(from: www.examiner.com)

Contract law.  *yawn*   It’s one area of law that I never thought could be described as “fascinating”.   However, in the wake of the Conan O’Brien v. NBC drama,  I must admit that the subject became more appealing.  Here are a couple tidbits about contract law:

What makes a contract enforceable?

1. Offer and acceptance – This is also known as ‘mutual assent’ or ‘meeting of the minds’.  Both parties must reach an agreement to the terms of the contract. This is usually written although oral agreements can also be enforceable.

2. Consideration -  Consideration describes the bargained-for benefit received by each party in exchange for a promise.  In the case of NBC and O’Brien, O’Brien received monetary compensation in exchange for hosting The Tonight Show and attracting/retaining viewers.

3. Capacity – The two parties involved must have the legal capacity to do so.  For example, a person who suffers from a mental illness or is inebriated lacks the capacity to enter into a contract.

4. Legality – The subject of the contract must pertain to something that is, indeed, legal.  Therefore, a contract between two parties surrounding gambling would not be enforceable.

What items are needed to prove breach of contract?

1.  The contract existed and was enforceable.

2. The contract was broken by the other party.

3. Material losses or damages were incurred as a result of the breached contract.

Now, onto the debacle at hand…

In a bold move by NBC back in September, former host of The Tonight Show, Jay Leno, made the jump into primetime.  This programming change meant that Leno’s Tonight Show neighbor, Conan O’Brien, would secure the highly coveted 11:30pm EST timeslot and become host of The Tonight Show. However, that bold move seems to have backfired as NBC announced its decision last week to scrap the whole primetime idea and send Leno back to his original late-night gig.  What did this mean for O’Brien?  Unfortunately, he was pushed out of that coveted timeslot.

But, did NBC have the right to do that to O’Brien?  Would forcing his show to air at a later time qualify as a breach of their contract?  Since various reports indicate that O’Brien’s contract failed to specifically state the actual timeslot of The Tonight Show, then O’Brien might not have had much leverage against NBC.  In theory, NBC could have moved The Tonight Show to a ridiculously late hour and O’Brien might not have any recourse.  However, in a statement relased by O’Brien, he alludes to the fact that the timeslot of The Tonight Show is and always has been implied: “Last Thursday, NBC executives told me they intended to move the Tonight Show to 12:05 to accommodate the Jay Leno Show at 11:35. For 60 years the Tonight Show has aired immediately following the late local news. The Tonight Show at 12:05 simply isn’t the Tonight Show.“  Touche, Conan.  Touche.

Although O’Brien could have made an attempt to prove NBC’s breach of contract,  it looks like he’s reached a deal to leave NBC.  Either way, I’m proud to say that I’m with Coco…

(Note: This post is dedicated to all the former and current CPA‘ers who understand what it feels like to study for REG.  To this day, I have nightmares about those multiple-choice questions relating to contract law.  Good luck!)

Posted by Melanie on January, 22, 2010 at 1:09pm.