Join Richard Stim for an in-depth discussion in this video Contracts, part of Music Law: Managing a Band's Business.
- In the next series of videos I'll discuss tasks that are often handled by member-managers. I'll start with contracts. Contracts bind your band or you personally. They're written in legalese and they sometimes contain legal land mines. Some contracts, like management, recording, music publishing, and spec deals require special attention, because you are committing your band for a period of years, and/or transferring copyrights. You can tell if an agreement is transferring rights because it will include wording such as, "grant," "assign," "license," or "transfer." In those cases your band would benefit from an attorney's review.
The good news is that I've already covered most of the important details for music contracts in my course, "Music Law: Recording, "Management, Rights, and Performance Contracts." That course discusses most common music agreements, and explains the typical trouble spots and how to avoid them. Also valuable, you'll find information about common, or "boilerplate" provisions, those miscellaneous clauses typically found in most agreements.
Here are some additional contract tips for bands. Get paper. One of your tasks as band manager is to be the keeper of the paper, with "paper" referring to physical and digital copies. You need to archive all contract exchanges, including supporting documentation, such as emails, receipts, and proof of purchase. This is essential for tax purposes, or if you're ever involved in a contract dispute. Be aware of dispute resolution provisions.
Most contracts contain some statements regarding what happens in a dispute. In particular, your band should be on the lookout for three issues. Jurisdiction provisions, sometimes called "Forum Selection Clauses." These provisions require the parties to consent in advance to resolving disputes in a specific location. For example, a record label in Chicago demands that if you have a legal dispute, you must travel to Chicago, even though your band is based In Seattle.
If you have the bargaining power, try to remove such requirements. Attorney fee provisions require that one party in a lawsuit pay the other party's attorney fees. Most are mutual. Whoever loses the lawsuit pays. But watch out for one-way provisions, that allow only one of the parties to receive attorney's fees. One-way provisions, no matter which side they favor, create an uneven playing field for resolving disputes.
Some states, such as California, have recognized this unfairness and automatically convert a one-way attorney's fees contract provision into a mutual provision. Arbitration provisions require that the parties resolve disputes through the aid of a private arbitration service. For simple contract disputes in which the matter can be heard in one day, arbitration is usually a good choice, because it's efficient. However, a binding arbitration ruling can't be appealed, and in some cases, the costs of arbitration can be significant, and may even exceed the costs of litigation.
Liability-shifting provisions. Often a record contract will require that the band promise that its songs and recordings won't infringe anyone's copyright, or a performance agreement may require a promise that the band won't cause injuries while performing. Sometimes these promises, known as "warranties," are accompanied by an obligation, known as "indemnity," that if infringement or injury occurs, the band will pay all damages, including attorney fees.
An attorney's assistance may be needed to properly draft and interpret these provisions. Signatures. When signing an agreement on behalf of a band partnership, the name of the partnership must be mentioned above the signature line, or the partnership may not be bound, only the person signing the agreement will. Next to the printed name it should state, "General Partner." For example, Joan Smith, General Partner.
If you are the member-manager, you should be authorized by the band to sign the contract. That is, the band has agreed to the terms and agreed that you can sign on the band's behalf. Band members signing on behalf of corporations and LLCs should be identified in their corporate or LLC capacities. Sometimes a music agreement will require all band members to sign it, and will state that the band members are jointly and severally liable. That means the other party can seek the full amount of a debt, lawsuit, or injury from any or all of the band members.
Leaving member provisions are typically found in management and recording contracts. If anyone leaves your band, the manager or record company has an option to sign that band member under the same terms and conditions as the underlying contract. If band members are uncomfortable with this provision, they should attempt to strike it completely, or have themselves excluded. No contract is bullet-proof, so it's important to research the people with whom you contract.
As some musicians say, "It's the people, not the paper." So find out what you can about club owners, producers, musicians, or anyone else with whom you will be negotiating. Remember, sometimes no deal is better than being trapped in a bad one.
It starts with what it means to be the manager of a band, and what types of business structures are available for bands. Once you've decided on a business structure, you can create a band partnership agreement that covers voting rights, postbreakup scenarios, new members, and terms for resolving disputes. Richard also exposes potential sources of disputes, like ownership of the band name, songs, equipment, and recordings. He includes advice on negotiating solid band contracts and managing financial basics: taxes, income, cash flow, and bookkeeping. Finally, he'll address how to protect your work, including your copyrights, band name, and songs, and explains how to find a lawyer—and save money on attorney fees.
DISCLAIMER: This course is taught by an attorney (or other instructor) and addresses US law concepts that may not apply in all countries. Neither LinkedIn (including Lynda.com) nor the instructor represents you and they are not giving legal advice. The information conveyed through this course is akin to a college or law school course; it is not intended to give legal advice, but instead to communicate information to help viewers understand the basics of the topic presented. The views (and legal interpretations) presented in this course do not necessarily represent the views of LinkedIn or Lynda.com.
- Putting together a band partnership agreement
- Working out ownership disputes
- Limiting band liability
- Protecting your copyrights and band name
- Hiring a lawyer