As many here in Baton Rouge know, the business world makes agreements and contracts on a daily basis. Contractual agreements are particularly important when conducting business to safeguard the interests of all parties involved. In many instances, no issues arise and all sides are happy. Yet sometimes, accusations that one side did not carry out its obligations can result in a lawsuit for breach of contract.
In 2009, the concert promotion company Live Nation teamed up with ticketing company CTS to create a system that was to compete with Ticketmaster; CTS would receive a fee for the tickets sold using the program they created. This contract was to last 10 years, but Live Nation terminated the contract with CTS early, eventually merging with Ticketmaster in 2010. CTS held that the contract stipulated they were to receive royalties from the tickets sold even if those tickets were purchased through Ticketmaster.
This contract dispute resulted in litigation, with an international arbitration court eventually ruling for Live Nation. While CTS felt they were wronged by Live Nation, the ruling indicated that Live Nation had terminated the contract validly, and therefore their actions did not constitute a breach.
A contract is breached when one party fails to fulfill their end of the agreement spelled out in the contract. When a company or person feels that a contract has been breached, they may attempt to compel the other entity to fulfill their obligation, or they can try to recover damages. But it is important for contractually bound parties to recognize that a contract may be terminated without actually breaching it.
Although CTS and Live Nation's dispute played out in a high-profile setting, the realities of business contracts are an important lesson for anyone in business. Consulting with a business attorney can help strengthen contracts and also provide support to parties when accusations of a breach of contract arise.
Source: The Wall Street Journal, "Court Rules for Live Nation in Breach-of-Contract Case with CTS," Debbie Cai, June 12, 2013