ally, was an illusory promise. However, the illusorypromise was not the only consideration given bythe purchaser. The purchaser promised to pay aguaranteed minimum amount no matter what effortswere undertaken. Whether or not an implied coven-ant was read into the agreement, the agreementwould be supported by consideration and would bebinding. That the purchaser chose not to grant a li-cense in a particular instance could not be the basisfor complaint as long as it made the agreed minim-um payments and paid royalties when it did exploitthe work.[See 1
Summary of Cal. Law (9th ed.1987) Contracts, § 743 et seq.]
Contracts § 23--Construction and Interpretation--Implied Covenants.For an implied covenant to a contract to be im-posed: (1) the implication must arise from the lan-guage used, or it must be indispensable to effectu-ate the intention of the parties; (2) it must appearfrom the language used that it was so clearly withinthe contemplation of the parties that they deemed itunnecessary to express it; (3) implied covenants canonly be justified on the grounds of legal necessity;(4) a promise can be implied only where it can berightfully assumed that it would have been made if attention had been called to it; (5) there can be noimplied covenant where the subject is completelycovered by the contract.
Contracts § 23--Construction and Interpretation--Implied Covenants-- Implied Covenant of GoodFaith and Fair Dealing--Application Where OneParty Retains Express Discretionary Power to Per-form or Not Perform.An implied covenant of good faith and fairdealing will be imposed on a contract granting oneparty complete discretion when necessary to protectan agreement that otherwise would be rendered il-lusory and unenforceable. However, in all othersituations where the contract is unambiguous, theexpress language is to govern, and no obligationcan be implied that would result in the obliterationof a right expressly given under a written contract.
Contracts § 23--Construction and Interpretation--Implied Covenants-- Avoidance by Courts.The courts cannot make better agreements forparties than they themselves have been satisfied toenter into or rewrite contracts because they operateharshly or inequitably. It is not enough to say thatwithout a proposed implied covenant, the contractwould be improvident or unwise or would operateunjustly. Parties have the right to make such agree-ments. The law refuses to read into contracts any-thing by way of implication except upon grounds of obvious necessity.COUNSELCohen & Luckenbacher, Evan S. Cohen and S.Martin Keleti for Plaintiff and Appellant.McCambridge, Deixler, Marmaro & Goldberg, BertH. Deixler and Daniel L. Germain for Defendantsand Respondents.
EPSTEIN, Acting P. J.
This case involves a dispute between a com-pany which owned the rights to the musical outputof singer/songwriter Tom
Waits from 1972 to1983 and the party which purchased those rights.The issue is whether a promise to market music, orto refrain from doing so, at the election of thepromisor is subject to the implied covenant of goodfaith and fair dealing where substantial considera-tion has been paid by the promisor. We concludethat the implied convenant does not apply.Factual and Procedural SummaryAccording to the complaint, Waits agreed torender his services as a recording artist and song-writer exclusively to Third Story Productions(predecessor in interest to plaintiff and appellantThird Story Music, Inc.) from 1972 to 1983, pursu-ant to written agreements dated July 1, 1972, andJuly 1, 1977. Third Story Productions transferredits rights in Waits's music to Asylum Records(predecessor in interest to defendant/respondentWarner Communications, Inc.) on August 31, 1972,Page 241 Cal.App.4th 798, 48 Cal.Rptr.2d 747, 96 Cal. Daily Op. Serv. 107, 96 Daily Journal D.A.R. 125
(Cite as: 41 Cal.App.4th 798)
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