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Entertainment, Arts, and Sports Law Commons

Open Access. Powered by Scholars. Published by Universities.®

2016

BLR

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Full-Text Articles in Entertainment, Arts, and Sports Law

Hollywood Deals: Soft Contracts For Hard Markets, Jonathan M. Barnett Jan 2016

Hollywood Deals: Soft Contracts For Hard Markets, Jonathan M. Barnett

University of Southern California Legal Studies Working Paper Series

Hollywood film projects involving significant capital investments regularly proceed on the basis of unsigned “deal memos” or draft agreements with uncertain legal enforceability. These “soft contracts” constitute a hybrid instrument adapted to the transactional hazards of an environment in which neither formal contract nor reputation effects can adequately specify and enforce parties’ commitments at any reasonable cost. Uncertainly enforceable contracts embed an implicit termination and renegotiation option that provides flexibility to respond to changed circumstances while maintaining a threat of legal liability that provides some transactional security. Evidence collected from litigation records, trade press coverage and field interviews show that ...