LGJ: Read the fine print!

post from Joystiq on 07 November 2009 02:00:00 AM. © Joystiq

Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:
CJ Sorg

Well, after the incident with Courtney Love and Kurt, it looks like the whole issue of famous musicians in games is back in the press with No Doubt suing Activision over Band Hero. A one time event is an anomaly, but twice in just a few months suggests something else. Of course, both of these all tie back to the contract, and since I'm a transactional attorney who spends the majority of most days negotiating and drafting agreements like these, I'm hoping I can shed a little light on what might be causing the problems. Since I wasn't involved in these particular negotiations nor have I read these contracts, all of what I'm presenting is speculation.

But before I begin, I suppose I should answer the simple question, "What is a contract?" I assume that most people reading this have at least some idea, but just in case, it's worth describing in detail. A contract is a legally binding agreement between two parties to perform certain promises in the future. In theory, to form a contract there are five elements: Offer and acceptance, consideration, intent, capacity, and formalities. In reality, it's fairly simple. The parties must have a meeting of the minds, that is agree to the same terms, which is often viewed as an offer by one party and acceptance by the other. Each party must put up something of value, called consideration, for the contract to be valid. The parties must intend to enter into a contract, and be of the appropriate mental capacity to enter into the agreement. And then the agreement is generally recorded in writing, as most jurisdictions have rules that require written agreements, which is then signed by the parties. And that is how a contract is born, in theory anyway.