“Performance” Clauses In Entertainment Contracts:
Written By New York Entertainment Attorney And Music And Film Attorney John J. Tormey III, Esq.
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 entertainment lawyer’s act of drafting clauses, contracts, and contractual language generally. How might the art of the entertainment attorney's legal drafting a clause or contract affect the musician, composer, songwriter, producer or other artist as a practical matter?
Many artists think they will be “home free”, just as soon as they are furnished a draft proposed record contract to sign from the label’s entertainment attorney, and then toss the proposed contract over to their own entertainment lawyer for what they hope will be a rubber-stamp review on all clauses. They are wrong. And those of you who have ever received a label’s “first form” proposed contract are chuckling, right about now.
Just because a U.S. record label forwards an artist its “standard form” proposed contract, does not mean that one should sign the draft contract blindly, or ask one’s entertainment lawyer to rubber-stamp the proposed agreement before signing it blindly. A number of label forms still used today are quite hackneyed, and have been adopted as full text or individual clauses in whole or in part from contract form-books or the contract “boilerplate” of other or prior labels. From the entertainment attorney’s perspective, a number of label recording clauses and 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, motion picture fan, or other entertainment lawyer, I bet you know what happened to Tap as a result of that scrawl.
It stands to reason that an artist and his or her entertainment lawyer should carefully review all draft clauses, contracts, and other forms forwarded to the artist for signature, prior to ever signing on to them. Through negotiation, through the entertainment attorney, the artist may be able to interpose more precise and even-handed language in the contract ultimately signed, where appropriate. Inequities and unfair clauses aren’t the only things that need to be removed by one’s entertainment lawyer from a first draft proposed contract. Ambiguities must also be removed, before the contract can be signed as one. For the artist or the artist’s entertainment attorney to leave an ambiguity or inequitable clause in a signed contract, would be merely to leave a potential bad problem for a later day - particularly in the context of a signed recording contract which could tie up an artist’s exclusive services for many years.
And remember, as an entertainment lawyer with any longitudinal data on this item will tell you, 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, or even just one bad clause. Usually these bad contract signings occur before the artist seeks the advice and counsel of an entertainment attorney.
One seemingly-inexhaustible type of ambiguity that arises in clauses in entertainment contracts, is in the specific context of what I and other entertainment lawyers refer to as a contract “performance clause”. A non-specific commitment in a contract to perform, usually turns out to be unenforceable. Consider the following:
One shouldn’t use either clause in a contract. One shouldn’t agree to either clause as written. One should negotiate contractual edits to these clauses through one’s entertainment lawyer, prior to signature. Both clauses set forth proposed contractual performance obligations which are, at best, ambiguous. Why? Well, with regard to Contract Clause #1, reasonable minds, including those of the entertainment attorneys on each side of the transaction, can differ as to what “best efforts” really means, what the clause really means if different, or what the two parties to the contract intended “best efforts” to mean at the time (if anything). Reasonable minds, including those of the entertainment lawyers on each side of the negotiation, can also differ as to what constitutes a “first-class” facility as it is “described” in Contract Clause #2. If these contractual clauses were ever scrutinized by judge or jury 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 corresponding contract itself. In the view of this particular New York entertainment attorney, yes, the clauses really are that bad.
Consider Contract Clause #1, the “best efforts” clause, from the entertainment lawyer’s perspective. How would the artist really go about enforcing that contractual 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 contract 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, and the artist’s entertainment attorney might not be able to help the artist out of it as a practical matter:
You get the idea.
Why should an artist leave a label with that kind of contractual “escape-hatch” in a clause? The entertainment lawyer’s 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 contractual marketing commitment clause, if the marketing of the Album is perceived to be an essential part of the deal by and for the artist. It often is. It would be the artist’s career at stake. If the marketing spend throughout the contract’s Term diminishes over time, so too could the artist’s public recognition and career as a result. And the equities should be on the artist’s side, in a contractual negotiation conducted between entertainment attorneys over this item. Assuming that the label is willing to commit to a contractual marketing spend clause at all, then, the artist-side entertainment lawyer argues, 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. Indeed, asks the entertainment attorney, “Why else is the artist signing this deal other than an advance, marketing spend, and tour support?”. The questions may be phrased a bit differently nowadays, in the current age of the contract now known as the “360 deal”. The clauses may evolve, or devolve, but the equitable arguments remain principally the same.
The point is, it is not just performers that should be held to performance clauses in contracts. Companies can be asked by entertainment lawyers to subscribe to performance clauses in contracts, too. In the context of a performance clause - such as a record label’s contractual obligation to market and publicize an album - it is incumbent upon the artist, and the artist’s entertainment attorney if any, to be very specific in the clause itself about what is contractually required of the record company. It should never be left to a subsequent verbal side conversation. In other words, working with his or her entertainment lawyer, the artist should write out a “laundry-list” clause setting forth each of the discrete things that the artist wants the label to do. As but a partial example:
Compare Clauses #3 and #4, to Contract Clause #1 earlier above, and then ask yourself or your own entertainment attorney: Which are more hortatory? Which are more precise?
As for Contract Clause #2 and its vague unexplained definition of “first-class facilities and equipment” – why not have one’s entertainment lawyer instead just include in the contract a laundry-list clause of the names of five professional recording studios in the relevant city, that both parties, label and artist, prospectively agree constitute “first-class” for definitional purposes? This is supposed to be a contract, after all, the entertainment attorney opines. “Don’t leave your definitions, and therefore definitional problems, for a later document or a later day, unless you truly want to make a personal financial commitment to keeping more litigators awash in business debating bad clauses and bad contracts before the courts”.
If you don’t ask, you don’t get. Through the entertainment lawyer, the artist should make the label expressly sign on to a very specific contractual list of tasks in an appropriate clause, 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 clause through the entertainment attorney in the first instance.
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Again, consider Contract Clause #2, the “first class facilities and equipment” clause, from the entertainment lawyer’s perspective. Note that, unlike Contract 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, an artist might now ask his or her entertainment attorney:
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. The entertainment lawyer should advise that any contractual ambiguity in any clause could hurt the artist, even in the context of one of the artist’s own obligations to the other contracting party. Don’t rest on the linchpin of ambiguities in clauses when conducting business and relying on contracts - even if, in your musical art form itself, as Cameron Crowe once suggested of my first guitar hero Peter Frampton, you may happen to write “obscurantist” song lyrics while taking your own artistic license.
Contracts need to be handled differently.
Here’s how ambiguity in your own contractual commitment to a label hurts you, from the entertainment lawyer’s perspective. The old-saw contractual 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 the form of masters, digital masters, or “glass masters”, in order to get paid. By virtue of a contractually-delineated procedure vetted by and between entertainment attorneys, 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” under the delivery clauses and delivery schedule in a contract. As one might therefore guess, “delivery” is a definite event whose occurrence or non-occurrence under the contract is oft-contested and sometimes even arbitrated or otherwise litigated by and between artists, labels, and the entertainment lawyers and litigators that represent them.
It is incumbent upon the artist and the artist’s entertainment attorney to prevent the label from drumming-up a pretextual “failed delivery” under any clause in the contract as an excuse for non-payment. In the context of Contract Clause #2 above, “first-class facilities and equipment” could easily become that pretext - the artist’s Achilles Heel in the litigation-tested contract contested between entertainment lawyer litigators. The label could simply take the position through counsel or otherwise that the delivered materials were not created at a “first-class” facility as contractually required in the relevant clause, no matter what facility was used. Why? Because “first-class” was never defined in any clause in the contractual document by either entertainment attorney on either side, as any particular facility. And if no clause in the contract explicitly defined “first class” as an entertainment lawyer would have advised that it should do, then 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 behind the artist’s back for his or her lack of contractual prescience. From the artist-side entertainment lawyer’s perspective, both of those horror-show possible eventualities and scenarios, are intolerable. They could have been avoided by a single, better clause – often the narrow reed upon which an artist’s success ultimately rests. (Ask Billy Joel. Ask Neil Young. Ask Bruce Springsteen. Ask George Michael. Ask John Fogerty).
What about prescience? How can this foreseeable contractual delivery dispute in the context of Contract Clause #2, be avoided by the entertainment lawyer? The simple solution in this case, again, is for the artist’s entertainment attorney to take a few extra minutes during the negotiations, and textually list-out, in a reply draft counter-proposed contract sent to the label, even if a single succinct clause, the actual facilities intended to be used. The artist-side entertainment lawyer can seek to make the label explicitly contractually pre-agree to the list of facilities, by name and address, in the body of the contract’s text. That is what a contract is for, anyway, as an entertainment attorney will tell you. When used correctly, a contract and its clauses really just comprise a dispute-avoidance tool. An entertainment contract should be a dispute-avoidance tool exchanged between entertainment lawyers. Also note that a contractual ambiguity in a clause could hurt an artist, regardless of whether it is embedded in one of the artist’s performance obligations, or even in one of the label’s performance obligations! The moral?: List all performance obligations. Break them down into discrete and understandable tasks, clause by clause. Approach it the same way an entertainment attorney would. Better yet – enlist the assistance of one before forming an opinion about the clauses or signing the contract.
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