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CONTRACT

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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 Cross-links: 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 Cross-links: 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 Cross-links: 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 Cross-links: 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 Cross-links: 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 Cross-links: 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 Cross-links: 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 Cross-links: 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 Cross-links: 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 recording. 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 Cross-links: ACQUITTAL, RELEASE, CONTRACT-A CLOSER LOOK, CONTRACT under "Waiver," "Novation," and "Warranty."

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Implied Contract, Valid Contract, Invalid Contract, Illegal Contract,
Voidable Contract, Void Contract, Contract Fraud,
Oral Contract, Exclusive Contract, Waiver,
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