14: CONTRACTS

For more on specific contracts use the links down the right, underneath the contracts heading in the menu. Links to sample contracts are on each page.

You can use the links below if you need to find info on specific contracts. Below those links however is some general stuff about contracts: typical common clauses which appear in most contracts and some general principles which it is useful to understand.

Part 1: Introduction to Contracts.

By the way, for those who want to read more (and can afford it!) there's a totally brilliant book covering this stuff called 'Music Business Agreements' - by Richard Bagehot. Published by Sweet and Maxwell. ISBN 0 08 036905 7. Its very expensive so get your library to get hold of a copy.

There are a variety of areas in music business life where contracts could be relevant. Some of them may never crop up in your career, but one or two might so it would be useful to know what they mean and have a basic understanding of the principles involved. Firstly, an agreement can be about anything so each one will have unique features perhaps not found anywhere else. In other words, there is generally no such thing as a standard contract. There are, however, general features which are likely to be in most contracts.

The areas where contracts may crop up are: Record deals, management agreements, live appearance agreements, publishing deal, distribution deals, and no doubt many more.

What is a Contract?

There are 4 essential elements to a valid contract:

an Offer

This means basically someone making an offer to someone else - pretty simple really. It will usually involve some kind of promise to do something in exchange for some service or other.

an Acceptance

This means that the people being made the offer have to accept it - possibly after some negotiation about some of the terms.

Consideration

There must be something of benefit for both parties to the agreement. If one party were seen to be worse off with the contract than without it the validity could be in doubt.

an 'intention to create legal relations'.

There should be the intention to form a legally binding relationship between the partners.

Some key terms and concepts

There are a few concepts it will be useful to get your head around, which are very common and likely to crop up in any contract whatever it may concern. There some great examples of the use of some of these terms in the sample contracts provided in the relevant sections. For instance, see the contract on the page about Management Contracts.

Some of the examples below might be scary - don't worry, they are for quite advanced students. The general idea is in the first few lines under each heading.

Term

This refers to a time period, usually that for which the agreement will last if everything goes according to plan. Sometimes this period might be divided into smaller periods (called, believe or not, 'contract periods' - good eh!). The joins between these periods might be points at which the general agreement can be renegotiated to some extent, often depending on the success of the previous period. These joins can sometimes be referred to as 'options'.

Here's an example from a contract of 'term' in action:

• The expression 'the Term' shall mean a period commencing on the date of signature hereof and continuing for twelve (12) months ('the Initial Contract Period') and for the additional Contract Period(s) (if any) by which such term may be extended consequent upon the Company's exercise of the options granted to the Company under the provisions of clause 3.2 below which options should be exerciseable at the Company's discretion by notice in writing to the Artiste served at any time during and prior to the expiration of the Initial Contract Period or the then current Contract Period or consequent upon any provisions herein contained for the suspension or extension thereof.

Territory

This literally refers to the geographical area within which an agreement operates. It could be the entire world, or regions such as Europe or the USA, depending on what type of contract it is. For example an agency agreement for a regional covers band probably won't extend into the artistes activities in Europe or America, there'd be no point.

Exclusive/Exclusivity

This means that one of the parties to the agreement wishes to be the only person or company taking a particular role. For instance, a management company will want to be the only one an artiste is signed to. Similarly, a record company will not want an artiste having obligations to another record company.

For more on specific contracts use the links down the right, underneath the contracts heading in the menu.