Friday, September 23, 2011
In my Contracts class, we recently discussed how part performance can make an offer irrevocable using cases such as the iconic Carlill v. Carbolic Smoke Ball and the less-iconic but perhaps more instructive, Marchiondo v. Scheck, 432 P.2d 405. In the latter case, a seller of real estate fires his real estate agent after the agent has done the work to set up a sale but before the sales contract with the buyer actually was signed. The real estate owner/seller claimed that no commission was due because he was bargaining for performance--a sale--and nothing short of that would do. Not surprisingly, the agent claimed that his part performance (which likely included showing the property, finding the ultimate buyer, and more) made the seller's offer to pay a commission irrevocable--and therefore entitled him to a commission upon the later finalizing the sale.
One of my reality TV-watching students noticed a parallel between the Marchiondo case and a somewhat recent dispute involving Bethenny Frankel, the star of the series "Real Housewives of New York City" and its later spin-offs. In this contractual dispute, Ms. Frankel's agent, Raw Talent (like the agent in Marchiondo), was suing Frankel (like the property owner in Marchiondo) for its commission in a deal that it felt that it brokered between Frankel and a liquor industry veteran, Kanbar. Frankel and Kanbar's deal was one to develop, market and later sell a company called Skinny Girl Cocktails (whose first product would be SkinnyGirl Margaritas), using Frankel as the company's celebrity endorser. After the deal between Frankel and Kanbar allegedly was arranged by Raw Talent, but before it was officially finalized via a round of salt-rimmed glasses and contracts, Frankel fired Raw Talent. In the next two years, Skinny Girl Cocktails drank its competition under the table and ultimately was sold by Frankel and Kanbar for $120 million. Raw Talent now wants its commission--10% of the $120 million. I asked my students...under Marchiondo, should Raw Talent get the money?
P.S. And, because no lawsuit is complete without a follow-up, the makers of SkinnyGirl Margaritas now are being sued for false advertising for claiming that the ingredients are "pure" when each bottle allegedly contains a not-so-pure preservative.