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Did You Read Your Contract Correctly

Did You Read Your Contract Correctly

To bring a successful breach of contract claim, you have to understand the contract as a whole as well as what is explicitly expected of each party to the contract. Many breach of contract cases are based on the misinterpretation of a term or phrase in the contract. Such misunderstandings usually end up resulting in litigation, because the parties cannot reach an agreement on the meaning of the terms.

Take for example the New York case of J.C. Studios, LLC v. Telenext Media, Inc. In this case, J.C. Studios, LLC (Studios) is suing Telenext Media, Inc. (Telenext) for breach of contract. Telenext signed an agreement with Studios to use its space to record a television show. They agreed to a two year contract with option to renew one year at a time for the following three years. Telenext was allowed to cancel the contract if its show was cancelled with a least seven week’s notice and the notice provided by the television network to Telenext regarding the cancellation. The contract also had a provision requiring Telenext to pay a higher price if they used the studio after the agreement ended.

In this case, Telenext’s show was cancelled by the network. Telenext was told of the cancellation a few months in advance of the final show date. It then immediately informed Studios of the cancellation, providing an approximate ending date more than seven weeks into the future with the promise to give a definitive date as soon as possible. Both parties agree that Telenext appropriately terminated the contract.

The question is when did the contract end. Studios believes that the contract ended seven weeks after it received notice, and that any time Telenext spent in the studio after the seventh week should be charged at the higher rate. Telenext paid the contract price for the entire time it used the studio but refused to pay the increased price because they believed the contract was not yet terminated.

Studios believed that the contract terminated exactly seven weeks from the date of the notice of cancellation. The court, however, disagreed. The contract stated that notice of termination had to be provided “at least” seven weeks in advance. Telenext was also very clear in its cancellation notice that the show would not wrap up for a few months, but it wanted to provide notice of the cancellation as soon as possible. The court found that a reasonable reading of the contract and the termination notice would not lead one to believe that the contract would end exactly seven weeks after notice. Accordingly, the court found for Telenext and dismissed Studios case.

Contract cases can be complicated. While all the necessary information is contained within the contract it can still be difficult to decide whether or not you should litigate your issue. An attorney can help. Hiring an attorney to review your contract whether before or after you sign it can save you time and money in the long run. If you have a contract issue, please contact our office.

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