“Breach of contract” is a term commonly used in legal parlance to refer to the failure of a party to fulfill its obligation in a bargain involving two or more parties. Various instances of action or inaction could count as breaches of contract depending on the agreement reached between parties.

If, for instance, one of the traders (parties) in a bilateral bargain sells to a third party, whereas there is a provision that the two parties in the bargain should sell only to each other, the party (trader) at the receiving end may initiate legal action against the violating party.

Another instance of breach of contract –especially one implying inaction by a party –is when the party stops committing their own portion of the funds used in running a two-man business. If the business contract implies that the two men involved in the business are obligated to continually contribute certain amounts of money to the business, the failure of one man to fulfill this obligation may count as a breach of contract.

Because contract breaches are issues that occur again and again, especially among business partners, we have come up with an insightful discourse about the top 7 famous breach-of-contract cases that you should know.

What Are the Top 7 Famous Breach-of-Contract Cases That You Should Know?

Netflix and Relativity Media

Netflix, Inc. is a US-based production company and streaming service established by the duo of Marc Randolph and Reed Hastings. Netflix offers Netflix Originals (Netflix-owned productions) along with a huge collection of films and TV series. It is a subscription-based streaming platform with numerous subscribers from across the world.

Relativity Media is a US outfit established by the duo of Ryan Kavanaugh and Lynwood Spinks. Launched in 2004, Relativity Media was a thriving commercial venture until its first incident of bankruptcy in 2015. Although it eventually broke free from that bankruptcy in 2016, Relativity Media was struck by another bankruptcy in 2018. Relativity Media, which deals with film production and other entertainment services, now operates under UltraV Holdings.

The Breach of Contract between Netflix and Relativity Media

Netflix and Relativity Media were involved in a legal action in 2018 when Netflix declared that Relativity Media went back on the agreement in the multi-year contract between the two parties.

As per the terms of the contract, Netflix was supposed to be the only platform licensed to show some Relativity Media films. However, Relativity Media was said to have gone contrary to the terms of the multi-year contract by allowing other services –including Amazon –to air the films. While Relativity Media wrongfully licensed two movies to Starz, a streaming service, it also distributed four movies namely The Woman in Black 2, The Lazarus Effect, Beyond the Light, and Angel of Death.

Relativity Media was eventually found guilty of a breach of contract following the lawsuit Netflix filed against the media outfit. Although it claimed to have committed the contract breach unintentionally, Relativity Media was required by law to pay $2.9 million and $9.6 million, respectively, for wrongfully licensing two movies to Starz and for distributing the four movies mentioned earlier.

 Amazon Studios and Woody Allen

Launched in 2010, Amazon Studios is an offshoot of Amazon. As a specialist in film and TV series production, Amazon Studios distributes lots of content via Amazon Prime Video and the theatres. Amazon Studios, a notable producer and distributor of TV series and films, largely relies on the Amazon-owned streaming service (Amazon Prime Video) for content distribution.

Woody Allen –fully known as Heywood “Woody” Allen –is a notable American who has been in the entertainment industry for more than 60 years. Not only has he received credit for several award-winning films, but Woody Allen is also a multi-talented individual having worked as an actor, film director, comedian, and writer. His work “Woody Allen” (a 1964 comedy album) earned him a Grammy Award nomination for Best Comedy Album.

The Breach of Contract between Amazon Studios and Woody Allen

Amazon Studios was dragged into a lawsuit by movie director Woody Allen following the former’s cancellation of the four-picture movie project between the two parties. What prompted the cancellation was the rape allegation leveled against Woody Allen at the time. The US entertainment scene had been rocked by the shocking news, alleging that Woody Allen raped his adopted daughter, Dylan Farrow.

Although Amazon Studios owed the movie director a whopping sum amounting to $68 million, the content distributor went ahead to end the movie project and filed for a breach of contract.

The deal cancellation by Amazon Studios gave cause for a lawsuit which was presided over by a Federal High Court in New York City. In the end, the court ruled that the lawsuit had been “voluntarily dismissed with prejudice”. The bottom line of the court’s ruling is that there was a two-sided agreement for the lawsuit to be killed. In other words, Amazon Studios and Woody Allen unanimously agreed that the legal case was ended.

New York University and Pfizer

New York University (NYU) is a New York-based academic institution founded in 1831. It was founded (under the leadership of Albert Gallatin) by New York citizens. Albert Gallatin was the Secretary of the Treasury at the time of NYU’s establishment. Formerly known as the University of the City of New York, NYU is a seat of academic learning chartered by the New York State Legislature in 1831. It operates as a research-focused private university offering both undergraduate and postgraduate programs.

Pfizer Inc. is a US multinational corporation concerned with biotechnology and pharmaceuticals. Founded by the duo of Charles F. Erhart and Charles Pfizer, Pfizer Inc. is a pharmaceutical company with its headquarters in New York’s Manhattan. Pfizer is a worldwide company that produces vaccines and pharmaceutical drugs. While the company’s net income was estimated at $21.98 billion in 2021, its revenue in the same year stood at $81.29 billion.

The Breach of Contract between New York University and Pfizer

The pharmaceutical company, Pfizer, was dragged to court by New York University (NYU) who accused Pfizer of exploiting its old technological breakthrough for drug production.

In simple terms, the reason for the lawsuit was that Pfizer allegedly adopted NYU’s old innovation for developing a new cancer drug, without remitting any part of the drug sales to NYU.

NYU dragged Pfizer to the Manhattan Supreme Court with the claim that the university is entitled to a fraction of the drug sales. The product, which provoked the lawsuit between the two parties, is a drug for lung cancer treatment.

Apple and Gerard Williams

Apple Inc. is a US tech outfit with its headquarters in California. It is a multinational company that belongs to the exclusive list of five IT giants including Microsoft, Amazon, Meta, and Alphabet. Apple deals with software products, online services and consumer electronics. In 2021, its total revenue was $365.8 billion, making it the largest tech company in terms of revenue.

Gerard Williams III is a tech expert who currently serves as the CEO of NUVIA –a company he co-founded. Formerly, he worked with ARM (where he was an ARM Fellow) and Apple where he served as Chief CPU Architect and Senior Director. Gerard Williams was a very influential member at both ARM and Apple. During his over-a-decade spell at ARM, he was an ARM technical advisor as well as a member of the ARM Architectural Review and Technical Advisory Boards. At Apple where he spent almost 10 years, Gerard Williams was the brain behind the development of various cutting-edge SoCs and CPUs.

The Breach of Contract between Apple and Gerard Williams

As alleged by Apple, Gerard Williams –Apple’s former chief architect –leveraged some of Apple’s staff in establishing his own tech outfit –a chip-design company named “Nuvia”. In the lawsuit, it levelled against Gerard Williams, Apple further argued that the Nuvia founder was still an Apple staffer at the time he set up Nuvia.

Also in the event of the lawsuit, Apple claimed to have been exploited by Gerard Williams and therefore demanded an unspecified sum in damages. However, in his counterclaim to Apple’s allegation of breach of duty and loyalty, Williams argued that his contract with Apple partly contradicted the state law of California.

It’s quite noteworthy that during his almost-a-decade spell at Apple, Gerard Williams was an influential member, especially for his development of the A12x chip and the A7 processor used in iPads and iPhone 5s respectively.

Apple and Epic Games

Apple Inc. is a US tech outfit with its headquarters in California. It deals with software products, online services, and consumer electronics. In 2021, its total revenue was $365.8 billion, making it the largest tech company in terms of revenue. Apple is a multinational company that belongs to the exclusive list of five IT giants including Microsoft, Amazon, Meta, and Alphabet.

Epic Games, Inc. is a US software and video game company established in 1991 by Tim Sweeney. During its start-up phase, Epic Games went by the name “Potomac Computer Systems”. At that time, Tim operated a video game company in Potomac where his parents lived. The video game company, which is now simply known as Epic Games, went by the name “Epic MegaGames, Inc.” in 1992 after the release of ZZT –Tim Sweeney’s foremost commercial video game.

The Breach of Contract between Apple and Epic Games

Apple went into a legal battle with Epic Games after discovering that the latter had developed a new version that prevented Apple from getting the 30% cut it was entitled to. In response to this development, Apple struck Epic Games out of its App Store in 2020.

In the lawsuit it filed against Epic Games, Apple accused the video game company of failing to pay for the benefit it derived from Apple’s platform, despite having raked in $600,000+ through the platform. Seeking to be compensated for this breach of contract, Apple demanded an unspecified sum of money in damages.

 Patterson-Stevens Inc. and (Virginia) State

Patterson-Stevens, Inc. is a specialty contractor that has been in operation for more than four decades. It is a contractor with wide-ranging services as a railroad contractor, swimming pool contractor, gunite contractor, and concrete restoration contractor. Patterson-Stevens, Inc. caters to a large clientele and its service coverage spans several US states including Ohio, Western Pennsylvania, Virginia, and New York. Established in 1971, Patterson-Stevens, Inc. is located in Tonawanda, New York, United States.

Virginia is a US state in the southeastern region of the country. Founded by Thomas Jefferson, Virginia constitutes the original 13 colonies. The state covers a land area, of 110,786 square kilometres, which extends between the Chesapeake Bay and the Appalachian Mountains. Some of Virginia’s significant landmarks include the iconic Charlottesville plantation and Monticello. Notable academic institutions in the state include, but are not limited to, Virginia State University, University of Virginia, and Virginia Tech.

The Breach of Contract between Patterson-Stevens, Inc. and (Virginia) State

Patterson-Stevens, Inc. was said to have engaged in a legal battle with Virginia state following the allegation that officials of Jamestown in Virginia breached contract terms.

Patterson-Stevens claimed to have encountered significant monetary losses in the course of the renovation work awarded to the company by Virginia State. In the legal case it initiated against the state, Patterson-Stevens argued that Jamestown officials interrupted the renovation work on various grounds.

The specialty contractor accused the officials of instances of interruption including delaying the start of the renovation work, improper withholding of payment, issuing a stop-work order, and prolonging the renovation work beyond the stipulated completion date, among others.

Patterson-Stevens demanded damages to the tune of $306,048 as compensation for the losses suffered. While Patterson-Stevens was said to have filed this lawsuit before Chautauqua County’s State Supreme Court, the specialty contractor further demanded that the Virginia state be responsible for all other necessary payments including attorney fees and interest fees.

Gilead Sciences, Inc. and the US Government

Gilead Sciences, Inc. is a US company concerned with biopharmaceutical products. With its headquarters in Forster City, California, Gilead Sciences, Inc. was established in 1987 by Michael L. Riordan. The company is notable for its top-notch research and development works aimed at combating viral diseases such as COVID-19, hepatitis B, HIV/AIDS, influenza, and hepatitis C. Gilead Sciences, Inc. churns out pharmaceutical products that work for the treatment of these diseases. The American biopharmaceutical company controls a number of subsidiaries, some of which include YM BioSciences, Kite Pharma, Forty-Seven, Inc., and Immunomedics, Inc.

The Breach of Contract between Gilead Sciences, Inc. and the US Government

Gilead Sciences initiated a lawsuit against the US Centre for Disease Control and Prevention (CDC) for the latter’s failure to comply with the provisions of the CTA and MTA contracts the two parties went into.

Provisions in the contracts between the two parties implied that Gilead would supply the disease control agency, CDC, with antiretroviral compounds needed for research.

While the contract provisions further implied that Gilead would supply the drugs on a free-of-charge basis, CDC’s parts of the bargain were to, on the one hand, inform the pharmaceutical company if any discoveries/inventions emanated from the research, and to, on the other hand, avoid seeking patents with respect to any inventions that emanated from use of the Gilead-supplied drugs.

FAQs

What Elements Does One Need to Prove a Contract Breach?

Inasmuch as a breach of contract is one of the issues that could provoke a lawsuit, the receiving party in the contract breach must be able to prove the breach. Holding irrefutable evidence of a contract breach will augment your likelihood of getting the presiding court to rule in your favour. So, here are some of the elements you need in order to prove the contract breach:

• Substantial evidence that a contract exists between you (plaintiff) and the contract violator (defendant)
• Evidence that you (the plaintiff) fulfilled your part of the contract
• Evidence that the violator (defendant) didn’t fulfil their part of the contract

Is “Breach of Employment Contract” a Form of Breach of Contract?

Yes, and this is because a breach of employment contract implies that either of two parties (employer and employee) has failed to honour or fulfil their part of the terms contained in an employment contract.

Conclusion

If you’re in formal business or other serious (profit-oriented) association with somebody, it’s very important that you honor whatever written agreement that binds you both. This is because you could be dragged by the party to the receiving end for breaching the terms of the contract that binds you with them.

You might ordinarily not incur any jail term for being the accused party in a breach of contract lawsuit. However, you should avoid being found guilty of an (especially intentional) breach of contract, otherwise, you might end up subjecting yourself to an embarrassing legal action.

With the information we’ve provided you in this post about the top 7 famous breaches of contract cases, especially coupled with the punishment (ruling) the presiding court served Relativity Media for wrongfully licensing its movies to a third party, you should now think of contract breaches as serious cases.

References:

http://www.wikipedia.org/