ContractsProf Blog

Editor: Jeremy Telman
Oklahoma City University
School of Law

Monday, April 8, 2024

Elon Musk "Cancels" a Contract

Image by DALL-E

Dear Reader, I apologize.  I seem to have let a week go by without reporting on some batshit-crazy thing that Elon Musk did. This would be excusable, if Mr. Musk could go a week without doing some batshit-crazy thing. Alas, he cannot.

Some details of the story are a bit murky, but it seems pretty clear from the parties' statements and conduct that Mr. Musk and Don Lemon entered into an agreement.  The agreement seems to have been that Mr. Lemon would have an interview show on Mr. Musk's social media platform, Twitter, which he calls X.  None of the terms of the agreement are public, but presumably, there is money involved, as Mr. Lemon referenced the "financial terms of the agreement" in the story linked to below.

Mr. Lemon attempted to launch the project with an extended interview with Mr. Musk. Apparently, the two men had different ideas about what was supposed to happen during that interview. Parts of it got very testy. Mr. Lemon challenged Mr. Musk, asking him whether he had any responsibility to engage in content moderation of hate speech on his platform and posed questions about Mr. Musk's drug use and whether there could be national security concerns associated with that drug use. Sometimes, Mr. Musk refused to answer, saying that he didn't have to answer questions from reporters. True enough. Sometimes, he gave self-serving answers that certainly did nothing to quell concerns that a man who controls vital national security infrastructure uses prescription drugs recreationally and not just as a public service. You can see the interview here:

Martha McHardy, writing for The Independent, reports that the deal was "axed" just hours after the interview was completed.  Let the lawyerspeak begin.  According to Twitter, "L]ike any enterprise, we reserve the right to make decisions about our business partnerships, and after careful consideration, X decided not to enter into a commercial partnership with the show."  

That's all fine, except that the platform announced that it would be hosting Mr. Lemon's show in January.  When Mr. Musk "axed" the deal, he did so by texting Mr. Lemon's agent, saying "the contract is canceled."  So while the lawyers for "X" are saying "not-X," X's owner is saying X.

In my language, people who "cancel" a contract without cause pay damages, but only if those damages can be proven with reasonable certainty. In this case, there appears to be no signed writing evidencing the terms of the deal. That's okay; there doesn't need to be a signed writing here.  The issue will be whether what Mr. Lemon calls "the financial terms of the agreement" are specified in sufficient detail to support an award of damages.  It seems from the interview that the two men had never previously met.  Presumably, there is a paper trail here.

Some of these clips are actually revelatory of more than just Mr. Musk's prickliness. He sometimes gives serious, seemingly earnest, seemingly truthful, although brief, answers to Mr. Lemon's questions.

A couple of notes. For much of the interview, Mr. Musk's affect is pretty normal.  He engages with Mr. Lemon in a fairly direct, straightforward way. Sometimes, when he doesn't want to answer a question and also doesn't want to refuse to answer the question, there are long pauses, and his eyes dart back and forth and you can almost hear him pondering, "What can I get away with saying here that will not get me into trouble and will also not be a bald falsehood?"  It's not a terrible thing for a thoughtful person to do, especially if the valuation of several companies turns on the answer.

One part of the interview that struck me as really odd was the question of whether CNN is a liberal media organization.  Mr. Musk insisted that "everybody thinks of" CNN as a left-wing media organization, and he implied that Mr. Lemon, having worked for CNN, is also part of the woke mob, or something akin to that. I don't watch cable news, even though I am now over sixty, and I think I have to turn in my AARP card if I'm not addicted by 65. I operate on the perhaps outmoded assumption that the three major cable news organizations had staked out their claims to the American right (Fox), left (MSNBC), and center (CNN). Now I believe there are two smaller companies to the right of Fox.  If CNN is now considered leftist, it may be evidence of the impact of the Trump presidency on the American political spectrum.

In any case, in the interview, Mr. Lemon posits, and Mr. Musk affirms, that Mr. Musk wanted Mr. Lemon's show to stream on Twitter because Mr. Musk wants his website to be a place where one can find content across the entire political spectrum. But then, according to Derrick Bryson Taylor writing in The New York Times, Mr. Musk explained that he was "canceling" his contract with Mr. Lemon, Mr. Musk complained that Mr. Lemon's approach "lacked originality" and was just "CNN on social media." There seems to be some tension between what Mr. Musk said in the interview and what Mr. Musk said in dissing the interview. Even if Mr. Musk wants to characterize his decision to cancel the contract as commercial rather than political, he should have made that determination before committing to have the show stream on his website. Did he really think the Don Lemon show on Twitter would be nothing like CNN Tonight with Don Lemon?

That kind of magical thinking is not how we will get to Mars.

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