Introduction: Case Overview
Forrest Gump, a famous ping pong player, enters into a contract with Alabama Sports Marketing as the major brand promoter for its anticipated video game. He commands a huge following, which makes him perfect for the job. The game’s development is set to begin on March 1, completed by July 31, and released at Thanksgiving- an optimal video game release period. By the account of both parties, the game must be completed on time to maximize profits. Under the terms of the contract, Gump would make 20% of the net proceeds. A liquidated damages clause also exists that indicates that if Gump fails to fulfill his contract obligations, he will be liable to pay Alabama Sports Marketing $2 million.
Why Alabama Sports Marketing Cannot Seek Specific Performance
Gump gets into an argument with the video game’s developer and refuses to perform any task until the problem is solved. By virtue of the specific performance precedence, seeking specific performance might be considered a viable option in the stalemate. Gump (the defendant in such a case) may be required to compensate Alabama Sports Marketing because Gump’s contribution is a unique property- monetary damages may not remedy Alabama Sports Marketing’s predicament. However, the main precept of seeking specific performance is equity (Jajodia, 2012). The argument between the developer and Gump suggests possible contractual difficulties on Gump’s part. For specific performance to be the best legal option, in this case, Alabama Sports Marketing should prove that the specific performance would not cause any form of hardship to Gump, the contract was not unconscionable, or the contract does not include some form of personal service. It would therefore be prudent that Alabama Sports Marketing proves these legal prerequisites (in light of the argument) before seeking specific performance. Even if they prove these prerequisites, specific performance may not be granted in cases where the detriment suffered by Alabama Sports Marketing (brand enhancement) can be substituted. Although Gump is a famous ping pong player, his contribution can be easily substituted with another famous table tennis player.
How the Courts Would Determine Whether the Liquidated Damages Clause is Valid
If the stalemate continues, Alabama Sports Marketing may opt to enforce the liquidated damages clause contained in the contract. The main condition for granting the liquidated damages claim is determining the fairness of the average (reasonable) costs of breaching any part of the contract (Odetola, 2016). Therefore, the court has a responsibility to analyze the circumstances existing at the time both parties enter the contract and determine whether the damages are reasonable. In this regard, the court should determine whether the liquidated damages clause was freely negotiated or buried in ‘boilerplate’ language to prevent Grump’s full comprehension of the terms and what both contracting parties thought of at the time of forming the contract (Odetola, 2016). The court should also consider the reasonableness of the clause was reasonable in light of any form of anticipated loss during the creation of the contract. Gump’s services are replaceable, and although they may result in reduced profits as compared to other table tennis players, his refusal does not connect to any presumed loss on the part of Alabama Sports Marketing.
Conclusion: Rescission
Liquidated damages and specific performance, in terms of the case are subject to several legal limitations. Gump may opt for rescission as the preferred equitable remedy of the contract if he can prove (by virtue of the argument) that he was the victim of vitiating factors that warrant canceling of the contract- duress, mistake, misinterpretations, undue influence, or duress (Jajodia, 2012). These factors are, however, specific to the nature of the argument.