Rock Group Horriblescreech, This Week\'s Hottest Band

¶ … Rock Group

HorribleScreech, this week's hottest band on the planet, recently came to its senses and hired me as its new attorney. The first task after cashing a retainer check for mucho dinero is to free the band from an oppressive "new kid" recording contract between HorribleScreech and Bloodsucker Enterprises. There is nothing on the face of the contract that would free HorribleScreech. At this point, all other legal/business options can be considered.

The contract and all the circumstances around it should be considered first. For example, even though the contract is oppressive and even though some lawsuits take years, there might be some factor that would allow the band out of the contract more easily and quickly. Contract laws differ from state-to-state, so let us assume for this paper that the contract was signed in Los Angeles, California. In California, a contract can be unenforceable or can be rescinded for several reasons, some of which will be mentioned here based on the facts of the assignment.

There are several circumstances surrounding the signing of a contract that might release the band. Lack of Capacity can be one way of escaping the contract. In California, if a person signing a contract is a minor, mentally incompetent or insane, and/or intoxicated and the other party has a reason to know that he/she is intoxicated, the contract is unenforceable. When the contract was signed, if one or more of the band members was/were: only 17 years old (high school graduates or not) (Legalinfo.cal.gov), OR mentally incompetent or insane, OR intoxicated and Bloodsucker Enterprises had reason to know about that intoxication, the contract is unenforceable (Weblocator). If one of those factors is true of even one member of the band, the entire contract could "fall" or could be far less attractive to Bloodsucker with only some band members bound by contract. Fraud could be another route to freedom. In California, if Bloodsucker Enterprises said something false or hid something true and that led the band members to sign the contract, it can be rescinded (Legalinfo.cal.gov). Duress can also be used to rescind a contract: if Bloodsucker Enterprises used duress such as threats or if the band members were in desperate circumstances, the contract might be rescinded (Legalinfo.cal.gov). Unconscionability would be a compelling reason for freedom: the fact that "new kid" contracts are common does not mean that they are right or invincible. Bloodsucker takes a risk by signing a "new kid" but Bloodsucker also makes a lot of money if the "new kid" is successful; otherwise, Bloodsucker would not bother with "new kid" contracts. If the contract is oppressive to the band, a court can refuse to enforce some or all of it (Weblocator). Furthermore, obtaining freedom from an oppressive contract has precedent: Olivia De Havilland accomplished something very much like it by successfully suing to rescind an oppressive contract with a movie studio (Dirks), and it changed the movie industry.

There are also factors after a contract is signed that might free the band quickly. Failure of Performance is one factor: if Bloodsucker Enterprises doesn't perform its duties under the contract, for example by not paying the band the agreed amount, then the band can attack the contract (Weblocator). Inability to Perform is another possible escape route: if Bloodsucker can't perform its duties under the contract; for example, if Bloodsucker cannot pay the band according to the contract (Weblocator). Finally, negotiating with Bloodsucker is a possibility, particularly if we are able to find some factors that would make the contract unenforceable and/or allow the band to rescind the contract.

Bankruptcy is an option mentioned in the assignment facts; however, bankruptcy is a drastic step with long-term effects. Bankruptcy is governed by Title 11 of the U.S. Code and is separated into individual Chapters for different types of bankruptcy (Handel On the Law). It appears that the only type of bankruptcy that might completely excuse the band from the contract is Chapter 7 (Handel On the Law), which would free the band from the contract (Legalinfo.cal.gov). However, bankruptcy has "significant consequences and can be granted only once every 8 years" (Handel On the Law), so bankruptcy is not the quick and painless solution that it might see. Furthermore, bankruptcy cannot be based on fraud: if the band is attempting to rescind this contract in order to get a better contract, suddenly accumulating a lot of debt and filing for bankruptcy might be considered fraudulent. The band members will be claiming in bankruptcy court that they cannot pay their debts but the reality is that they want to rescind a contract and take a better offer. Basically they'd be concealing the real reason for bankruptcy and the better offer, and "if a debtor is found to have concealed some financial information and/or records, the court will not grant a discharge of debt" (Handel On the Law). What's more, if the ploy of suddenly running up large debts and avoiding a contract by bankruptcy has occurred to me, then a bankruptcy judge has probably seen that ploy many times; therefore, it might not work. Finally, even if the bankruptcy is granted, if Bloodsucker eventually discovers our true reason for bankruptcy, Bloodsucker could try to get the bankruptcy reopened because of fraud (Edgar).