Music Business/Law Tips - "Breaking A Record Contract" (Part 6)

Another situation akin to breach that frequently arises in an artist deal (and which somewhat relates to the Seven Year Statute) involves a dispute over the expiration date of the agreement. As mentioned, many recording agreements provide for a minimum term of minimum one year, with separate options of minimum one year each, sometimes tied to the delivery of product. The record company generally has the privilege of either exercising the right to continue the contract, or to let it lapse. Most contracts have a specific provision for the exercise or non-exercise of options. If the exercise provision is not properly complied with by the label (e.g., the label fails to give written notice of its intent to pick up an option), the artist can argue that it is free to sign a new contract.

Similarly, an artist could also allege that it has fulfilled its recording commitment to the label. Every artist agreement bestows on an artist the duty to record and deliver a specified number of masters to the record company during the term. Unless the contract provides for a detailed schedule of how many records to deliver in any given period, if the artist is signed, for example, to a five album deal, the artist could theoretically deliver the five albums at any time and fulfill the delivery requirement. Legend has it that Frank Zappa once pulled this stunt when he delivered multiple albums at one time so that he could claim he fulfilled his obligations. Apparently, the record company had not safeguarded against this occurrence. On the flip side, when an artist is trying to fulfill the delivery commitment, and the label is not reciprocating, the artist could argue that the label is refusing to let the artist record and wrongfully attempting to suspend the artist for non-delivery of product. If there is no possible basis for failure to accept the recording, this could be a breach of a good faith duty or obligation by the label.

It is important to note that buried within most record contracts is a notice provision whereby any claim of breach by the artist must be submitted in writing to the label with the label having an opportunity to cure the alleged breach. If a notice is not timely and properly served on the label by the artist, the artist may have failed to fulfill a condition precedent to support a legal action for breach of contract.

Obviously, a breach of a recording contract can be argued under a myriad of instances, so the underlying contract should be closely scrutinized for potential cracks.

[part 7 next time]

Ben McLane Esq
benmclane.com