## Facts

- A theatrical producer contracted with acrobatic performers for exclusive services for one year beginning September 1, 1919, with a 20-week employment guarantee and weekly compensation that increased when touring.
- The contract gave the producer an option to renew for a second theatrical year (September 1, 1920 to September 1, 1921) if notice was given before July 1, 1920, with higher weekly pay and a renewed 20-week guarantee.
- The performers expressly agreed not to perform for any other manager or appear in any other theater or public amusement without the producer’s written consent during the engagement.
- Before the option deadline, the producer mailed a letter exercising the renewal option; the letter was not returned as undelivered but misstated the renewed term by referring to “October” rather than “September.”
- The performers refused to perform during the renewal term and contracted to appear for a competing manager at a rival New York theater.
- The producer sought an injunction to enforce the negative covenant by restraining the performers from performing for others during the renewal term.

## Issues

1. Whether equity may enjoin performers who provide unique and extraordinary personal services from performing for competitors, enforcing an express negative covenant without compelling affirmative performance.
2. Whether the exclusive-services contract and renewal option were sufficiently mutual and fair to justify injunctive relief.
3. Whether the producer effectively exercised the renewal option despite the letter’s technical date error.

## Decision

- The Second Circuit affirmed the injunction restraining the performers from performing for others during the renewal term.
- The court found the option effectively exercised because timely notice was mailed and the circumstances supported receipt; the date misstatement did not defeat renewal.
- The performers’ services were unique and extraordinary, and the producer’s damages from breach were not reasonably measurable, making legal relief inadequate.
- The contract was not inequitable for lack of mutuality because the producer assumed reciprocal obligations, including a substantial salary structure and a minimum-employment guarantee.

## Legal Principles

- Courts may enforce an express negative covenant in a personal-services contract by injunction when the promised services are unique or extraordinary and monetary damages are uncertain.
- Injunctive enforcement of a negative covenant does not require ordering specific performance of personal services; it may permissibly restrain competing performances.
- Mutuality for equitable relief is assessed in light of reciprocal obligations and overall fairness; a minimum-employment guarantee and agreed compensation can supply sufficient mutuality.
- A timely option notice that clearly manifests intent to renew may be effective despite a technical misdescription of dates when surrounding circumstances show the renewal period intended.

## Conclusion

The court upheld equitable enforcement of an exclusive-services negative covenant against performers with unique skills after concluding the renewal option was effectively exercised, the agreement was sufficiently mutual and fair, and damages from breach were too uncertain to provide an adequate remedy at law.


Shubert Theatrical Co. v. Rath, 271 F. 827 (2d Cir. 1921)