What is the fundamental principle of law? 

Freedom 

What are the five points of a vaild contract?

Unambiguous

Consideration

Capacity

No Illegal Acts

Mutual Agreement 

What is the Statute of Frauds?

 Items the court will not enforce unless written.

Oral contracts that are not valid to certain subjects. 

What are the 6 types of contracts that fall under

the Statute of Frauds? 

Can't be performed in one year

Realty

Consideration of Marriage

Assuming debt of another

sales over $500

Assignment of copyright 

Acceptance is effective once mailed,

a contract is made at this point 

What is the mirror image rule?

Acceptance must be unconditional and must not change, add to, or qualify the terms of the offer.

Why is it important to read and understand the definitions given in a contract? 

Definitions are the key to understanding the deal, and are personal to the author. 

Define "rider" 

Attached to agreement for live shows and discusses special needs of the artist. 

Define "warranty" 

expess or implied promise that something is guaranteed.

What is "indemnity"? 

A duty to make good any loss, damage, or liability, incurred by another. Certain warranties that need not be stated. 

What is "condition"? 

(if.........then)

Something must happen for something else to happen 

What is Most Favored Nations clause?

No one else can get a better deal.

The party promised this status will receive as good of a deal as anyone else. 

An indemnity clause commonly follows which clause? 

Warranty 

Give the general definition of "option"    

privilege that one party may or may not choose to exercise.

Usually refers to continue term of contract for additional period. 

What is material breach? 

severe breach that threatens the value of whole contract.

NON BREACHING party excused and may sue 

What is an immaterial breach? 

UNIMPORTANT values/terms

non breaching party not excused, may sue 

What would you include in a Liquidated Damages clause? 

Specific dollar amount if contract is breached. 

How must liquidated damages be limited? 

Must not be excessive, must not act as a punishment.

"Place a ceiling on the amount" 

What does "term" refer to? 

DURATION of the agreemnt (years) 

What two forms does term refer to? 

Flat Period: # of years/albums

Option Period: initial period followed by option periods 

In a recording agreement, which party has the right to exercise the option?     

the label, never the artist 

What is California Code Section 2855?

What effect does it have on options? 

Personal service contract may not extend past 7 years.

May not be enforced after 7 years, entire contract NOT void and still standing for the initial 7 year period. 

What is "Option with Condition Precedent"? 

Something must happen before company can exercise the option, otherwise this is considered automatic termination. 

Who is the coolest kid in class? 

You're right, Brent Bowser is, now keep going and study those note cards. You're doing a great job. When you're done you can have a cookie with some milk. 

What is "option to make up difference"? 

Company can opt to make up the number of albums in order to reach a predetermined figure.  Credit given to to artist's royalty account. 

What is option exercise date? 

day you have to give notice by 

option not in effect.  Could lose artist if there is no time to fix the problem. 

If the agreement calls for Automatice Exercise of an option, under what circumstance would the label have to give notice? 

Only if company chooses not to exercise the option. 

What is "recording commitment"? 

Artist's obligation to record a specified number of masters and deliver to record company upon demand.  Label could request more. 

What are the terms to watch out for in a recording commitment? 

Masters, commercially satisfacory, chosen by company.

These terms give label too much control. 

When a minimum recording commitment is contained in a contract, what should the arist make sure is included in order to prevent overcall masters? 

Get a MAXIMUM 

What are overcall masters?

those the label demands over and above the minimum, not applied to future minimums 

List some elements that are required for delivery. 

Session tapes, licenses, artwork, credits, length, liner notes, I-9, consents, clearances, and more. 

What will happen if the aritst failes to deliver? 

Could result in automatic suspension, even if it's not the artist's fault 

What happens if the artist fails to deliver in an open ended agreement? 

No automatic suspension, instead the contract is extended. 

What is form I-9? 

US Immigration and Naturilzation Service Employment and Eligibility Certificate.

Legally required element for delivery.

Proves authorized to work. 

Why might an artist be suspended?

Non-delivery

Act of label

Inability to perform

failure to actively pursue career

Any other breach 

What happens to an artist when suspended? 

 Cannot record

No Income

Destruction of artist's career

Stops the clock

Artist can still perform live, appear on TV/Film, produce or compose. 

Define "royalties" 

money due for sale or use of product or right, for sale of artist's recordings.

% of money paid for recording, also called points. 

What causes royalty rate to vary? 

How it's sold (mail order, download)

Where sold (domestic/foreign)

Price(full or budget)

To whom (libraries, PX, etc.) 

What is formula for royalty computation? 

sale price x royalty - decution= payment 

What is royalty acceleration? 

increases upon hitting sales benchmarks.

Once artist is proven not to be a risk, may get higher rate.

Not retroactive. 

Why do record companies hole reserves? 

Label holds portion of artist's royalties until returns are accounted for. This stops label from paying royalties to artists on albums that might get returned. 

What are freebies? 

Free records sent to stores, radio stations.

Royalties are not paid on freebies. 

Why should an artist allow freebies? 

Good promo for artist. 

What is container charge?

Who pays for it? 

Packaging (container charge).

The artist pays for it, deducted from royalty computation price.

largest single deduction is 25% 

What is cross-collateralization? 

Income from one record or contract used to recoup the advance on another record or contract. 

What are considered recoupable expenses?

Any advance-signing, option, or other

Costs of recording

Anything the label says is "spent on the artist" 

What is the largest cost? 

Recording Cost 

Explain All-In agreements. 

Production company supplies artist and producer to label in exchange for all in royalty.

Label agrees to one overall royalty from which all royalties are paid.

Production Company receives royalty and distributes it to artist and producer. 

What does "accounting" mean in recording agreements. 

When the artist gets paid. 

What provision in accounting should be included to protect the artist. 

Audit Provision 

Define coupling. How can an artist limit this? 

aka Compilation. Master grouped with other masters and released as package.

Artists should require prior consent. 

What is "joint recording"? 

two or more artist perform on one master (duet)

does not apply to minimum recording commitment

What things are found in Grant of Rights provision?

Who are the rights being granted to? 

Artist may be able to modify areas of coupling, foreign sales, joint recording, merch, and publicity.

Rights granted to label from artist. 

Why would an artist want to limit an indemnity clause? 

act of or claims made by third parties.

Don't want to be responsible for 3rd party doing something wrong. 

What effect does a rerecording restriction have on the artist? 

cannot rerecord songs for anyone else any composition recording under agreement for specified periods.  Usually lasts five years. 

What is a morals clause?

How should it be limited to protect the artist? 

Gives label right to terminate contract for immoral acts of artist (anything label says being immoral)

Use definitive language 

What is a master purchase agreement? 

agreement to purchase the masters. 

What are two common provisions dealing with ownership of musical compositions? 

Partial Ownership:co-publishing, 50%

Negotiate rate: if artist doesn't want to give up ownership, gets a reduced mechanical rate. 

If artist enters a copublishing deal with record company, which compositions should be effected from the artist's point of view?

From the labels? 

Artists POV: the compositions created during the contract

Label's POV: all pre-existing songs and current 

In context of compositions, when label wants to negotiate a rate, what deal is it trying to get? 

75% of stat rate, max of 10 tracks per album, and no regard to length of song. 

Aside from producing and recording, what are common duties of the producer? 

 prepare and meet budget requirements

Union regulations

I-9

prepare session reports

clear rights to composition

clearance and licensing 

Should the producer be liable for recording costs? 

Yes, anything over 110% of budget 

In regard to publicity and advertising, what word should be included for the producer's benefit when granting rights to the label? Why? 

"shall" not "may"

It is for promotion for the producer 

What is an option agreement? 

A developmental deal.

Gives label chance to shop artist. 

What is the average recording commitment associated with an option agreement? 

2-4 at most. 

What two things are negotiated when referring to the double negotiation involved in option agreements? 

terms of OPTION AGREEMENT

and

terms of RECORDING AGREEMENT 

What 4 different methods of Compensation can be used to pay the artist for a live performance? 

% of Gate

Flat Fee

both, whichever is greater

Flat fee, plus % of Gate 

What will the venue want under a Merchandise rider? 

15-40% of gross sales 

What is usually covered in Clippings and Posters Rider? Why would the artist want this? 

Allows artist to review press generated before and after show

Used to measuer how well venue promoted the event. 

Why would the venue owner to sign an Insurance Rider? 

If venue doesn't have insurance but signs the rider, the band can sue venue if someone gets hurt because the artist relied on venues promise. 

What is a Cancellation Rider? 

Artist gets paid if venue cancels gig. The close to the show date, the larger the payment.

Usually only for bands w/ bargaining power.