Ellefson v. Megadeth, Inc | |
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Court | United States District Court for the Southern District of New York |
Full case name | David Ellefson, vs. Megadeth, Majestic IV, Inc., Megamerch, Inc., David Mustaine |
Decided | January 12, 2005 |
Defendants | Megadeth, Inc |
Plaintiff | David Ellefson |
Court membership | |
Judge sitting | Naomi Reice Buchwald |
Ellefson v. Megadeth, Inc. 2005 WL 82022 (S.D.N.Y. 2005) was a contracts case tried in the United States District Court for the Southern District of New York in 2005, in which the court determine to enforce a settlement agreement page signed and sent by fax, as an acceptance of a contract or as a counter offer. [1]
David Ellefson and David Mustaine are both original members of the heavy metal band Megadeth formed in 1983 and incorporated in 1990 with Mustaine receiving eighty percent of the stock and Ellefson receiving twenty percent of the stock. Ellefson claimed that Mustaine and Megadeth defrauded him out of his share of corporate profits. In October 2003 the parties entered negotiations to settle the disputes between them, leading to discussions of a buy-out of Ellefson's share of the corporation.
On April 16, 2004, Ellefson was sent a proposed "Settlement and General Release" for purchasing his interest and various licensing agreements. During the week of May 10, 2004, Mustaine imposed a 5 p.m. deadline on May 14, 2004, to sign the agreement and complete the settlement. On May 14, shortly after 4:45 pm, Ellefson sent a completed signature page via fax after receiving the final agreement. Four days after the faxing of the contract, defendant's counsel mailed out full copies of the agreement. Ten days after the faxing of the agreement Ellefson notified defendant's counsel that he "withdraws from these negotiations and withdraws all proposals."
The plaintiff argued for the mail copies a late acceptance of the contract considered a counteroffer and being late is a violation of the terms in the offer, and that the offer lapsed due to the expiration of time. The fax was immaterial since it did not contain any terms in the contract. Because Ellefson did not comply with the terms, it is not a valid acceptance because there was no mutual assent formed. The plaintiff argued that the court should reject that the regular U.S. mail was an unreasonable method of acceptance since it was not used in communications.
The court ruled in favor of the defendant granting their motion to enforce the settlement agreement, holding that faxing the signature page expressed the plaintiff's willingness to be bound by the agreement. The mailing of the contract by defendant's counsel constituted defendants’ acceptance under the mailbox rule and manifested their consent of plaintiff's counteroffer, prior to the withdrawal sent by the plaintiff. No restrictions were made on the mode of acceptance. It does not preclude the use of mail to accept the counteroffer. [2]
Fax, sometimes called telecopying or telefax, is the telephonic transmission of scanned printed material, normally to a telephone number connected to a printer or other output device. The original document is scanned with a fax machine, which processes the contents as a single fixed graphic image, converting it into a bitmap, and then transmitting it through the telephone system in the form of audio-frequency tones. The receiving fax machine interprets the tones and reconstructs the image, printing a paper copy. Early systems used direct conversions of image darkness to audio tone in a continuous or analog manner. Since the 1980s, most machines transmit an audio-encoded digital representation of the page, using data compression to transmit areas that are all-white or all-black, more quickly.
Megadeth is an American thrash metal band formed in Los Angeles in 1983 by vocalist/guitarist Dave Mustaine. Known for their technically complex guitar work and musicianship, Megadeth is one of the "big four" of American thrash metal along with Metallica, Anthrax, and Slayer, responsible for the genre's development and popularization. Their music features complex arrangements and fast rhythm sections, dual lead guitars, and lyrical themes of war, politics, religion, death, and personal relationships.
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