Waits

This case involves a dispute between a company which owned the rights to the musical output of singer/songwriter Tom Waits from 1972 to 1983 and the party which purchased those rights. The issue is whether a promise to market music, or to refrain from doing so, at the election of the promisor is subject to the implied covenant of good faith and fair dealing where substantial consideration has been paid by the promisor. We conclude that the implied convenant does not apply.

Factual and Procedural Summary

According to the complaint, Waits agreed to render his services as a recording artist and songwriter exclusively to Third Story Productions (predecessor in interest to plaintiff and appellant Third Story Music, Inc.) from 1972 to 1983, pursuant to written agreements dated July 1, 1972, and July 1, 1977. Third Story Productions transferred its rights in Waits’s music to Asylum Records (predecessor in interest to defendant/respondent Warner Communications, Inc.) on August 31, 1972, and to Elektra/Asylum Records (currently a division of Warner Communications, Inc.) pursuant to an agreement dated June 15, 1977. Under these agreements, TSM was to produce master recordings…