One day, while Bruno is preparing for a difficult maneuver, he gets into an argument with the director and refuses to perform any stunts at all. Can X Entertainment seek specific performance of the contract? Why or why not?
X entertainment can seek specific performance as a fulfillment of the contract and the agreement that both parties had on ending the movie on time to capture the summer market. Based on the uniqueness of the character that Bruno has been asked to take part in, X entertainment has limited options to undertake in ensuring that the filming ends on time. The demand for a specific performance from Bruno would help in achieving their goal as stipulated in the contract to avoid losses. Seeking for specific performance is the only adequate remedy to the breach of the deal will be a specific performance by Bruno as initially agreed.
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However, it is X entertainment will undertake the risk of underperformance as Bruno coerced might decide to perform the stunts below his usual standards despite his ability and expertise to do better. A replevin which refers to claim and delivery will be a reasonable course of action to act as a remedy to the contractual remedy between Bruno and X entertainment as it will be enforced by the law. Also, the contract between the two parties is fair and equitable, and specific performance will be effectively recognized by the law in Article 2 of the UCC (Uniform Commercial Code).
What factors would a court consider to determine whether the $1-million-dollar liquidated damages clause constituted validly or as a penalty?
The 1 million dollar liquidated damage clause constituted in the contract of Bruno, and the X entertainment will require a court determination of its validity or term it as a penalty for Bruno breach of the contract. The court will consider various factors for its validations. The factors include the court's ability to estimate the damages caused by Bruno’s breach of the contract. In the entertainment industry, the estimation of the damages is difficult to evaluate, and thus the clause may be enforced. On the other hand, it can be used as the penalty after a calculation of the losses in profit by the X entertainment industry.
The court will consider the amount equated to the liquidated damage in the clause. Its validation or terming it as penalty or punishment will depend on if the amount is reasonable. The determination of whether the 1 million dollar is a fair amount in the breach of the contract will be considered by the court for its validation. Another factor that will be reviewed by the court is the bargaining power of the involved parties. It refers to Bruno’s ability to negotiate for the provision of the liquidated clause with X entertainment.
Suppose that there was no liquidated damages clause (or the court refused to enforce it) and X Entertainment breached the contract. The breach caused the release of the film to be delayed until the fall. Could Bruno seek consequential (special) damages for lost profits from the summer movie market in that situation? Explain.
According to the contract, the provision of the liquidated damages clause is effective when Bruno breaches the contract. If the X entertainment were to violate the agreement or the court failed to enforce the provided liquidated damage, it would be for Bruno to pursue his special damages for the lost profits which he expected in the summer market as has been agreed in the contract. The contract recognizes both parties in the signing of the contract and failure of either party to meet the stipulated agreement should result in liquidated damages to avoid an unbalanced relationship which would make the contract unfair and inequitable.
It would be just for the court to ensure that X entertainment is nondiscriminatory to Bruno and pay the accrued damages which results from its failure to produce the movie in time for summer profits. X entertainment should, therefore, be prepared to pay Bruno an amount equivalent to 10% of the net returns that were expected from the movie during the summer. Since Bruno has kept his end of the bargain as stated in the contract and has been consistent in following the contract to the letter, X entertainment should be forced to uphold the agreement on the contract and give Bruno his dues for the summer profits of the movie.
