re: When is a contract not a contract?

From: Eric J. Aafedt - InvestmentHouse.com <eric_at_investmenthouse.com>
Date: Mon 08 Oct 2001 11:33:19 -0500

IVAN WELTMAN <ivan_at_tudogs.com> WROTE:

>I would like some advice from any lawyers in the group.
>At the end of November 1996 I signed a three year
>contract with Burst! Media. At the end of the period I
>signed a further two year contract with Burst! that
>still has two months left to run. Now, unilaterally,
>they have changed the terms of the contract (more
>favorable to them, including extended payment terms,
>which means that I and other publishers are financing
>them). I have declined to accept the new contract as
>I have time left on the old - but I have been cut off
>from my statistics.
>Is this usual in America? (I am English, living in
>Cape Town, South Africa.)

Ivan, I believe your current agreement has the following
relevant language: "BURST! reserves the right at any time,
in its sole and absolute discretion, to terminate this
Agreement, ...[edit]... If BURST! terminates this agreement
for any reason other than your breach, then revenue for
advertising run through the date of termination will be
payable at the originally agreed upon contract rate."

First, this language allows Burst to simply terminate your
agreement. However, from your note it appears that they have
not done this. Thus, they are under their existing
obligations.

Paragraph 3A of your agreement provides:
"BURST! will handle all accounting arrangements for the
Network and provide each Network member an online detailing
of the activity on their unique BURST! source code."

Therefore, it appears that Burst is now in breach of their
agreement with you. Therefore, you may sue them now for
this breach of contract. If you wish to proceed, note the
following 2 paragraphs from your agreeement:

"15. You hereby irrevocably (i) submit to the nonexclusive
jurisdiction of any Massachusetts State or Federal court
sitting in Boston in any action or proceeding arising out
of or relating to this Agreement or the transactions
contemplated hereby, (ii) agree that all claims in respect
of such action or proceeding may be heard and determined
in such Massachusetts State court or in such Federal court,
and (iii) waive, to the fullest extent permitted by law,
the defense of an inconvenient forum to the maintenance of
such action or proceeding."

"16. Notwithstanding that you, your web site or your server
may reside outside the State of New York, including outside
of the United States of America, you agree that this Agreement
shall be governed by the laws of the State of New York."

The above basically means that you must sue them in
Massachusetts utilizing New York law. The first issue you
would want to know is if a successful result in litigation
would include you recovering your lawyer's fees. In most
states, a breach of contract does provide for recovery of legal
fees. If not, the costs of pursuing would most likely outweigh
the benefits to you (remember, it is unlikely that Burst! is not
going to pay you or that they are going to "cheat" you, thus
your "damages" at this point are speculative.)

Ivan, you are right in being upset with Burst. In my opinion
Burst is an agency that just does not "get it". Having been
with Burst for around 4 years I am very unimpressed with them.
However, my guess is that you are best off just letting this go
... and assuming your checks arrive ... simply move on to your
new agency.

Hope the foregoing helps...

Eric J. Aafedt
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Received on Mon Oct 08 2001 - 11:33:19 CDT