Last time, I wrote on the concept of Contract and its importance in Nigeria entertainment industry. Today, I will be demystifying the concept by pointing out the basics that intending parties to a contract should look out for.
To avoid falling victim of the prevalent act of exploitation in the entertainment industry, artistes need have a basic understanding of what a contract is and its implications. Answers to the following questions should afford artistes intending to go into a contract the basic understanding of a contract;
i. What considerations should guide artistes when entering into a binding entertainment contract?
These are things artistes must consider regardless of whether it favours them or not:
• Obligations and Conditions of the Contract– These are what intending parties to a contract need to do in order to fulfill the terms in a contract. Artistes must be certain that their obligations and conditions are what can be reasonably met and not what can potentially fetter or hamstrung them.
• Performance– Most often than not, managers and record labels ensure that ignorant artistes are constrained into performing their obligations while there is a deliberate lacuna regarding the performance of their own obligations in the contract. Artistes must be conscious of how the terms in the contract will aid the performance of their obligations.
• Payment Terms– This is a schedule that specifies when royalty and other payments are to be made and how much is to be paid. This is an imperative term as it often times engender avoidable legal rift between parties. Payment terms should not only be expressly spelt out but also be reasonable and fair. Artistes should carefully note if the exact timing of payments is tied to specific dates, elapsed time or a milestone being achieved. Artistes have to carefully consider the conditions tied to these dates of payment.
• Liabilities– These are basically consequences of a party abdicating its obligations in a contract. Liabilities should be carefully considered as it can make or mar an ignorant artiste’s nascent career. Also, review who is liable when either parties are sued by a third party and who will bear the legal cost. It is advisable to get the record label to be responsible for all third party claims or at most have each party take care of their own legal expenses.
• Breach of Contract– This provides for what will happen to the contract should either party fail to fulfill any of its obligations. This most times favour the managers and record labels as they ensure that they are at liberty to repudiate the contract at any slight breach whilst they cunningly deny artistes this same right in a bid to recoup money invested.
ii. What fundamental terms should the parties look out for?
• Parties– This is one of the most vital components of a contract as it gives a face to the subjects of the contract. Artistes should endeavour to read the contract and make sure it is between the intended contracting parties. This is important in determining where money is coming from and who it will be going to. This becomes more critical if things go wrong and lawyers get involved.
• Offer– The offer on the table must be reasonable and commensurate with what is expected of an artiste.
• Consideration– This is usually something of value exchanged for performance or promise of performance of terms contained in a contract. In the music industry, money, endorsements, etc. are usually exchanged for an artiste’s intellectual product. However, artistes must be careful not to sign away their absolute right to their intellectual property as it is an avenue to make perpetual income even after the expiration of the intended contract.
iii. What are the red flags to look out for?
• Non-competes– Usually, when record labels sign on an artiste, they like to exclusively ‘own’ the artiste and his works. This is done by having exclusive rights to the artiste and his works by limiting the artiste’s dealings or potential dealings with the label’s competition in the industry. While this is reasonable in some situations, it is advisable to try and take this clause out of the contract or limit it as much as possible as it may be a defining factor in the growth of an artiste in the industry.
• Ownership– The artiste is the primary owner of his works and should be allowed to have a say in what and how it should be used. Therefore, artistes should endeavour to look out for clauses that will strip them of total rights and ownership of their work. It is advisable for artistes to insist on joint ownership of their works. Kiss Daniel’s legal battle with G-Worldwide comes to mind.
• Penalties if things go wrong– At certain points in a contract, things may go wrong, it is important to note what the penalties to either party will be. There also should be a reasonable ‘cure period’ that will afford a defaulting party to ‘make things right’ before penalties or legal action can begin.
iv. Are the terms in my best interest?
Before entering into a contract, artistes must know what he/she wants from the contract, whether the terms will aid or impede his/her future projections.
v. When is it appropriate to just walk away?
Once you carefully study the contract and you realise it is not in your best interest and does not support your future projections, try negotiating the terms and if it is not improved upon, it is best to walk away.
vi. Will these terms allow me to walk away when it doesn’t favour me?
This will usually be contained in the Liabilities and breach of contract clause. Most managers and record labels use this clauses to enslave artistes and make money off them at the cost of their careers. Artistes should carefully study these clauses and make sure there is no provision that makes them obligated to continue with the contract even though it does not favour them.
When reviewing a contract, it must be clear as to what is specifically expected of each of the contracting parties. An ambiguity or confusion in any part of the contract can lead to problems when trying to enforce the provisions of the contract. Parties, especially artistes should look out for ambiguities and should not be afraid to ask for clarifications where needed.
Furthermore, there is a misconceived notion that hiring a lawyer is too expensive and unnecessary. However, the consequences of not hiring a capable lawyer to protect your works and rights out-weigh the cost of hiring a lawyer to try and remedy whatever infringement that has been suffered or liability that has been incurred. Stakeholders in the entertainment industry need to come to terms with the fact that the role of a legal practitioner in the entertainment industry is pivotal at every stage from the initiation of the contract to the conclusion.