The presence of law in the business world

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In order to make sure that company is fair and predictable, law must exist in the business world. Additionally, it promotes competition while upholding fairness because it guarantees the protection of all property rights. The law ensures that all parties involved respect and follow responsibilities as they carry out their duties, regardless of the size or type of business being conducted. In this situation, contract law is crucial for safeguarding contracts, handling violations, and offering remedies. The law mandates that all parties engaged in a contract be aware of its implications before entering into one. (Morgan, 2012). A case in the supreme court involved Judge Ferrer and his lawyer Preston. These two had engaged in a contract where they had both agreed that Preston would be Ferrer’s personal manager in a television show and that Ferrer would have to pay Preston a percentage of all the earnings from this deal. There was also a clause contained in their contract which required that any disputes arising between them had to be arbitrated. After some years had passed, Preston filed against Ferrer with the American Arbitration Association seeking to be paid some of the dues which he claimed that was owed to him by Ferrer. Ferrer, on the other hand, claimed that the contract was invalid since Preston was unlicensed at the time of signing the contract and the case would have to be heard by California Labor Commissioner before seeking any arbitration to their disagreements (Buechner, 2008)

The ruling made by the California Court of Appeals was in favor of Ferrer. The ruling did not agree that such a case should be heard by the arbitrator before being taken to the court as the contract was allegedly not valid. Moreover, the California Labor Codes required that any person seeking to act as a talent agent must first be licensed (Gardner, 2015) . The court also maintained that these parties were required to file their differences with Labor Commissioner even before seeking arbitration. Preston challenged this ruling by claiming that the clause allowed their differences to be heard by an arbitrator and by taking the case to the court, the contract was no longer valid. However, the petition to review the case was denied by the California Supreme Court. The court insisted that if the contract was alleged to be invalid in the first place, then all the clauses in the contract could not be considered valid including the arbitration clause (Buechner, 2008).

Preston maintained that according to the California Talent Agencies Act, arbitration was important as it was protecting the vulnerable party. He was certain that arbitration would protect their rights to file petitions allowing the arbitrators to perform their duties. He also stated that he was a personal manager and not a talent agent as his duties were different from the duties of a talent agent. Only the talent agents required licensing according to California Talent Agencies Act (Gardner, 2015)

In conclusion, the ruling by the court was fair. However, if the court had agreed with Preston, it would have given way for contradicting parties to avoid arbitration and thereby avoid being scrutinized and therefore get away with the statutory schemes that have been laid down by the state to protect all parties in a contract.


Buechner, L. (2008). Preston v. Ferrer (06-1463). LII / Legal Information Institute. Retrieved from

Gardner, E. (2015). Challenge to California's Talent Agent Licensing Law Revived by Appeals Court. The Hollywood Reporter. Retrieved from

Morgan, S. (2012). What Is the Role of Law in Business? Legal Beagle. Retrieved from

July 15, 2023

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