Contracts in the Time of COVID: House of Mouse v Scarlett Johansson

If you’re anything like the majority of Australia right now, lockdown has you actively consuming the news like its caramello chocolate on supermarket debut.

Perhaps not quite as gripping as the daily COVID numbers to the everyday Australian, you may have caught wind that Scarlett Johansson is suing Disney over their decision to release the Black Widow on Disney+ rather than direct to cinema.

Unsurprisingly, the outrage that followed this news was along the lines of, “she earnt $20,000,000, what more could she want?”

But at the heart of this lawsuit, lies a very typical contractual agreement and an alleged breach of that contract.

Disney have hit back calling the proceedings a, “callous disregard for the horrific and prolonged global effects of the Covid-19 pandemic.”

The House of Mouse is not alone in pivoting business plans throughout the last eighteen months. Globally, businesses have had to review their plans and make alternative decisions that were not on the table two or three years ago.

Scarlett Johansson was paid upfront for her work, and like many Hollywood talent deals, the remainder of her earnings would be based on the film’s performance at box-office.

This isn’t too dissimilar to any contract negotiated on a commission basis or a half now, half on completion payment schedule.

In consideration that Scarlett Johansson made $14M upfront for Avengers: Endgame and an additional percentage of box-office revenue, which made $3.8 billion dollars, it is easy enough to see why she’s not pleased with Disney’s decision to head straight to streaming-services with Black Widow.

But if you’re the business that finds themselves forced to pivot, and you can no longer fulfil your initial contractual obligation, what should you do?

Firstly, seek legal advice. It might be possible that the contract is “frustrated” or the existence of a Force Majeure clause provides a solution.

In the absence or alternative of the aforementioned, it might also be possible to re-negotiate a favourable outcome for both parties without compromising the intention of the contract. Re-negotiation might seem simple enough in theory, but it is absolutely crucial that you do so without compromising your position.

Similarly, if you find yourself in a position similar to Scarlett Johansson (or at least in this story) and out of pocket with a contractual party claiming they cannot fulfil their obligations, COVID-19 is not in itself enough a done and dusted explanation.

---

VRT Lawyers Commercial Lawyers, John Vizzone and Laura Pouri-Robertson are taking COVID-safe appointments, and are well versed in negotiating contracts. Contact law@vrtlawyers.com.au or (02) 9667 1271 to make an appointment today.