Opinion ID: 714870
Heading Depth: 2
Heading Rank: 1

Heading: Validity of the Written Synch License.

Text: 15 Based on the undisputed evidence, the district court found that Fosson executed the Synch License and, therefore, authorized the Producers' use of the Composition in the Film. Although the court did not expressly find that the Synch License, on its face, was supported by valid consideration, 4 it concluded that a valid contract was formed, and that Fosson was bound by its terms. 16 Fosson attacks the enforceability of the Synch License on the grounds that: (1) the written agreement served merely as a continuing offer or option that, absent consideration, could be revoked by Fosson at any time prior to acceptance; and (2) the entire agreement was illusory and void for lack of consideration. However, as discussed below, neither of Fosson's contentions has merit. 1) Fosson's Offer Revocation Theory 17 Fosson's characterization of himself as offeror of the Synch License is unsupported by law or the facts of this case. Under California law, an offer is a manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it. In re First Capital Life Insurance Co., 34 Cal.App.4th 1283, 40 Cal.Rptr.2d 816, 819 (1995) (citing Restatement (Second) of Contracts § 24). 18 It is undisputed that the Producers approached Fosson and manifested their willingness to license the Composition for use in the Film. The Producers also proposed the initial license amount of $1,250.00. Further, once Capper indicated that the amount was acceptable, the Producers proposed the additional contract terms for Fosson's acceptance. Thus, because under California law the Producers-and not Fosson-were the offering party, Fosson lacked power to revoke. 19 Even assuming that Fosson was the offeror, Fosson admits that he did not view Capper's October 20th letter as an attempt to revoke or rescind the Synch License. 5 Thus, even if Fosson's contention had merit, the undisputed facts of the case show that no revocation was attempted. 6 20 Further, under California law, acceptance is the 'manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer.'  Id. (quoting Restatement (Second) of Contracts § 50). Fosson admitted that he read and discussed the terms of the Synch License with his manager Capper. Thereafter, Fosson signed the license and returned it to the Producers in the pre-addressed, postage paid envelope provided. Thus, the undisputed facts tend to show that Fosson manifested his assent to the Producers' terms in the manner invited, and that his assent concluded the offer and acceptance phase of the bargaining. 21 2) Fosson's Contention That the Synch License Is Illusory and Lacks Consideration 22 Fosson's contention that the Synch License lacks consideration is based on the precise language of paragraph 7. The paragraph reads in pertinent part: 23 If the Composition is used by Company in the Picture, in consideration of Licensor's execution of the agreement and grant of such license, Company shall pay Licensor [$1250], payable as follows: _________ [blank in original]. 24 Fosson asserts that the language of the paragraph renders the promise illusory because the Producers were not obligated to use the Composition in the Film, nor did the contract specify when payment should be made. The latter proposition is not fatal because, under California law, where no time limit is specified for the performance of an act, a reasonable time is implied. See Consolidated World Investments, Inc. v. Lido Preferred Ltd., 9 Cal.App.4th 373, 11 Cal.Rptr.2d 524, 528 (1992); Cal.Civ.Code § 1657 (1985). Thus, the failure to specify a timeframe for payment of the license fee would not render the contract illusory. 25 The Defendants/Appellees counter that the Synch License should be interpreted as a unilateral contract by which the Producers agreed to pay Fosson $1,250.00 if the Composition was used. Further, the Defendants cite City of Los Angeles v. Anchor Cas. Co., 204 Cal.App.2d 175, 22 Cal.Rptr. 278 (1962) for the proposition that the requirement of mutuality of consideration does not apply to unilateral contracts. Id., 22 Cal.Rptr. at 282. However, the district court did not expressly interpret the Synch License to be a unilateral contract. Moreover, such a finding would be contrary to established principles of contract interpretation in California. See Patty v. Berryman, 95 Cal.App.2d 159, 212 P.2d 937, 942 (1949) (If doubt [exists] as to whether the agreement was bilateral or unilateral, such doubt would have to be resolved by interpreting the agreement to be bilateral.... There is a presumption in favor of interpreting ambiguous agreements to be bilateral rather than unilateral.). Therefore, absent any evidence to rebut the presumption of a bilateral contract, we cannot conclude that a valid unilateral contract was formed. 26 In California, the doctrine of mutuality of obligation requires that the promises on each side of a contract must be binding obligations in order to be consideration for each other. See Witkin, Summary of California Law, Contracts § 228 (9th ed. 1987) (citing Mattei v. Hopper, 51 Cal.2d 119, 330 P.2d 625, 626 (1958)). In a bilateral contract, the promise of one party is consideration for that of another. Witkin, at § 215. [A]ny valid promise, whether absolute or conditional, is sufficient consideration for another promise. Id. Moreover, the California Supreme Court has articulated two rules to guide the analysis of conditional promises. 27 First, [i]n every contract there is an implied covenant of good faith and fair dealing that neither party will do anything which injures the right of the other to receive the benefits of the agreement. Bleecher v. Conte, 29 Cal.3d 345, 213 Cal.Rptr. 852, 698 P.2d 1154, 1156 (1981) (citations omitted). Second, if a contract is capable of two constructions, the court must choose that interpretation which will make the contract legally binding if it can be so construed without violating the intention of the parties. Id., 213 Cal.Rptr. at 855, 698 P.2d at 1157 (citations omitted). 28 The California Supreme Court decision in Mattei, 330 P.2d at 625 (Cal.1958), is instructive regarding our interpretation of the instant contract provision under the second rule. In Mattei, the court held that a contract for the sale of real estate was neither illusory nor lacking in mutuality of obligation because the parties inserted a provision .... making plaintiff's performance dependent on his satisfaction with the [commercial] leases to be obtained by him. Id., 330 P.2d at 628-29. In other words, although obtaining the leases was completely within the control of the plaintiff, the court found that a contract arose, and plaintiff was given the power and privilege to terminate it in the event he did not obtain such leases. Id., 330 P.2d at 626. 29 Applying the principles of Bleecher and Mattei, we conclude that paragraph 7 of the Synch License constitutes a valid conditional promise. A reasonable construction of paragraph 7 would be that Fosson would be paid a fee of $1,250.00 in exchange for his grant of the license if, in fact, the Composition was used in the Film. Moreover, paragraph 7 can be read such that neither party would be bound to the terms of the Synch License if the Composition was not used. Similar to the contract provision at issue in Mattei, although use of the Composition was within the Producer's discretion and control, we hold that a valid contract arose by virtue of the obligations the Producers agreed to assume in the event the Composition was used. Further, the Producers were under an implied obligation to act fairly to protect Fosson's rights and benefits under the contract. 30