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Performance Clauses In Entertainment Contracts - John J. Tormey III
"This article is not intended to, and does not constitute, legal advice with respect to your particular situation and fact pattern. Do secure counsel promptly, if you see any legal issue looming on the horizon which may affect your career or your rights. What applies in one context, may not apply to the next one. Make sure that you seek individualized legal advice as to any important matter pertaining to your career or your rights generally".

Producing and editing a masterwork of recorded music is obviously a specialized art form. But so is the act of drafting contractual language. How might the art of legal drafting affect the musician or producer?

Many artists think they will be “home free”, just as soon as they are furnished a record contract to sign. They are wrong. (And those of you who have ever received a label’s “first form” are chuckling, right about now).

Just because a U.S. record label forwards an artist its “standard form”, does not mean that one should sign it blindly. A number of label forms still used today are quite hackneyed, and have been adopted in whole or in part from form books or other labels’ “boilerplate”. A number of label recording contracts actually read as if they were written in haste - just like Nigel Tufnel scrawled an 18-inch Stonehenge monument on a napkin in Rob Reiner’s “This Is Spinal Tap”. (And if you are a musician, I bet you know what happened to Tap as a result).

It stands to reason that an artist and his or her legal counsel should carefully review all forms forwarded to the artist for signature, prior to ever signing them. Through negotiation, the artist can interpose more precise and even-handed language where appropriate. Inequities aren’t the only things that need to be removed from a first draft. Ambiguities must also be removed. To leave an ambiguity in a contract is merely to leave a potential bad problem for a later day - particularly in the context of a recording contract which could tie up an artist’s exclusive services for many years. And remember, the artistic “life-span” of most artists is quite short - meaning that an artist could tie up his or her whole career with one bad contract, one bad signing.

One seemingly inexhaustible type of ambiguity that arises in entertainment contracts, is in the context of what I call a “performance clause”. A non-specific commitment to perform usually turns out to be unenforceable. Consider the following:

1. Clause #1: “Label shall use best efforts to market and publicize the Album in the Territory”.

2. Clause #2: “The Album, as delivered to Label by Artist, shall be produced and edited using only first-class facilities and equipment for sound recording and all other activities relating to the Album”.

One shouldn’t use either clause. One shouldn’t agree to them as written. Both clauses set performance obligations which are, at best, ambiguous. Why? Well, reasonable minds can differ as to what “best efforts” really means, or what the two parties intended “best efforts” to mean at the time (if anything). Reasonable minds can also differ as to what constitutes a “first-class” facility. If the clauses were ever scrutinized under the hot lights of a U.S. litigation, the clauses might well be stricken as void for vagueness and unenforceable, and judicially read right out of the contract itself. They are that bad.

Consider Clause #1, the “best efforts” clause. How would the artist really go about enforcing that clause as against a U.S. label, as a practical matter? The answer is, the artist probably wouldn’t, at end of day. If there ever were a dispute between the artist and label over money or the marketing expenditure, for example, this “best efforts” clause would turn into the artist’s veritable Achilles Heel in the contract:

Artist: “You breached the ‘best efforts’ clause!”

Label: “No! I tried! I tried! I really did!”

You get the idea.

Why should an artist leave a label with that kind of contractual “escape hatch”? The answer is, “no reason at all”. There is absolutely no reason for the artist to put his or her career at risk by agreeing to a vague or lukewarm marketing commitment, if the marketing of the Album is an essential part of the deal for the artist. It would be the artist’s career at stake. If the marketing spend diminishes over time, so too could the artist’s recognition and career as a result. And the equities should be on the artist’s side, in a negotiation over this issue. Assuming that the label is willing to commit to a marketing spend at all, then the artist should be entitled to know in advance how his or her career would be protected by the label’s expenditure of marketing dollars.

In the context of a performance clause - such as the obligation to market and publicize an album - it is incumbent upon the artist to be very specific about what is required. In other words, the artist should write out a “laundry list” of each of the discrete things that the artist wants the label to do. As but a partial example:

“You will spend ‘x’ U.S. dollars on advertising for the Album during the following time period: ____________”; or even,

“You will hire the ___________ P.R. firm in New York, New York, and one will cause no less than ‘y’ U.S. dollars to be expended for publicity for the Album during the following time period: _____________”.

If you don’t ask, you don’t get. The artist should make the label expressly sign on to a very specific list of tasks, monitor the label’s progress thereafter, and hold the label to the specific contractual standard that the artist was smart enough to “carve in” in the first instance.

* * * *

Consider Clause #2, the “first class facilities and equipment” clause. Note that, unlike Clause #1, this is a promise made by the artist to the label - and not a promise made by the label to the artist.

So, one might now ask, “the shoe’s on the other foot, isn’t it?”

“‘First class’ is as vague and undefined a contractual standard as “best efforts”, isn’t it?”

Right.

“So there won’t be any harm in my signing onto that clause, will there, because I will be able to wiggle out of it if I ever had to, right?”

Wrong.

The fact is, a contractual ambiguity in a performance clause is a bad thing - in either case - whether in the context of a label obligation to artist; or even in the context of an artist obligation to a label. Ambiguity could hurt the artist, even in the context of one of the artist’s own obligations to the other contracting party.

Here’s how. The old-saw principle of music “delivery” often finds the artist required to hand over documents to the label, as well as physical materials such as the album itself; in order to get paid. By virtue of a contractually-delineated procedure, the label may be entitled to hold some (or even all) monies back, and not pay those monies to the artist until “delivery is complete”. As one might therefore guess, “delivery” is a finite event whose occurrence (or non-occurrence) is oft-contested and sometimes even litigated.

It is incumbent upon the artist to prevent the label from drumming up a pretextual “failed delivery” as an excuse for non-payment. In the context of Clause #2 above, “first-class facilities and equipment” could easily become that pretext - the artist’s Achilles Heel in the litigation-tested contract. The label could simply take the position that the delivered materials were not created at a “first-class” facility. And if the contract didn’t explicitly define “first class”, the artist could well be out the money, at least for the entire duration of an eminently avoidable multi-year litigation over what 2 dumb words mean. (Worse yet, meanwhile, the label might be holding the money and laughing at the artist for his or her lack of contractual prescience).

What about prescience? How can this be avoided? The simple solution in this case, is to take a few extra minutes during the negotiations, and list out the actual facilities intended to be used. Make the label explicitly pre-agree to the list of facilities, by name and address, in the body of the contract. That is what a contract is for, anyway - when used correctly, a contract is really a dispute-avoidance tool. Also note that a contractual ambiguity could hurt an artist, regardless of whether it’s embedded in one of the artist’s performance obligations, or even in one of the label’s! The moral: list all performance obligations. Break them down into discrete and understandable tasks.

My law practice includes the fields of entertainment and publishing. If you have any questions about copyright law or any other legal issues which affect your career, and require representation, please contact me:

John J. Tormey III, PLLC
217 East 86th Street, PMB 221
New York, NY 10028
(212) 410-4142 (phone)
(212) 410-2380 (fax)
e-mail: brightline@worldnet.att.net
http://www.tormey.net


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