Contract Law: Main Line Pictures Inc. vs. Basinger

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Should Main Line’s maximum and minimum lost profit amounts be revised downward for the following? Why?

The domestic distribution revenues of $3 million because the deal had not been finalized

Yes. Main Line Pictures Inc. incurred a loss of the $3 million which could have been obtained from the sale of the film in the home city (Albrecht, Stice & Swain, 2007). It was logical that Main Line Pictures Inc. could have been able to make this sale as it based its probabilities from previous performances, where Basinger has been used to perform. Due to her refusal to take part in performing the major role as agreed in the contract, Main Line Pictures Inc. has the right to be compensated. Thus, the $3 million should be used in calculating the loss or profit that the filmmaker could have gained or lost. The loss can be explained in the following calculation.

With Basinger in Leading Role

International pre-sales	$ 7.00
Domestic sale expectations	$ 3.00
Contributions	$10.00
Less production cost	$ (7.00)
Profit /lose	$ 3.00

The $800,000 of foreign pre-sales because they were “probable” not actual

The $ 800,000 which was not raised since the film was not acted should not be included in maximizing or minimizing the loss incurred. This is because in the last place the film was not launched. Second, there was no guarantee that the film will make such an amount of money, as one cannot be sure how many companies will run the film in their cinema theaters. Therefore, one cannot rely on this information as it is impossible to calculate the actual profit that could have been generated by running the film. Thus, the pre-sale of $ 800,000 should not be used in maximizing /minimizing the loss.

The loss of $2.1 million on the “Without Basinger” film

The $ 2.1 million loss which could be incurred by the filmmakers if they decided to shoot the film without Basinger cannot be used to calculate the lost contribution. This is because the figures are just based on assumptions and not actual figures. The figures are derived from the comparison made from various films done by the Main Line Pictures Inc. which involved Basinger and those produced in her absences (Biederman & Silfen, 2007).

In maximizing /minimizing the loss profit incurred, this amount should not be included because the film was not produced so the actual loss caused by Basinger not taking part in the film cannot be traced. Accounting principles prohibit the use of assumptions when calculating profit or loss.

Are the following relevant to the determination of lost profits to Main Line? Why?

Basinger’s $3 million salary for “Final Analysis.”

The salary proposed to Basinger for final analysis can be used as a start point in calculating the compensation. This is because it gives us a rough idea of what was to be her remuneration if she had taken part in a leading role. Thus Basinger’s salary is very relevant to this case. According to toSobel, (2002), Basinger was fully entitled to the salary and as the deal was set according to the contract it is important to note that this amount is very useful in calculating the amount of compensation to be awarded to Main Line Pictures Inc

The comparison of revenues for Basinger films with revenues for Fenn films

The comparison part cannot be used to determine the amount of compensation. Fenn was not considered a star-like Basinger and thus one cannot compare the remuneration for the two actresses. Her salary was not the same as Basinger. Secondly, since the film was not shot, the comparison would be of no relevance to Main Line Pictures Inc

Is the plaintiff’s expert correct in not attempting to estimate revenues for “Boxing Helena” beyond pre-sale amounts? Why?

No. It is unprofessional to calculate or estimate revenues of the film as if the film has been shot and run in various cinema theaters. This is because you can’t be able to estimate the actual profit or lose that can be attached to this film, one is not sure if the targeted customers will like the film and make orders to have copies made for them. We only anticipate making sales thus probability cannot be used to make the final judgment of the sale and revenue collected. Revenues should not be anticipated while losses should be provided for.

Should Main Line’s lost profits be adjusted downward to include an estimate of domestic revenues for the “Without Basinger” film? Would it have been valid to use the $1.7 million advance against domestic revenues as the estimate? Explain.

Yes. The profit should be adjusted in order to estimate the revenue expected from domestic sales. $1.7 million should be used to calculate the domestic revenue as it was an advance given to Main Line Pictures Inc. in order to enable those who produce the film. As examined by Weiler, (2002), the $1.7 million is a liability that must be shown in the calculation of the profit and loss incurred by the company.

Suppose Basinger had remained with the film and assume the $3 million profit shown in the plaintiff expert’s minimum damage calculation was correct. Is it reasonable to assume that Main Line’s pretax cash position would have increased by $3 million or would some part of this have been paid to others? Why?

It’s not correct to say that the profit would have remained to be $3milion; the profit could have increased, though some money could be used to pay other production costs.

If you disagree with the jury’s lost profit assessment, briefly prepare one of your own

I believe that the jury’s award was suitable for the case as the company lost a lot of profit and incurred a lot of expenses as it tries to organize and set the stages where the films were to be shot. The cost included in conducting the research for producing and selling the film should be included in the compensation (Campbell, 1997). The company should be content with the amount of money awarded to then as compensation because even when the film was shot later in September 1993 the total profit raised was of $2milion as domestic revenue and $ 5milion in the international field is slightly lower than the awarded amount.

References

Albrecht, W., S. Stice, A. Stice, E. & Swain, M. (2007). Accounting: Concepts and Applications. New York. Cengage Learning.

Biederman, D., E. & Silfen M, E. (2007). Law and business of the entertainment industries. 5^th Ed. New York. Greenwood Publishing Group. Print.

Campbell, A., W. (1997). Entertainment law: cases and materials 4^th Ed. New York. Austin & Winfield.

Sobel,S,.L. (2002). Entertainment law. Entertainment Law Reporter. 17(1).

Weiler, C., P. (2002). Entertainment, media, and the law: text, cases, problems. 2^nd Ed. New York. West Group.

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