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Cross-Links Hot! 1) A promise, or set of promises, that create a legal obligation for the performance of a defined duty, or duties, by one and/or all parties involved, i.e., an agreement to do or not to do a certain thing.
2) A legal instrument that defines an agreement between two
or more parties.
Contracts,
in the music business, as in other areas of business, are usually
tailored to fit specific individual situations and needs. They
may be used to define agreements of action or inaction, collection
and distribution of income, divisions of assets, etc..
Entering into any contractual situation is serious business and must be approached with caution. Contracts, remember, can create problems as well as solve them. For example, contracts or parts of contracts may, in some cases, be unenforceable because they are invalid from the outset (void contracts), conflict with existing law (illegal contracts), become void because of certain uncontrollable events (e.g., bankruptcies or mergers), become void when new laws are retroactively enforced back to a certain date before such contracts existed, because they conflict with existing court decrees, because other contracts that were previously in existence override them, or because statements in new contracts or statements found elsewhere in the same contract may override them. For these and other reasons, contract drafting and negotiations should be handled only by professionals.
See: INSTRUMENT, CONTRACT-A CLOSER LOOK,
CONTRACT-CLUB CONTRACT,
CONTRACT-RECORDING CONTRACT, CONTRACT-SONGWRITER/PUBLISHER CONTRACT,
CONTRACT-COMPUTER BUYER/VENDOR CONTRACT.
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Adhesion Contract:
Any contract that greatly restricts one
party while being non-restrictive to the other party involved,
e.g., a form contract offered to a consumer by a manufacturer
on a "take-it-or-leave-it" basis. This means that the
consumer must agree to the manufacturer's terms in order to obtain
the product. This mandatory requirement raises doubt as to whether
the contract is representative of a voluntary and uncoerced agreement,
i.e., as to whether it is a valid and enforceable contract. See:
CONTRACT-A CLOSER LOOK,
CONTRACT-RECORDING CONTRACT, CONTRACT-SONGWRITER/PUBLISHER CONTRACT,
CONTRACT-COMPUTER BUYER/VENDOR CONTRACT, CONTRACT under "Form
Contract," and "Void Contract."
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Agreement of Sale:
A contract agreement between a buyer and
a seller. The agreement would express or imply that the seller
has an obligation to sell, and the buyer has an obligation to
purchase. Sales agreements for real property must be in writing
in order to prevent fraud and to provide accurate record of the
transaction. See: CLEAR TITLE,
ESCROW, TITLE, BUY, SALE, CONTRACT-A CLOSER LOOK,
CONTRACT under "Deed of Trust."
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Bilateral Contract:
A contract where each party is a promisor
and a promisee, i.e., there are mutual offers and considerations.
See: CONTRACT-A CLOSER LOOK,
CONTRACT-RECORDING CONTRACT, CONTRACT-SONGWRITER/PUBLISHER CONTRACT,
CONTRACT-COMPUTER BUYER/VENDOR CONTRACT, CONTRACT under "Indenture,"
and "Unilateral Contract."
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Binder:
A written summation. It states the most
important items of a formal contractual agreement that has not
been finalized or drawn up. It is a preliminary or temporary contract.
See: CONTRACT-A CLOSER LOOK.
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Breach of Contract (Default
or Failure to Perform):
A failure, without legal excuse, to perform
(which actually involves inaction in some cases), or comply with,
any of the offers or considerations (obligations) that are intrinsic
elements of a contract. This happens when the promisor does not
honor his promise to the promisee. The breach may exist because
of non-performance, repudiation, or hindrance.
Non-performance occurs when a contractual duty is simply not
performed, e.g., a studio musician hired to perform studio back-up
work never shows up or does not complete all of the work contracted.
Repudiation exists when the promisor renounces or disavows
his promise and therefore refuses to comply. This can happen when
verbal contracts are used and considerations are forgotten by
the promisor.
Hindrance exists when there is obstruction or prevention of performance by unforeseen circumstances, e.g., if a moving company contracts to move a piano to a new location on the 50th floor of a building and the elevators are not of sufficient size to accommodate the move.
See: DEFAULT, REMEDY, DAMAGES, RESTITUTION, SPECIFIC
PERFORMANCE, BANKRUPTCY,
AGENCY under "Termination of Agency," CONTRACT-A CLOSER LOOK,
CONTRACT-SONGWRITER/PUBLISHER CONTRACT clauses #39, CONTRACT-RECORDING
CONTRACT clauses #49, COMPUTER BUYER/VENDOR CONTRACT clauses #17
and #18.
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Contract Negotiables:
Certain costs that are defined by contractual
agreement to be the responsibility of the artist or songwriter.
These costs are recouped from the artist's or songwriter's gross
royalties. In the absence of such agreement, the costs would be
paid by the record company or publisher. They are referred to
as "negotiables" because, depending upon the strength
of the negotiation power of the artist or songwriter, some, or
all, may be deleted from the contract. Negotiable costs may include
cash advances, demo costs, masters recording costs, album jacket
costs, record return costs, record discounts, kickbacks, complimentary
copies, agent fees, attorney fees, accounting and other service
charges, etc.. See: RECOUPABLES,
INCOME, FREE RECORDS, COST under "Chargeable Costs,"
CONTRACT-RECORDING CONTRACT clauses #30, #31, #32, #33, #34, #35,
#36, #37, CONTRACT-SONGWRITER/PUBLISHER CONTRACT clauses #21,
#22, #23, #24, #25, #26, CONTRACT-A CLOSER LOOK, CONTRACT under
"Contract Clause."
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Lease:
A contract that transfers the right to
possession of a specified property for a definite period of time.
The transfer is made in exchange for periodic payment of defined
amount, i.e., rent or royalty. See: LESSOR,
LESSEE, CONTRACT-A CLOSER LOOK,
CONTRACT under "Master Lease."
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License:
A contractual permission to act, usually
by written agreement, which is granted by a party of authority
that is legally authorized to grant such permission, e.g., allowing
a party an exclusive right to a copyright. In the absence of such
authorization, the act would be illegal. See: PERFORMANCE
LICENSE, PERMIT, LICENSED PROFESSION, LICENSEE, LICENSOR, CONTRACT-A CLOSER LOOK,
TAX under "Excise Tax."
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Release of Liability:
1) A contract that allows a party to be freed from an otherwise enforceable claim, right, or interest that could be held against such party, e.g., a songwriter may sign a release freeing a record company of plagiarism liabilities to encourage the record company representative to listen to the songwriter's demo tape. Or, a songwriter may release a publisher from copyright infringement liabilities when submitting a song for evaluation.
2) An instrument that defines an agreement where an obligator
agrees to nullify one or more legal responsibilities of an obligee,
e.g., a record company may release an artist from a recording
contract commitment.
The above two are called "express releases" since they have explicit terms of agreement. Express releases are usually in writing.
3) An act or acts that imply a release has been given (called an "implied release"). For example, if a landlord (without complaint) allows a recording studio tenant to continually pay his rent past the due date, the landlord, in effect, has released the tenant of his responsibility to pay by the due date.
See: ACQUITTAL, RELEASE, CONTRACT-A CLOSER LOOK, CONTRACT under "Waiver," "Novation," and "Warranty."
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