A singer entered into an agreement with a personal management and production company, which was intended to be automatically extended in the event of a substantial deal. After the relationship between the parties soured, the singer refused to enter into an agreement with a third party that had potential to significantly advance her career, all in order to prevent the extension of the agreement.
The Court held that it was the singer who breached the agreement and canceled it unilaterally in a manner that gives her managers the right to compensation. A contract between an artist and a personal manager is a relationship contract, which, unlike a contract for a single transaction, is designed to regulate long-term relationships, in the present and in the future. Such contract, by its very existence, must be sensitive to the existence of future circumstances that were not expressly regulated by the contract when executed, including through the establishment of mechanisms to change and add to the terms of the contract, and its execution requires a high level of mutual trust and cooperation between the parties. During its existence, the contractual relationship is enriched with additional or alternative agreements that the parties reach naturally in the normal course of business, and therefore certain ambiguity in the language of the original agreement, or certain contradictions, are expected and accepted. Here, the singer acted unilaterally and in bad faith when she conditioned her approval to the offer, which had potential to bring about her success, in changing the commercial conditions and refused to continue cooperating with her managers, in a way that damaged the mutual trust and the ability of the parties to cooperate, and which are at the basis of a relationship contract, and is therefore required to compensate the managers for breach of the contract.