Term
| 1What is the fundamental principle of contract law? |
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Definition
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Term
| What are the five points of a valid contract? |
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Definition
1. Unambiguous
2. Consideration
3. Capacity
4. No illegal acts
5. Mutual agreement |
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Term
| What is the Statute of Frauds? |
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Definition
a. The areas that have been traditionally subject to fraud
b.(Has to be in writing) |
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Term
| 4. What are the six types of contracts that fall under the Statute of Frauds? |
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Definition
1. Cannot be performed within a year
2.Concerning an interest in reality
3.Consideration of marriage
4. Assignment of copyright
5. Assuming the debt of another
6. Sale of goods of over $500 |
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Term
| 5. What is the Mailbox Rule? |
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Definition
| a. Acceptance of an offer is effective once it has been mailed |
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Term
| 6. What is the Mirror Image Rule? |
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Definition
a. Acceptance must be unconditional and must not change, add to, or qualify the terms of the offer.
b. Any modification will be considered a counter offer |
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Term
| 7. Why is it important to read and understand the definitions given in a contract? |
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Definition
| a. Because it is the key to understanding the deal |
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Term
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Definition
| a. Addendums to contracts |
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Term
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Definition
| a. A promise that something is guaranteed |
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Term
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Definition
1. A “hold harmless”
2. A duty to absolve by another person from any financial responsibility for damage or other liability arising from the transaction |
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Term
| 11. An indemnity clause commonly follows which clause? |
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Definition
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Term
| 12. Give the general definition of “Condition.” |
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Definition
| a. A future and uncertain event on which the existence or extent of an obligation or liablility depends. Affects time of performance, specific dates or events |
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Term
| 13. What is a Most Favored Nations clause? |
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Definition
| a. A clause which states that the party promised this status will receive as good of a deal as anyone else |
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Term
| 14. Give the general definition of “Option.” |
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Definition
| a. A privilege that one party may or may not exercise |
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Term
| 15. What is the difference between a Material Breach and an Immaterial Breach? |
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Definition
1. Material breach: severe and threatens the value of the whole contract
2. Immaterial Breach: violates the contract in a minor way |
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Term
16. Why would you include a Liquidated Damages clause in a contract? How must it
be limited? |
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Definition
It encourages the other party to perform.
Provides specific dollar amount to be paid if contract is beached
Limited: places a reasonable estimate of damages |
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Term
| 1. What does “term” refer to, and what are the two common forms this takes? |
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Definition
1. Refers to the duration of the agreement; usually expressed in a term of years; an initial period followed by option periods
2. Flat period: an option free term which is based upon either a number of years or a specified number of albums
3. Option periods: usually one year long or are based upon delivery of albums (open ended) |
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Term
| 2. In a recording agreement, which party has the right to exercise the option? |
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Definition
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Term
| 3. What is California Labor Code Section 2855? What effect does it have on options? |
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Definition
| a. Personal service contracts cannot be enforced for periods longer than seven years in the state of California |
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Term
| 4. Give the definition of Option with a Condition Precedent. |
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Definition
| a. Something must happen before the company can exercise the option. i.e. a certain number of records sold |
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Term
| 5. What is an Option to Make Up the Difference? |
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Definition
| The Record Company can opt to make up the number of albums in order to reach the minimum figure necessary to exercise and option. A credit is usually given to the artist’s royalty account |
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Term
| 6. What is an Option Exercise Date? |
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Definition
| a. Option Exercise Date: the date by which notice must be given for the exercise of the option to be valid |
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Term
| 7. What may happen if the recording agreement calls for an Advance With the Exercise of the Option, and the label fails to send a check with the notice of option? |
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Definition
| a. It means the option is not in effect. The label might have just lost the artist if there is no time left to cure this defect |
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Term
| 8. If the agreement calls for Automatic Exercise of an option, under what circumstance would the label have to give notice? |
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Definition
| a. If the company chooses not to exercise the option |
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Term
| 9. What is a “recording commitment”? |
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Definition
| The artist’s obligation to record a specified number of masters (or sides, singles, albums or CDs) and deliver them to the record company upon demand |
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Term
| What are the terms to watch out for in the recording commitment? |
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Definition
1.“Commercially Satisfactory”
2. Highly subjective
3.“Chosen by Company”: This means that the company can choose what the artist records and therefore has creative control over the artist.
4. Similar style
5.Recording is not “releasing.” The masters may never be released. |
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Term
| 11. When a minimum recording commitment is contained in a contract, what should the artist make sure is included in order to prevent overcall masters? |
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Definition
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Term
| 13. List some of the elements that may be required for delivery. |
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Definition
| May include all session tapes, licenses, artwork, credits and much more. |
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Term
| 14. What will happen to the artist if he fails to deliver? How is this different in an open ended agreement? |
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Definition
1. May result in automatic suspension
2. Suspension may result even though the item that was not delivered was not under the artist’s control and non-delivery was no fault of the artist.
3. No automatic suspension in open ended agreements. Instead, the term of the contract is extended. |
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Term
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Definition
US Immigration and Naturalization Service Employment Eligibility Certificate
US employers must prove that any employee (even independent contractors) is a citizen or a foreigner who is authorized to work in the US (by visa or green card).
Legally required element of delivery |
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Term
| 16. For what reasons might an artist be suspended? |
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Definition
1. Acts by the artist, such as non-delivery
2.Acts by the label
3. Acts of god (force majeure)
4. Failure to deliver masters in a timely manner
5. Inability to perform
6. Failure to “actively pursue a career”
7. Any other breach, real or perceived |
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Term
| 17. What happens to an artist when he is suspended? |
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Definition
1.Artist may be kept from recording
2. Does not apply to live performance, appear on TV or in films, produce or compose
3. Stoppage of income
4.Possible destruction of the artist’s career |
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Term
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Definition
Generally: money due for the sale or use of a product or right.
Industry: money due to an artist for the sale of that artist’s recordings. |
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Term
| Many factors may cause the royalty rate to vary. List them. |
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Definition
1. Varies according to the type of recording sold
2. How sold (mail order, brick and mortar, download)
3. Where sold (domestic or foreign)
4. Price (full price or budget)
5. To whom sold (libraries, PX, etc.) |
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Term
| What is the formula for royalty computation? |
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Definition
| a. •Sale Price X Royalty Rate - Deductions = Payment |
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Term
| What is royalty acceleration? |
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Definition
| c. •Increases upon hitting sales benchmarks. |
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Term
| Why do record companies hold reserves? |
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Definition
If a label pays royalties on albums shipped, it is paying for those which invariably will be returned.
To avoid this excess payment to the artist, the label will withhold a portion of the artist’s royalties until the returns are accounted for. |
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Term
| What are freebies? Why should an artist allow freebies? |
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Definition
Free records which may be distributed to stores, radio stations, record clubs, etc. A price reduction may also be referred to as a freebie.
b. •Important promotional tool for the artist, so it is in neither sides’ best interest to eradicate them. |
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Term
| What is a container charge? Who pays for it? |
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Definition
Also known as packaging charge or jacket charge
Deducted from the royalty computation price, even on digital downloads
c. •The largest single deduction, and it applies to virtually all types of sales (foreign, record club, etc.). The average is about 25%.
Paid for by artist |
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Term
| 25. Define cross-collateralization. |
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Definition
| a. •Income from one record (or contract) will be used to recoup the advance on another record (or contract), and vice versa. |
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Term
| What things are considered recoupable expenses? Which is the largest cost? |
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Definition
Any advance- signing, option or other
Costs of recording (the largest recoupable cost)- payments to engineers, arrangers and musicians; tape; tour support; cost of videos & DVDs.
Pretty much anything the label says is spent on behalf of the artist. |
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Term
| 27. Explain an All-In agreement. |
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Definition
A production company supplies an artist and producer to a label in exchange for an all-in royalty.
The label agrees to one overall royalty from which all royalties are paid.
The production company receives the royalty and distributes it to the artist and producer |
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Term
| 28. Within the context of recording agreements, what does “accounting” mean? What provision should always be included in order to protect the artist? |
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Definition
Essentially, when the artist gets paid.
Right to audit |
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Term
| 29. Define “coupling.” How can an artist limit this? |
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Definition
Commonly known as compilations
A master is grouped with other masters and released as a package.
The artist’s royalty is based on his proportionate contribution to the album.
‘No coupling without artist’s prior consent” is the best you’re going to get. |
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Term
| 30. Define “joint recording.” |
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Definition
Two or more artists perform on one master (ex: a duet).
Usually doesn’t apply to the minimum recording commitment.
Each artist keeps their royalty rate, which is multiplied by their proportionate share of the recording.
Recording costs are charged back to the artists in proportion to their share of the recording. |
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Term
| 31. What things are usually found in a Grant of Rights provision? Who are the rights being granted to? |
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Definition
Every recording agreement has a grant of rights provision.
b.These are rights granted to the label by the artist.
c. indemnity and the execution and delivery of documents.
d. Artist may be able to make modifications in the areas of: coupling, foreign sales, joint recording, merchandising, and publicity. |
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Term
| 32. Why would an artist want to limit an indemnity clause? |
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Definition
| To Limit what it takes to activate an indemnification clause. Ex: act of or claims made by 3rd parties. |
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Term
| What effect does a rerecording restriction have on an artist? |
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Definition
| Artist must agree that for a specified period he will not rerecord for anyone else any composition recording under the agreement. |
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Term
| 34. What is a morals clause? How should it be limited to protect the artist? |
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Definition
Gives the label the right to terminate the contract for “immoral” acts of the artist
Use definite language such as “convicted of a felony” rather than “tending to....” |
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Term
| 35. What is a master purchase agreement? |
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Definition
| Record companies often buy recorded masters from artists, producers or production companies |
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Term
| 35. What is a master purchase agreement? |
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Definition
| Record companies often buy recorded masters from artists, producers or production companies |
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Term
| 36. What are the two common provisions dealing with the ownership of musical compositions? |
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Definition
The label (or an affiliated company) has the right to acquire an ownership interest in the artist’s musical compositions; or
b. •The company will pay a reduced mechanical license fee for the compositions. |
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Term
| 37. If an artist enters a co-publishing deal with the record company, which compositions should be affected from the artist’s point of view? From the label’s? |
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Definition
Best deal for the artist: only those compositions initially recorded during the term of the agreement.
What the label will want: an interest in all compositions written prior to and during the term of the agreement. |
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Term
| 38. In the context of compositions, when a label wants to negotiate a rate, what is the deal it is trying to get? |
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Definition
No greater than 75% of the minimum statutory rate on a maximum of 10 tracks per album
Fees calculated without regard to length of the song |
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Term
| 1. Aside from producing and recording masters, what are the common duties of the producer? |
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Definition
a. Produce & record masters approved by the label
b. Prepare & meet budget requirements
c. Prepare & file session reports
d. Clear rights to compositions
e. Comply with union regulations
f. Obtain properly completed I-9 forms |
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Term
| 2. Should the producer be liable for recording costs? If so, how much? |
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Definition
| a. Producer is often responsible for costs over 110% of the budget |
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Term
| 3. In regard to publicity and advertising, what word should be included for the producer’s benefit when granting rights to the label? Why? |
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Definition
| a. “Shall” instead of “may” |
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Term
| 1. What is an option agreement? |
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Definition
a. The right to take on an artist for a trial period and then decide if they should be signed to a regular recording agreement
b. Development deal |
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Term
| 2. What is the average recording commitment associated with an option agreement? |
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Definition
| a. Usually between 2 and, at most, 4 |
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Term
| 3. What two things are negotiated when referring to the double negotiation involved in option agreements? |
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Definition
| a. Negotiate for the terms of the option agreement and of the recording agreement |
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Term
| 1. What 4 different methods of Compensation can be used to pay the artist for a live performance? |
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Definition
a. •Percentage of gate
b. •Flat fee
c. •Guaranteed fee or percentage of gate, whichever is higher; or
d. •Guaranteed fee plus a percentage of revenues |
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Term
| 2. What will the venue want under a Merchandise Rider? |
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Definition
| a. •Venue will want 15% to 40% of gross sales |
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Term
| 3. What is usually covered in Clippings and Posters Riders? Why would the artist want this? |
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Definition
Allows artist to review the press generated before and after the show
b. •Used to measure how well the venue promoted the event |
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Term
| 4. Why would the artist want the venue owner to sign an Insurance Rider? |
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Definition
| a. •If the venue doesn’t have insurance but signs this rider, the band can sue the venue if someone is injured because it relied on the venue’s promise of insurance |
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Term
| 5. What is a Cancellation Rider? |
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Definition
a. •Only for artists with bargaining power
b. •Artist still gets paid even though the gig is cancelled
c. •The closer to the show date, the larger the payment.
(–Ex: 50% at 4 weeks prior, 100% at 2 weeks) |
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Term
| Songwriter agreements, two types: |
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Definition
1. Exclusive
2. Non-exclusive |
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Term
| 1. What are the two types of speech? |
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Definition
Pure: written or spoken word
Symbolic: intend to a send a particular message; and likely to be understood |
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Term
| 2. What are the two types of restrictions on speech? |
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Definition
Content based: what is said is restricted
Content neutral: speech restricted without regard to content |
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Term
| 3. What kind of restriction does not restrict what is said, but rather restricts the time, place or manner of speech? |
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Definition
| Content neutral: time, place, and manner restrictions |
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Term
| 3. What kind of restriction does not restrict what is said, but rather restricts the time, place or manner of speech? |
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Definition
| Content neutral: time, place, and manner restrictions |
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Term
| 4. What three things must be shown to prove that the speech is incitement to violence? |
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Definition
a. Intended to incite criminal action
b. That is imminent; and
c. Likely to result
i. The “Brandenburg” test |
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Term
| 5. What type of speech is unprotected, has no safe harbor, and may even result in criminal penalties? |
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Definition
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Term
| 6. What group was responsible for causing the RIAA to place warning stickers on albums? |
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Definition
| a. PMRC: Parents’ music resource center |
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Term
| 7. Of all forms of communication, which receives the least First Amendment protection? |
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Definition
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Term
| 8. What is “safe harbor?” |
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Definition
a. Hours between 10pm-6am
b. You can broadcast indecent or profane material |
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Term
| 9. What is the name of the administrative body which regulates interstate communication by radio, wire, television and satellite? |
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Definition
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Term
| 10. What was the regulation at issue in Ward v. Rock Against Racism? |
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Definition
a. Performers were required to use the city’s sound system and their engineer
Content neutral, reasonably regulated place and manner |
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Term
| 12. What is the purpose of antitrust laws? |
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Definition
| a. To protect the economy and ensure competition |
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Term
| 13. Name the three ways marketplace competition protects consumers. |
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Definition
a. Lower prices
b. Better quality
c. Greater choices |
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Term
| 14. Does the Sherman Act provide for criminal penalties, civil penalties or both? |
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Definition
Both:
Company can face criminal charges, be dissolved, and law suits can piggyback on the guilty finding |
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Term
| 15. What are the three elements of a consent decree? |
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Definition
a. No admission of guilt
b. Stop illegal activity, anti-competitive conduct
c. Not vulnerable to private suit piggybacking |
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Term
| 16. What three elements must be satisfied to establish monopolization? |
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Definition
a. Intent to control prices or destroy competition
b. Predatory or anti-competitive conduct
c. Dangerous probability of success in achieving monopolization |
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Term
| 17. Define “market power.” |
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Definition
a. Ability to affect market price
(Indication of a monopoly) |
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Term
| 18. Clear Channel used Negative Synergy by limiting airplay of artists who didn’t use its concert services. This is an example of which antitrust violation? |
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Definition
| a. Tying: put together two products to require consumer to purchase one product to obtain another |
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Term
| 19. In any business, who has the responsibility to ensure compliance with antitrust laws, and thereby may be held liable for violations? |
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Definition
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Term
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Definition
| a. Paying/bribing radio stations for airplay |
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Term
| 21. What must happen for pay for play to be considered legal? |
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Definition
a. Listeners are told about arrangement
(Disclosure) |
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Term
| 22. What is “respondeat superior?” |
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Definition
| a. Situation where employer may be held liable for the acts of an employee |
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Term
| 23. Who may be held liable for the acts of a borrowed servant? |
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Definition
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Term
| 24. Finish the sentence: An employer is liable only if the employee’s acts were committed within the ____________________________. |
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Definition
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Term
| 25. When are acts considered to be within the scope of employment? |
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Definition
| a. Motivated in whole or in part by a desire to serve the employers interest |
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Term
| 26. When is an employer liable for the intentional torts of his employee? |
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Definition
1 Foreseeable consequence of the activity
2. Done when action is serving the employers interest
Employers may be held liable for intentional and negligent acts of an employee |
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Term
| 27. Define “fiduciary duty.” |
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Definition
| a. An affirmative duty to do what’s in the best interest of another person do to the relationship between the parties |
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Term
| 28. Define “apparent agency.” |
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Definition
a. An agency relationship created by the appearance of the party
i. (Presenting someone to be in a position of power) |
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Term
| 29. Once an employer ratifies an act, may the employer later avoid liability? Deny an agency relationship? |
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Definition
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Term
| 30. What are the goals of negotiation? |
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Definition
a. Produce a wise agreement
b. Improve the relationship |
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Term
| 31. List the elements of a wise agreement. |
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Definition
a. Meets legitimate interests
b. Resolves conflicts fairly
c. durable |
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Term
| 32. What are the four steps of Principled Negotiation? **(good, positional bad) |
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Definition
a. Separate people from the problem
b. Focus on interest, not positions
c. Generate options
d. Base the result on objective criteria |
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Term
| 33. Why is it so important for people to put themselves in the shoes of the other party? |
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Definition
a. So you can understand their interest
b. To keep the other party involved and participating in the process |
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Term
| 34. Explain “active listening.” |
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Definition
| a. Acknowledging what they say and repeating it back to them. i.e. let me see if I understand you |
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Term
| 35. What are the two questions you should ask in order to identify interests? |
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Definition
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Term
| 36. What are some examples of fair criteria upon which the result of a negotiation can be judged? |
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Definition
a. Market values (fair standards), professional standards, costs, what a court would decide, etc.
b. One cuts, the other chooses |
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Term
| 37. What is BATNA? Why is it important to know your BATNA? |
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Definition
| a. Best alternative to negotiated agreement, it’s important because you don’t want to end up worse off than where you started |
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Term
| 38. Under the “Negotiation Jujitsu” approach, why should you use questions instead of statements when dealing with a difficult or positional negotiator? |
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Definition
a. Questions offer no position to attack
b. Questions do not criticize, they educate |
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Term
| 39. What are the benefits of using silence when negotiating? |
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Definition
a. •People tend to feel uncomfortable with silence, especially when they have doubts of the merit of their position
b.Silence creates impression of a stalemate, which other side may feel compelled to break with statement or suggestion |
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Term
| 40. What are some ways in which you can design a deal to minimize risks? |
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Definition
They carry out their side of the deal first
Build guarantees into the agreement
(i.e. Non-refundable deposit)
Don’t let them treat your doubts like a personal attack
i. •Of course I trust you, but my lawyer insists…
d. •Add a dispute resolution procedure
i. fight it out |
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