Decision of Note: <b>Deal Memo May Tie Artist To Manager</b>

King and Gurley signed a letter memorializing their agreement that provided:

“This letter will serve to state that I will sign an exclusive management agreement with Cathy Gurley for a period of three years. This will begin either when my agreement with In House ends (December 1999) or earlier if Cathy is able to persuade In-House to relinquish their contract. … The details of the agreement will be worked out later but will basically follow the same arrangement currently in place with In House.”

When Gurley sued King in Tennessee state court for breach of contract to enforce the agreement, King argued that the memo had only been an “agreement to agree.” The court dismissed Gurley's suit, but the Tennessee Court of Appeals reinstated the case for trial. According to the court: “It is only when an essential term is left open for future negotiation that there is nothing more than an unenforceable agreement to agree. … Similarly, a letter of intent may be binding even though it refers to the drafting of a future, more formal agreement. … Here, the intent of the parties to be bound by the letter of intent is not left to inference from the terms of their agreement but is twice expressly stated in prominent parts of the letter of intent. … We believe the parties acted upon the letter in such a way as to suggest that they believed a binding agreement had been reached.”

The Tennessee Court of Appeals, at Nashville, ruled that a manager may proceed with a suit to enforce a deal memo between the manager and an artist. Gurley v. King, M2003-02897-COA-R3-CV. Artist Matt King had entered into a management contract with In House Inc. in 1995. In House brought in Cathy Gurley to help manage King. In March 1999, King and Gurley agreed that, after the In House management contract ended, Gurley would serve as King's manager for 3 years at the same commission as that of In House (ie, 15% of gross income).