In reliance upon her arrival, the lounge owner alleges that he went out and spent close to $100,000 on sound equipment, staging, tables, decorations, catering and other costs.
On Wednesday, June 17, 2009, just 3 days before the performance date, Beyoncé's representatives called and cancelled her appearance, citing time constraints associated with her new upcoming tour as the reason (although the word on the street out here is that the real reason was because Beyoncé got into an argument with sister Solange). At any rate, the singer breached her end of the contract, but she offered to mitigate the damages by agreeing to show up for an hour at the lounge. The lounge owner declined, stating that a 1 hour appearance was not the deal. He now seeks to be reimbursed for his $100,000. It should be noted that Mathew Knowles (Beyoncé's father and manager) stated that the $200,000 contract payment was never made by the lounge owner.
This is the party of the exam where it says something like "Write an essay outlining all viable claims that each party would raise both on the contract and in equity, and all applicable defenses. You have 15 minutes. Go!" ***BARF!!!***
It's been a few years since I've taken contracts (thank God!) but sounds like this guy has a strong reliance claim for damages based on a legal term we call promissory estoppel, which is simply a legalese way of saying that you had an agreement with somebody, you relied on their word and took steps to honor the agreement that cost you something, and they backed out of the agreement after you took steps to make the agreement happen.
But Beyoncé has a good counter argument to that because she did allow the lounge owner a chance to mitigate the damages by showing up, even if it was just for an hour.
So, Who was in the Wrong here and Who Wins?*1
EDIT: Link to the event flier HERE.
EDIT: Link to a pdf of the Contract HERE.
Folks, we have the Contract (see link above in the EDIT) and it is not looking good for the lounge owner.
In fact, I am officially calling shenanigans on him and especially on the media!!!!
In pertinent part, the Contract specifically states:
"Artist [Beyoncé] to appear at venue for a total of one (1) hour."
"It is expressly acknowledged and agreed that Artist [Beyoncé] shall not render performances of any kind (musical or otherwise) at the event."
"Concurrently with the execution hereof, and as a condition of this Agreement, PURCHASER [club owner & affiliates] shall enter into a separate agreement for the services of Solange Knowles to perform at the event described herein.
So the deal was ALWAYS for an appearance only. So all those news media outlets that are spinning this as Beyoncé backing out of a performance are full of you know what and need to get their facts straight.
However, there is a little wrinkle in the Contract for the Knowles family (and this may be what Mathew Knowles was referring to when he said they never received any money) because the Contrct also provides as follows:
"50% deposit payment ($100,000) shall be made no later than June 15, 2009, and balance payment ($100,000) shall be made no later than Friday, June 19th, 2009 at/or before 5:00PM EST via financial wire transaction to the following account: [account info]"
So the REAL issue here is whether or not the lounge owner made the deposit or not, as he was required to do in the Contract. If he didn't, then he breached the Contract and Beyoncé would have the right, under Anticipatory Repudiation, to rescind the Contract and not show up. If, on the other hand, the lounge owner did make the deposit, then Beyoncé breached and owes him at least the $100,000 deposit, plus possible damages associated with her breach.
*1 - My money is on Beyoncé. Not because I agree with her position or anything, but because her dad is a beast when it comes to business disputes. Don't believe me? Just ask the dozen sisters whose names you don't remember anymore that used to be in Destiny's Child! One minute they're flying in private jets on tour and staying in the finest hotels all around the world, the next minute they're riding the bus and living with their mama.