http://www.rtcoopers.com/practice_corporatecommercial.php

© RT COOPERS, 2007. This briefing note does not provide a comprehensive or complete statement of the law relating to the subjects discussed and does not constitute legal advice. It is only intended to highlight general issues. Expert legal advice should always be sought in relation to certain circumstances.

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