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LCN Final Review
The review
65
Education
Undergraduate 2
05/27/2009
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Term
1. What is the fundamental principle of contract law?
 Definition
freedom of contract
Term
2. What are the five points of a valid contract?
 Definition
unambiguous, consideration, legal capacity (age, metal ability, and authority), no illegal acts, mutual agreement.
Term
3. What is the Statute of Frauds?
 Definition
where the court will not enforce an oral agreement, it must be written.
Term
4. What are the six types of contracts that fall under the Statute of Frauds?
 Definition
cannot be performed within one year, concerning an interest in realestate, in consideration of marriage, consuming the debt of another person, the sale of goods in the amount over 500 dollars, assignment of copyright.
Term
5. What is the Mailbox Rule?
 Definition
Acceptance is effective once its been mailed. the offerer cannot withdraw there offer.
Term
6. What is the Mirror Image Rule?
 Definition
Acceptance must be exact with the offer term for term. (if you don't follow the rules its called a counter offer)
Term
7. Why is it important to read and understand the definitions given in a contract?
 Definition
So you can understand the deal.
Term
8. Define “Rider.”
 Definition
an attachment to an agreement for a live performer/performance.
Term
9. Define “Warranty.”
 Definition
A promise that something is guaranteed.
Term
10. What is “Indemnity?”
 Definition
A hold harmless, your holding a person free from any financial risk or liability.
Term
11. An indemnity clause commonly follows which clause?
 Definition
warranty
Term
12. Give the general definition of “Condition.”
 Definition
a future and uncertain event in which the existence or extent of an obligation or liability depends.
Term
13. What is a Most Favored Nations clause?
 Definition
gives you a good of a deal as somebody else.
Term
14. Give the general definition of “Option.”
 Definition
A privilege that one party may or may not chose to exercise.
Term
15. What is the difference between a Material Breach and an Immaterial Breach?
 Definition
If its an Immaterial breach the non reaching party still has to perform there part. A material breach does not have to perform.
Term
16. Why would you include a Liquidated Damages clause in a contract? How must it be limited?
 Definition
It provides a specific amount so it encourages the other party to perform. It must be limited because it has to be a reasonable estimate of damages.
Term
1. What does “term” refer to, and what are the two common forms this takes?
 Definition
The length or duration of the contract. Flat term, initial/option term.
Term
2. In a recording agreement, which party has the right to exercise the option?
 Definition
The Record Label.
Term
3. What is California Labor Code Section 2855? What effect does it have on options?
 Definition
personal contracts cannot be enforce for more than 7 years. Options can be effected to.
Term
4. Give the definition of Option with a Condition Precedent.
 Definition
Something must happen before the company can exercise the option. (a trigger)
Term
5. What is an Option to Make Up the Difference?
 Definition
When the label can elect to make up the album sales. make up the number to meet the condition precedent.
Term
6. What is an Option Exercise Date?
 Definition
the very last possible date notice must be given to excercise the option.
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?
 Definition
Option is not in effect.
Term
8. If the agreement calls for Automatic Exercise of an option, under what circumstance would the label have to give notice?
 Definition
If they elect not to exercise the option
Term
9. What is a “recording commitment”?
 Definition
the obligation to record and deliver.
Term
10. What are the terms to watch out for in the recording commitment?
 Definition
Commercially satisfactory, chosen by company, similar style.
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?
 Definition
negotiate for a maximum commitment
Term
12. And what are overcall masters anyway?
 Definition
and excess recording, the master the record label need over and under the minimum.
Term
13. List some of the elements that may be required for delivery.
 Definition
session tapes, licenses, artwork, credits, always I and i's.
Term
14. What will happen to the artist if he fails to deliver? How is this different in an open ended agreement?
 Definition
suspension (no money), opened ended agreement terms can be extended.
Term
15. What is form I-9?
 Definition
a US immigration form - it certifies immigrants to work in the US.
Term
16. For what reasons might an artist be suspended?
 Definition
non delivery,inability to perform, any other breach real or perceived, acts by the label, act of god,
Term
17. What happens to an artist when he is suspended?
 Definition
kept form recording, no income for that time, could lead to destruction of their career.
Term
18. Define “royalties.”
 Definition
money due to the artist from the sale of their recordings.
Term
19. Many factors may cause the royalty rate to vary. List them.
 Definition
types of recording sold, how its sold, where its sold, price, and to who its sold.
Term
20. What is the formula for royalty computation?
 Definition
sales price x royalty rate - deductions
Term
21. What is royalty acceleration?
 Definition
the more you sell the higher your royalty rate.
Term
22. Why do record companies hold reserves?
 Definition
setup to account for returns.
Term
23. What are freebies? Why should an artist allow freebies?
 Definition
discounted records / or free. Its a good promotion tool.
Term
24. What is a container charge? Who pays for it?
 Definition
Artist has to pay (even on digital downloads).
Term
25. Define cross-collateralization.
 Definition
when the label is using income from different records to recoup on another one.
Term
26. What things are considered recoupable expenses? Which is the largest cost?
 Definition
All advances, All costs of recordings. Cost of the recording is the most expensive
Term
27. Explain an All-In agreement.
 Definition
A direct agreement between the Artist and production company. (need an inducement letter from the artist)
Term
28. Within the context of recording agreements, what does “accounting” mean? What provision should always be included in order to protect the artist?
 Definition
Audit Rights
Term
29. Define “coupling.” How can an artist limit this?
 Definition
when a master is grouped with other masters and is packaged. Concent or approval.
Term
30. Define “joint recording.”
 Definition
two or more artists that perform on 1 master.
Term
31. What things are usually found in a Grant of Rights provision? Who are the rights being granted to?
 Definition
right of publicity, joint recording, coupling, foreign sales, merchandising, indemnity, executIon and deliver of documents
Term
32. Why would an artist want to limit an indemnity clause?
 Definition
The Label
Term
33. What effect does a rerecording restriction have on an artist?
 Definition
Will not re record for anyone else same same song. for a certain period of time.
Term
34. What is a morals clause? How should it be limited to protect the artist?
 Definition
Gives the label the right to terminate the clause (naughty clause.) Use more definite language avoiding words attending too.
Term
35. What is a master purchase agreement?
 Definition
an agreement to purchase the masters
Term
36. What are the two common provisions dealing with the ownership of musical compositions?
 Definition
(co-publishing) & (controlled composition clause)
Term
37. If an artist enters a copublishing deal with the record company, which compositions should be affected from the artist’s point of view? From the label’s?
 Definition
Artist - () Label - looks to get all of it (prior and during)
Term
38. In the context of compositions, when a label wants to negotiate a rate, what is the deal it is trying to get?
 Definition
look for 75% of stat rate, limit it to 10 tracks, and gonna pay 75% of .091 cents.
Term
1. Aside from producing and recording masters, what are the common duties of the producer?
 Definition
deliver masters, prepare and meet budget requirements, comply with union regulations, complete proper I9 form, etc.
Term
2. Should the producer be liable for recording costs? If so, how much?
 Definition
If they are over 110% of the budget.
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?
 Definition
"Shall". To provide the producer promotion
Term
1. What is an option agreement?
 Definition
development deal - a trial period giving the label the right to shop the artist around.
Term
2. What is the average recording commitment associated with an option agreement?
 Definition
2 to 4 masters
Term
3. What two things are negotiated when referring to the double negotiation involved in option agreements?
 Definition
Negotiating the terms for the option agreement and recording agreement.
Term
1. What 4 different methods of Compensation can be used to pay the artist for a live performance?
 Definition
gate %, Flat Fee, Guaranteed fee, guaranteed fee plus a percentage of revenues.
Term
2. What will the venue want under a Merchandise Rider?
 Definition
15% - 40% of gross sales
Term
3. What is usually covered in Clippings and Posters Riders? Why would the artist want this?
 Definition
for the artist to be able to look at all the press regarding the show. it is the only way to be able to tell whether the promoter did a good job promoting the event.
Term
4. Why would the artist want the venue owner to sign an Insurance Rider?
 Definition
So they won't be responsible for the injury of someone.
Term
5. What is a Cancellation Rider?
 Definition
Artist still gets paid even though the gig is canceled.
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