California Civil Code Section 1589 - Interpretation
In Recorded Picture Company Productions Ltd. v. Nelson Entertainment, Inc. (1997) 53 Cal.App.4th 350, the Court of Appeal found the trial court erred in finding a subdistributor was bound by the agreement between the movie producer and distributor under Civil Code section 1589.
The original contract provided the distributor with the rights to domestic distribution of the motion picture, the Last Emperor, in theatrical, television, and home video markets, along with the worldwide copyright to the movie.
The subsequent contract between the distributor and subdistributor conveyed only distribution rights to the domestic home video market.
The court held the subdistributor was not bound by the payment terms of the original contract because it did not receive all of the benefits of the original contract, not because the subdistributor accepted a portion of the original contract's benefits through a subsequent, separate agreement with one of the original contracting parties.