by Raizel Liebler
We are starting a new series, loud moments in metal law history. If you have any metal law issues you’d like us to discuss, leave a comment. Enjoy!
In honor of the tenth anniversary of the contract (or not) formed over the Memorial Day holiday, our first post in this series discusses the legal dispute between Megadeth’s Dave Mustaine and Dave Ellefson (heretofore called Junior, as the fans do). While Dave and Junior have made up, the legacy of their dispute lives on. This case is important not only to metal fans, but also is used as an example of contract formation in contracts classes in law schools.
The background is simple — Dave wanted to restart Megadeth after the Arizona years. Dave and Junior were at odds; at the time Dave owned 80% of Megadeth, Junior 20%. Lawyers were involved in the contract dispute, faxes and emails were exchanged — but was the contract signed and arrived in time for Dave’s 5 p.m. deadline? And what about the followup contract sent by postal mail over the Memorial Day weekend that took thirteen days to arrive?
When taking up this issue, the court compared the issue to a basic first year law school hypo: but “we begin with a fundamental tenet: to have a valid contract, there must be both an offer and an acceptance.” Junior didn’t get his signed fax back to Dave by the deadline, therefore, it was a counteroffer rather than an acceptance of the original contract. And then Junior withdrew his counteroffer a few days later.
But wait! Dave mailed back a signed response to the late fax before Junior pulled his counteroffer, thereby creating a new contract with the terms of the counteroffer. The court does have a slight burn for the dueling metalheads: “once the offer has been accepted, the parties have formed a contract and are bound by the terms of that agreement, even if later events make them regret their decisions.”
Important lesson — acceptance by mail of contract terms is still a contract — and don’t sue your fellow bandmates when you will make up soon.
There is no official reporter version of the case, so the citation is Ellefson v. Megadeth, Inc., 2005 WL 82022 (S.D.N.Y. Jan. 13, 2005)