Business Law 13th Edition by Frank Cross, Kenneth Clarkson, Roger LeRoy Miller

Exercise 2

BACKGROUND AND FACTS?Ziff Communications Company, a publisher of specialty magazines, bought PC Magazine from its founder, Anthony Gold, for more than $10 million. As part of the deal, Ziff gave Gold or a company that he owned and controlled "ad/list rights"-rights to advertise at an 80 percent discount on a limited number of pages in Ziff publications and free use of Ziff's subscriber lists. In 1983, Gold formed Software Communications, Inc. (SCI), a mail-order software business that he wholly owned, to use the ad/list rights. In 1987 and 1988, he formed two new mail-order companies, Hanson Connors, Inc., and PC Brand, Inc. Gold told Ziff that he was allocating his ad/list rights to Hanson Connors, which took over most of SCI's business, and to PC Brand, of which Gold owned 90 percent. Ziff's other advertisers complained about this "allocation."
Ziff refused to run large ads for Hanson Connors or to release its subscriber lists to the company. Ziff also declared PC Brand ineligible for the ad discount because it "was not controlled by Gold." Gold and his companies filed a suit in an Illinois state court against Ziff, alleging breach of contract. The court ordered Ziff to pay the plaintiffs more than $88 million in damages and interest. Ziff appealed to an intermediate state appellate court, arguing, in part, that Gold had not properly assigned the ad/list rights to Hanson Connors and PC Brand.
IN THE LANGUAGE OF THE COURT
Justice Cousins delivered the opinion of the court.
* * * * Ziff * * * argues that Gold never properly reassigned his rights under the amended ad/ list agreement from SCI to PC Brand and Hanson. We agree with plaintiffs that assignments can be implied from circumstances. No particular mode or form * * * is necessary to effect a valid assignment, and any acts or words are sufficient which show an intention of transferring or appropriating the owner's interest. [Emphasis added.]
In the instant case, it is undisputed that Gold owned 100% of SCI. In a letter dated May 13, 1988, Gold, as president of SCI, instructed Ziff that he was allocating the ad/list rights to Hanson and PC Brand. Additionally, SCI stopped using the ad/list rights when PC Brand and Hanson were formed. * * * Gold's behavior toward his companies and his conduct toward the obligor, Ziff, implied that the ad/list rights were assigned to PC Brand and Hanson.
DECISION AND REMEDY The state intermediate appellate court affirmed the lower court's decision that the rights had been properly assigned. The appellate court remanded the case for a new trial on the amount of the damages, however.
THE SOCIAL DIMENSION?Would the assignments in this case have been valid if Gold had not notified Ziff? Why or why not? The Economic Dimension How might Ziff have effectively avoided both this dispute with Gold and complaints from its other advertisers?