Nature of the Case
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Facts
Tony Curtis (D) decided he wanted to become a novelist. He prepared a manuscript and got the aid of Irving Paul ('Swifty') Lazar, a well-known literary agent. Doubleday & Co. (P) saw potential and entered into a two-book contract with D in the winter of 1976. P promised to pay D royalties on hardcover sales, and a share of the proceeds from the sale of subsidiary rights (e.g., paperback rights), provided D could deliver -- within a specified period of time -- final manuscripts, 'satisfactory to Publisher in content and form.' The agreement was on a standard industry form. which did not elaborate on the meaning of the penultimate condition-'satisfactory to Publisher in content and form.' The final draft was generally acknowledged to have been a joint effort of D and Larry Jordan, a Doubleday editor. On seeing the eight-page outline for his next novel, P agreed to renegotiate the contract governing publication of the second book. D was to receive one hundred thousand dollars as an advance to be charged against future royalties. One-half of the advance was paid upon the signing of the contract, with the balance due on 'acceptance of complete satisfactory manuscript.' D was to receive fifty percent of any proceeds Doubleday might earn from the sale of reprint rights. This performance was contingent upon D's ability to produce a 'satisfactory' manuscript by a date no later than October 1, 1978. This deadline, as well as the conditions relating to acceptable 'form' and 'content,' were expressly stated to be 'of the essence of the Agreement.' The document further stated that failure to comply with the satisfaction clause granted D the right to terminate the contract, and require D to return any sums advanced. The agreement did not speak to the methods and standards by which D would determine whether a manuscript was 'satisfactory.' The New American Library ('NAL') promised to pay P $200,000 merely for the right to publish D's second novel in paperback, in the event it was accepted for publication by P. If P published the work before December 31, 1980, NAL was bound by the terms of the contract and P was ensured a handsome profit. In April 1980 that D delivered a partial first draft. D ignored the October 1978 deadline. NAL extended its own deadline one year to December 31, 1981. P passed editing from one editor to another. Eventually, the work landed on Adrian Zackheim's desk who took four months to read it. Adrian wrote a 7-page letter to D regarding weaknesses and inconsistencies but had praise for D's story-telling ability. D and Adrian never got a synergy going most likely because D was involved with complex divorce proceedings, and his visits to New York became more and more infrequent. P executives expressed concern for the December 31, 1981 deadline with NAL. The final draft was forwarded, and Adrian was appalled at the product and concluded that Starstruck was unpublishable. D ignored suggestions involving the story's first half and composed such an unexpectedly poor conclusion that Starstruck was transformed into an almost certain debacle. Despite forfeiting the deal with NAL, P decided it would have to reject the work. Adrian approached Lazar and suggested that D submit the manuscript to a 'novel doctor' in an attempt to put the shine back on the fallen Starstruck. Lazar demurred, and P canceled the reprint deal with NAL, formally terminated the September 1977 agreement with D and demanded repayment of the original $50,000 advance. D refused and P sued. D counterclaimed for breach of the agreement and sought $150,000 because P failure to provide adequate editorial services -- a duty derived from its implied obligation to perform in good faith -- prevented him from completing a satisfactory manuscript. At trial, D was a good actor. The court characterized the litigation as a 'dispute about creativity and the respective responsibilities of an author and his publisher,' and dismissed both suits. The judge held that the decision to reject D's manuscript had been animated by a genuine belief that Starstruck was unpublishable. As for P's claim, the judge held that P had waived the 'time of the essence' clause by accepting D's manuscript eighteen months after the original deadline had passed. The court found that because P had led D to believe that Starstruck would eventually be published, it had also waived its right to a return of the advance even if it found the manuscript unsatisfactory. Both parties appealed.
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