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Entertainment giants battle over contract dispute

Two major names in the California entertainment industry are locked in an ongoing legal battle with one another. The case between Netflix and Fox centers around the question of employment contracts in the industry. Fox sued Netflix after the streaming firm recruited several top executives, and the ongoing case has brought up major issues about how contracts are formed for high-ranking business leaders. Netflix is arguing that Fox's employment contracts are illegal and invalid, and the streaming giant even compared them to slavery.

Lawyers representing Netflix said that Fox's contracts violated the 13th Amendment to the U.S. Constitution, one of the so-called "Civil War Amendments" that banned involuntary servitude and slavery. Because Fox's contracts bind employees to continue working for the company for a specified period of time, Netflix argues that these contracts should be thrown out. Earlier in the trial, a judge came down largely on Fox's side, dismissing Netflix's arguments that the contracts were disguised illegal non-compete clauses that violate California employment law. Netflix's amended pleadings, however, raise further concerns.

Fox argues that employment contracts for a fixed term provide security and certainty for both parties in the agreement, the company and the executive. However, Netflix argues that such contracts are largely unseen outside the entertainment industry because they are unwelcome to most business executives. Netflix also argues that Fox's contracts forbid employees to resign their jobs and prohibit them from seeking new jobs until 90 days before their contracts end. It also claims that the company cannot show that its executives' departure caused it any kind of financial harm.

Contract disputes are some of the most common causes of business litigation. A business law attorney may help companies to draft clear contracts on a solid legal basis as well as represent them in the event of a dispute.

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