Contracts Continued

I’m trying to study for my Business Law course and I need some help to understand this question.

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Many of you may have watched Friends when it was on television and may even still watch the reruns. In 2000, the case of Friends, one of the hottest shows on television, demanded a pay increase. The demand was made with a valid contract in place and near the time NBC was to announce its fall lineup. The six stars demanded $1,000,000 each per episode. NBC settled for $750,000 per star, up from the stars’ $150,000 per episode figure renegotiated in 1998.

When stars seek to renegotiate contracts before their expiration, the network can replace them if they fail to live up to their contracts, and it can enforce the standard contractual clause, which prohibits them from doing other television work until the expiration of their contracts. Recasting six stars for a highly successful show would not be feasible. To offset the stars’ bargaining power, NBC prepared a television promotion that would relabel the last show for that season as the “series finale” and announce “See how it all ends on Friends.” The cast were informed of NBC’s threat to end the series in this manner. Renegotiations quickly ensued and led to the $750,000 agreement. Two years later the six stars obtained their goal of $1 million per episode paychecks.

Jay Leno was asked about the tactics of the Friends stars. He responded, “You have to get what you can while you can in this business.

Was it ethical for the stars to threaten to strike just before the fall lineup announcements? Are the stars breaching the contract if they ask for more money during a contract? What is a breach? Should it matter that the show has become more successful since the contract was signed? What tactics do they use to get the attention of the network executives? Is that ethical? Why or why not? What does each side have to gain and what does each side have to lose when stars want to change a valid contract?

When the new agreement was reached, was there a mutual rescission of the existing contract and the substitution of a new contract, or did the new contract fail for lack of consideration? Finally, do you agree with Jay Leno’s comments? Why or why not?

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