Document Type

Working Paper

Publication Date

1998

Center/Program

Center for Law and Economic Studies

Center/Program

Center for Contract and Economic Organization

Abstract

The standard analysis of Parker v. Twentieth Century Fox follows the court in focusing on whether the substitute employment offered Shirley MacLaine was "different and inferior" from that which she had initially contracted for. That, this paper argues, was the wrong question. The court managed to produce the right outcome, but through convoluted reasoning that failed to recognize the essential feature of the contract. The contract had a "pay-or-play" provision by which the studio, in effect, purchased an option on her time; they would pay her to be ready to make a particular film, but they made no promise to actually use her in making the film. Cancellation did not entail breach, and, therefore, it was unnecessary to ask whether she had failed to mitigate. The paper traces the case through the courts, showing how the attention paid the pay-or-play feature declined. It then analyzes the economics of the pay-or-play clause. The clause gives the studio an option, giving it the flexibility to adapt or to abandon a project. The pay-or-play clause is a nuanced balancing of the studio's need for flexibility against the artist's reliance.

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