1. A) Since the deal had not been finalized they should not claim the domestic revenue of $ 3 million. This because if the deal had not been finalized therefore there was no contract between the two. In case the contact had been finalized then it could be adjusted upwards. But for now it should be adjusted downwards.
b) The 800,000 presales should not be adjusted since in the first place the contact had not been finalized. If the contract had been finalized then damages should have been preferred but to return the parties to the original position not to make profits out of it.
c) The loss of profits because of non-existence of the film will not be adjusted under any circumstances. This because a loss could be incurred at any time whether business is in existence or not. They will be given the amount of money that is in the contract as damages.
2. A) The $ 3 million salary is not relevant for determination of profits lost under agreement. This is because the salary is for final analysis and the parties of the contract were not informed of it existence before entering the contract.
b) Comparison of revenues of Basinger films and Fenns films should not be used in the determination of the profits lost because the company had not commenced business for film. It will be not necessary to claim profits for a business that does not exist.
3. The expert is correct not to include revenues beyond pre-sales revenue because since the event had not taken place there were no revenues. Therefore in determining the revenues proper foreseeable revenues should considered not all .He used Quantum meruit that of the lost revues only. There should be determination on what was the value of lost revenue.
4. There should be no adjustment for the non existent of the film. The use of $ 1.7 million should not have been used. This because the advance was not made on non-existent film which could have failed because of one or two reason apart from failures of contract parties.
5. The cash position of the company should not be in the same position as at $ 1.7 million because there are other payments that will be made in attaining the revenue.
6. The lost revenues should be
Presales revenue 800,000
Advance revenues 3,000,000
In determining the laws incurred it is prudent to measure reasonable damages only, since post contract revenues is not loss incurred because of the contract it will not be included. In order to determine properly what should be included the following must be taken into consideration. Money paid on the contract before it is commencement but for expectation of the benefit from the contract. Secondly money paid for loss of money. In the law of breach of contract damages are assessed with the aim of mitigating the laws and the damages will be classified in various types and they include;- special damages, ordinary, or general damages, exemplary damages , nominal damages, contemptuous damages, unliquidated damages, liquidated damages, and penalty clause damages. This are the costs that needs to be considered when calculating the cost of the losses incurred and in my opinion the above losses as calculated are adequate.
Hussain A. (2003); General Principles Law and Commercial Law.
Jordans Cases and materials in Company law, L C Sealy, Butterworths Heinemann
Lowry, J., Dignam, A. and Padfield, (2004) Company Law, Butterworths
Slorach, J.S. and Ellis, J. (2006) Business Law LPC Guide Oxford OUP