Comment on the Impact of Ellington v. EMI Music on Drafting and Interpreting New York Contracts

SUMMARY

The Corporation Law Committee (David M. Silk, Chair) issued a white paper discussing the 2014 Court of Appeals decision, Ellington v. EMI Music.  In that case, the court held that, absent a clear intent to bind future affiliates, a contractual provision referring to “affiliates” pertains only to then-existing affiliates and does not include future affiliates.  The report examines two recent trial court opinions that illustrate the differing outcomes courts may reach when applying this rule.  The report urges drafters of contracts governed by New York law to be aware of Ellington‘s potential implications for the use of the term “affiliates” in contracts, and to draft precisely so as to avoid unintended results.