We all know what a basic contract is: an agreement entered into voluntarily by two or more parties with the intention of creating some sort of legal obligation. When one party breaches and abandons his or her obligation set forth in the contract, this terminates the contract for purposes of further performances. However, breach of contract allows the other party to bring suit and seek recovery. Makes sense. So what happened when 16 Grammy winner Beyoncé Knowles agreed to make the video game “Starpower: Beyoncé” with game developer Gate Five, but then, well, didn’t? She was slapped with a $100 million lawsuit by Gate Five.
And to add insult to injury, Manhattan Supreme Court Justice Charles Ramos rejected Beyoncé’s motion to dismiss back in December 2011, allowing Gate Five to proceed with civil action.
The project was to create a dance-related video game that would enable players to perform along with the diva’s greatest hits – because there aren’t enough games like this already in existence. Beyoncé and Gate Five entered into this agreement in June 2010, and a lawsuit followed in April 2011. According to Gate Five founder Greg Easley in an interview with New York Magazine, Beyoncé’s abandonment forced them to lay off 70 employees and miss out on potential profits. In addition to losing their investment of more than $6 million into the project, Beyoncé’s decision essentially led to their cancelling the project all together.
Gate Five also claims that the songstress “double crossed” them over compensation issues when she made an “extortionate demand for entirely new compensation terms she wanted.”
Beyoncé’s attorneys countered that she was within her rights to exercise the termination provision of the contract after Gate Five was unable to fulfill contractual obligations to obtain $5 million of “committed financing” for the project. Her attorneys asked the judge to take a plain reading of the contract and further argued that Gate Five had not met the mid-November 2010 deadline to finance the project. According to The Hollywood Reporter, however, Gate Five argued that the doctrine of estoppel applied because Gate Five had relied to its detriment on her assurances that the November deadline was immaterial. This doctrine applies to estop Beyoncé from changing her mind and seeking greater compensation because the change would be unfair to Gate Five. However, Gate Five relied to its detriment on a statement clearly contradicting their written agreement in which Beyoncé had already negotiated compensation terms and made it clear that she was committed to completing the business project. So shouldn’t Gate Give reap what they sow?
Justice Ramos gave no explanation as to why he denied her request to toss the suit, but the ruling has allowed Gate Five to seek major damages as well an injunction to prevent the singer from working on any future games. While she has no problem shaking her moves on stage, it seems like she’ll have a tough time shaking off this $100 million lawsuit. Maybe if Gate Five liked this deal so much, then they should have put a ring on it?