Breaching a Contract

A Contract is defined as a binding agreement between two or more persons or parties; Especially; One legally enforceable. When signing a contract the person signing signs the contract, to render services for a certain amount of time or for a certain amount of material, which is labeled a term in the agreement. In every contract there are certain duties and rules that are to be followed and obeyed. When disobeyed or rules are broken then that leads to what is called a breach in contract. When at a breach in a contract accurs then that means that legal action shall take place.

But in some instances there are ways to get out of contracts with out breaking any rules or encountering any legals suits. What is a breach of Contract? A breach is defined as the breaking or violating of a law, right, or duty, either by commission or omission. A breach of contract is ” Failure, without legal excuse, to perform any promise which forms the whole or part of a contract”. If the artist cannot or does not perform to the standards then a breach of contract can also be deemed. When Does A breach of Contract Occur?

As stated before, when one side fails to stick to his or her part of the bargain this is understood in being a breach of contract. For instance, when one party to a contract makes it impossible for the other parties to the contract to perform, such as a party to the contract does something against the intent of the contract, or a party absolutely refuses to perform the contract. Not all breaches of contract are necessarily “contract killers” which would end up in a lawsuit. Much would depend on whether the breach is “material” or “immaterial” and who the parties are.

If the breach is immaterial, you may have the option to: ignore or excuse the defect and continue on as if nothing occurred, point out the problem to the responsible side and give it/she/him an opportunity to fix it, refuse to pay anything more until it is fixed, or correct the work yourself and deduct the cost from any payment. A Musical Artist under some severe circumstances, is allowed to break an existing Recording Contract . For a new recoding artist in the recording industry, receiving an agreement with a Production or a record company is the best of all situations.

But like in a lot of contracts, there are always some circumstances that will make an artist want total freedom from the contract that he/she has signed. Do to the unknown status of a new artist, the first record deal is usually an 1 sided deal in favor of the label over the artist. The artist in a situation like this has very limited Negotiating power. But, if the Artist creates or is featured on a hit song and credibility increases in the music world, than the artist might fell that the agreement doesn’t fit his/her standards with there new found status.

Situations like this have caused many legal recourse on record companies, in the means of leaving the leaving the contract or even the company to pursue more money for there talent. Recently a few top selling artist in their attempt to leave an exclusive contract have filed for bankruptcy (bankruptcy is defined as; utter failure or impoverishment). The Federal Bankruptcy Code states that “existing contracts may be rejected if they impair a debtor’s ability to get back on his/her feet and recover or improve on their financial status.

The Bankruptcy Law has given Artist seeking to break or renegotiate their agreement or contract a very powerful use of information in the legal aspects of the business. In 1998/99, the world famous singer Toni Braxton filed for Bankruptcy in the U. S. Bankruptcy court in L. A. Toni’s Bankruptcy plea was that her liabilities were higher than her assets. But said by Music business critics, Toni filed for Bankruptcy to exterminate any and all existing recording agreements that she had once made with LaFace Records. The trio group named TLC also filed for Bankruptcy in 1996/97.

The court settlement was simply a new contract , but still under the LaFace Label. In 1999/00 there was a bankruptcy bill pending that would prevent contracts and existing contracts to void of bankruptcy proceedings. This to be done so that Artist can no longer threaten bankruptcy to get out of contract or even to get a contract renegotiating. Another common technique used in cancellation of a Recording contract is the use of Civil Code Section 2855, also called “Seven-Year Statute”. In this statute “a contract to render personal service, may not be enforced against the employee beyond seven years from the commencement of service under it”.

This also prevents a record contract from being enforceable against an artist for longer than seven years. Most recording contracts run for a period of one year, with four, one year optional periods( this is seen in the “TERM” of the agreement). The period s are contigent on delivery of recorded product. So instead of providing that, the term based on delivery would be open-ended, because the period is dependent on upon an unknown future date when the recordings are actually delivered. Few Artist contracts are written for a 7 or more years, because of section 2855.

Under Section 2855 the record label is allowed to sue the artist for monetary damages if, after the seven year period the artist does decide to terminate the record deal and signs with a new company ,but in doing so still owes the first company a certain amount of recordings or records. In 1992/93 Luther Vandross filed for section 2855 against epic records claiming he was no longer bound for his 1981/82 contract. The California Civil Code Section 3423, is another tactic that an artist can use to terminate a record deal.

Equity will not require a party to perform under a personal service contract, such as a recording agreement. Equity can, however prevent an artist from performing personal services for someone else if a valid contract exists which makes the artist’s services exclusive to the first party. Such a remedy is in the form of an injunction (An Injunction is defined as a writ granted by a court of equity whereby one is required to do or to refrain from doing a specified act) which would prevent an artist from leaving the current label and going to another label.

Section 3423 also goes by the nickname of “9,000 Plus Provision” , and it requires that a record company is obligated to make increasing minimum annual payments to an artist in order to obtain an injunction. The new law reads that a record company can get an injunction only if it contractually guarantees the artist $9,00 in the first contract year, 12,000 in the second year and 15,000 per year in years three to the end of the seventh year. The company has to have paid the artist between the sums of 15,000 and 90,000 dollars.

One of the most prolific cases involving the ” 9,000 plus provision” would have to be the Red Foxx vs. Williams case, involving Red and his record company named Dootone. Dootone tried to enjoin Foxx from performing with any other company. The courts found that the contract did not meet the requirements of the injunction. Another loophole in breaking a contract would be, being under the age of 18 years of age Under the age of 18 is considered a minor. In the current market place there is a high consumer demand for minors and teen idols such as 3LW, B2k, Cassidy, Alston Twins, And also artist like Lil Bow wow and The New No Limits Lil Romeo.

Now ever since these young idols and top sellers in the market place there are many minors signing record agreements. In signing a minor under a record deal, there is risk taking place. Under the section 6751 the contract is viodable at the option of the minor either at the beginning or at the end of agreement terms. Once success is achieved the artist can use to his/her advantage the fact that they signed the agreement during minority, thereby opting to disaffirm( Disaffirm is defined as to refuse to confirm) the contract.

An example of this would have to be the issue that took place in the 1970’s with a highly credible pop star by the name of David Cassidy. David a production contract to act in the great TV show “The Patridge Family”, and to record on Partridge Family records. That contract that young Cassidy signed granted the producers of the show and the recordings the right of the use of Young Cassidy’s name, pictures, and also his hard earned likeness. Due to Cassidy’s child success, his good looks, the show and the records became a smash hit at the time.

The company received millions upon millions of dollars in merchandise of this teen American idol. Do to his emerging success in the entertainment industry Cassidy would soon want to renegotiate his contract agreements. He forced the label to renegotiate the contract due to the plain and simple fact that he signed the Contract as a minor (At the time of this contract agreement the age limit split was at the age of 21). He was disaffirming the contract thus they take his name off of all merchandise, remove his pictures and also his voice from everything.

Without a reason not to renegotiate his deal and also without any legal tactics not to, the producers had to renegotiate his deal and Cassidy was the highest paid young performer/entertainer off his time. But from this situation there are ways now to avoid situations like this. Agreements now that involve minors as a signed artist or act can be approved by the Superior court, as allowed in section 6751. In this Section prevents minors from disaffirming the contract ( By doing this, contracts signed by minors are now looked at and sought to be looked at as a contract signed by an adult).

Approval of a court may be given on petition of either side or party, after a hearing by the court. Another method of avoiding a breach of contract would be by a charge that the record label committed a material breach of contract can also be a successful mechanism for an artist to utilize in a bid to exit an existing contract. A material breach can be alleged in many different forms, but the most common is a lack of proper payment of royalties by the label. Such a breach of contract was recently cited in court involving the band “The Kingsmen” who had the hit song “Louie Louie” in the 60’s.

The Band won a five year court case in late November of 98. The U. S. Supreme court Upheld the Ninth Circuit Court ruling that cancelled the record company’s contract with the group on the fact that the company neglected to pay royalties. The suit was based in part on the law of rescission which states that a party may unilaterally rescind a contract if there have been ” breaches of the contract so material and substantial in nature that they affect the very essence of the contract and serve to defeat the object of the parties.

The company (G. M.L/Gusto) did not keep up to the agreement by not paying the band there royalties under the contract. So in that case the band later got out of the contract with the company. In just about every recording contract there is a notice provision whereby any claim of breach by the artist must be in writing to the company or label giving the label a chance to cure the breach in the contract. If the Delivery of the notice is not sent on time then the artist can and may fail in fulfilling a condition precedent to support a legal action for breach of the contract.

But in any recording contract, a breach can be argued under a Myrid (Ten Thousand) of instances, So the underlying contract should be closely scrutinized for potential cracks. The last and final tactic to in breaching a contract would be for an artist to just walk away from a contract and leave it up to the label to stop the artist from recording elsewhere. A situation like this would only occur when the contract that was signed by the artist is extremely unfair, and when there are several arguable points in the contract. An example of this technique that was successfully used involves Boston and Donna Summer.

Boston went ahead and signed a new contract with MCA with an ongoing contract still under agreement. Epic Records soon moved for an injunction, but the injunction was denied and MCA released his Album. The downside to these methods is in some case they can take a lot of time in court and some artist career only last a few years. To much time can set an artist career off course and out of the public’s eye. Labels knowing this often tend to stall and stretch out the process to end an artist Career. In recent news R&B singer/songwriter/producer Sensation R.

Kelly has filed a $75 million dollar breach of contract lawsuit against rapper Jay-Z. R. Kelly is charging Jay-Z with using violence to force Kelly off of the tour. Kelly is asking for a rumored $15 mil. in compensatory damages and $60 mil. In punitive damages. He states that Jay-Ztried to ruin him by giving him bad Lighting at some shows and when that didn’t work that is when he sent someone to pepper spray him in the eyes. He feels that with him receiving 60 percent of the first $15 mil. To Jay-Z 40 percent that there was some jealousy brewing.

With the tension high behind the scenes between the two, the tour was turned into a legal nightmare on behalf of the promoter, artist and the court system. There are many ways in which a breach of contract can occur but, there are many ways in which contracts can legally be broken. As seen in the Contract connected to this Term Paper, There are many agreements that must be seriously looked over and also fulfilled by the artist and the label. There issued that maybe a problem in later years to come such as Term, Delivery, Royalty payments, and many more issues. But the believe it or not Breaking out of a contract is not that easy.