LGJ: Read the fine print!

Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:

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Well, after the incident with Courtney Love and Kurt, it looks like the whole issue of famous musicians in games is back in the press with No Doubt suing Activision over Band Hero. A one time event is an anomaly, but twice in just a few months suggests something else. Of course, both of these all tie back to the contract, and since I'm a transactional attorney who spends the majority of most days negotiating and drafting agreements like these, I'm hoping I can shed a little light on what might be causing the problems. Since I wasn't involved in these particular negotiations nor have I read these contracts, all of what I'm presenting is speculation.

But before I begin, I suppose I should answer the simple question, "What is a contract?" I assume that most people reading this have at least some idea, but just in case, it's worth describing in detail. A contract is a legally binding agreement between two parties to perform certain promises in the future. In theory, to form a contract there are five elements: Offer and acceptance, consideration, intent, capacity, and formalities. In reality, it's fairly simple. The parties must have a meeting of the minds, that is agree to the same terms, which is often viewed as an offer by one party and acceptance by the other. Each party must put up something of value, called consideration, for the contract to be valid. The parties must intend to enter into a contract, and be of the appropriate mental capacity to enter into the agreement. And then the agreement is generally recorded in writing, as most jurisdictions have rules that require written agreements, which is then signed by the parties. And that is how a contract is born, in theory anyway.
The practical reality is that few major contracts are that simple. Routine purchase and sale of goods contracts may fall quickly to that kind of formula, or routine service contracts may be un-negotiated, where one party makes an offer, say a used copy of Chrono Trigger on the SNES for $70, and the other party accepts. And in fact, all sales really are contracts. Even eBay sales are a contract, whereby the seller is agreeing to deliver the goods to the highest bidder, and the highest bidder is agreeing to pay their bid amount if they win, whether that's $100 for a copy of Earthbound or $15,000 for a Gold Nintendo World Championship NES cartridge.

However, most all significant contracts are negotiated agreements rather than a simple offer and acceptance. Anyone who has ever bought a house or negotiated an employment contract has a taste for the general idea. One party will make an initial offer, which the other party will then counter, and this back and forth will continue until someone has made a counter-offer that the other party accepts. It's at this point that the final, negotiated agreement is signed, and the parties are bound to these terms. In the sale of a house or the like, this may take a few weeks and be confrontational. In the world of transactional attorneys, this often takes months and can become all-out war.
In the most pleasant of negotiations, the parties simply go back and forth, giving a little and gaining a little until some middle ground is found acceptable to both parties. On the other end of the spectrum, there are negotiations that involve yelling matches via conference calls, nasty e-mails and perhaps a little trickery. You would be surprised how often an "undetermined software error" or "misunderstanding" leads to a provision being re-inserted into a contract that had been previously deleted, often at the very last moment before the agreement is signed. You may be surprised to learn that what is in the signed agreement is far more important than what may have been agreed in discussions beforehand, and the rules of evidence may not even allow those other discussions to be brought into a subsequent trial, depending on the exact circumstances. This relates to what is called the parole evidence rule, which in short says you cannot bring in evidence that contradicts the written contract.

So what about all of these band-related conflicts? Well, there are a few possible explanations. First, though unlikely, it's possible the contract is vague on this point, or doesn't speak to it at all. I would imagine that all of these people are using lawyers who wouldn't let an issue like that not be spelled out in great detail in the contract. However, if that it the case, a court would likely have to make the decision, and so it's possible that based on the terms, both parties may actually be right (or wrong, for that matter). Second, it's possible one party is simply wrong about the terms of the agreement. Whether this is a result of not carefully reading the contract or some of those mysterious last minute changes is not clear, but it's certainly a possibility, and could equally apply to either party. Finally, it's also possible that both parties know what the contract says, but one is simply not interested in complying; that is, someone is actually breaching the contract. Whether that is No Doubt regretting their decision to be in the game as such, or whether that is Activision not wanting to limit No Doubt's use to certain tracks is unclear, but it seems more likely that No Doubt would want to be backing away from the terms of the agreement than Activision. But this is all just speculation.

The moral of the story, if there is one, is to be sure to read what you are actually signing. Just because a contract at a closing looks like the one you've been negotiating for days, weeks or months doesn't mean the terms are all the same. Now, that's not to say that is the case here, but it remains a good lesson for anyone looking at a contract. It will be interesting to see if these kinds of disputes prevent more acts from getting involved with music games, which would certainly be unfortunate for the music game genre as a whole, or whether this pushes more groups to the Rock Band camp, as these issues have both been with Activision's "Hero" music games.

Mark Methenitis is the Editor in Chief of the Law of the Game blog, which discusses legal issues in video games. Mr. Methenitis is also a licensed attorney in the state of Texas with The Vernon Law Group, PLLC and a member of the Texas Bar Assoc., American Bar Assoc., and the International Game Developers Assoc., where he is a board member of the Dallas chapter. Opinions expressed in this column are his own. Reach him at: lawofthegame [AAT] gmail [DAWT] com.

The content of this blog article is not legal advice. It only constitutes commentary on legal issues, and is for educational and informational purposes only. Reading this blog, replying to its posts, or any other interaction on this site does not create an attorney-client privilege between you and the author. The opinions expressed on this site are not the opinions of AOL LLC., Weblogs, Inc., Joystiq.com, or The Vernon Law Group, PLLC. As with any legal issue that may confront you in a particular situation, you should always consult a qualified attorney familiar with the laws in your state.

This article was originally published on Joystiq.