Summary of Locke v. Warner Bros., Inc. (1997)
Facts: P appellant was given a “pay or play” directing deal, but the D studio never produced her proposed films nor hired her to direct; P claims that the deal was a sham and that the D never intended to make any films with her, and that their reasoning to enter in the K was to please Clint Eastwood, former husband of D; D claims no breach and that they considered each project P submitted
P/S: P appeals a judgement following a grant of summary judgment in favor of D
Issue: Whether D breached its contract with P by failing to evaluate her proposals on their merits.
Holding: There is sufficeint fact to conclude that D may have acted in bad faith by categorically rejecting P’s work and refusing to work with her. REVERSED, FOR P
Rule: In every contract there is an implied covenant that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the frutis of the contract.
Rationale: P had testimony from two witnesses each saying that D never planned to make a movie with P. Merely because D paid P the guaranteed compensation under the K does not establish good faith by D. If D acted in bad faith and categorically rejecting all P’s work and refused to work with her, irrespective of the merits of her work, such conduct is not beyond the reach of the law.
Section 205 of Restatement:
–Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.