The Cinematic Artist
Benjamin is a highly successful and famous CGI animator and artist whose work and talent is widely recognized by both professional colleagues and the public at large. When his name is attached to a motion picture, it's widely thought to almost guarantee success.
Woodpecker Productions contracts with Benjamin to work on its new film Grasshoppers III - Revenge of the Locusts. A critical component of the marketing plan is a release date of May 15, just a schools let out for the summer. To make that, the animation has to be completed by Jan 1. Benjamin needs 3 months to complete his work, and agrees that he will be done by Jan 1, provided that Woodpecker has the film ready for him to start his work by October 1. Both parties agree that time is of the essence and that these deadlines are critical to the success of the project.
The contract calls for all the work to be done at Woodpecker's state-of-the-art visual effects studio and laboratory. It has a limitation of liability provision that states if Benjamin is injured on the job, Woodpecker is liable only for nominal damages. It contains a liquidated damages clause that requires Benjamin to pay Woodpecker $1 million if Benjamin breaches the contract. In the agreement, Woodpecker agrees to pay Benjamin 10% of the net proceeds of the film as compensation for his work.
Answer the following questions, while discussing the issues:
1. Benjamin begins work, but shortly after, gets into an argument with the director and refuses to continue the animation. Would a court be inclined to award specific performance as a remedy for Benjamin's breach of this contract? Why or why not?
2. While Benjamin is working on the animation at the Woodpecker Laser Lab, a group of Woodpecker employees gets drunk at lunch and come back to the lab. Benjamin reports them to their supervisor, and in retaliation, one of them shoots Benjamin in the behind with a laser, burning him severely. Will a court be likely to enforce the limitation of liability clause of the contract in that event?
3. What factors would a court be likely to consider in order to decide whether the liquidated damages clause was valid, or was a penalty?
4. Assume there was no liquidated damages clause. Assume further that Woodpecker breached the agreement by not allowing Benjamin access to the studio and laboratory until late July. This causes the release date to be pushed back so that it doesn't occur until a week before school re-starts. In this event, do you think Benjamin would have a claim against Woodpecker for consequential damages in the form of lost profits from the summer movie viewing season? Why or why not?