How To Understand Contracts The Dotted Line

How To Understand Contracts The Dotted Line
As an aesthete breed, musicians are often reluctant to sully their art with commerce. But on a Sudbury Saturday night, as you get stiffed on the door and end up crashing in the van instead of that cushy Motel 6 you were promised, your position may feel somewhat less lofty. You might, next time, want to think about signing a contract.

A contract is an agreement between two or more parties to do, or not do, something. What makes a contract different from an agreement is that a contract creates a legal relationship. That's an important distinction, because you can sue if you have a contract, whereas the law doesn't recognise a simple agreement as being "actionable" — meaning, capable of being interpreted by the legal system.

Whether written or oral, whether for a gig, a tour, engaging management, recording or distribution, all contracts contain certain key elements. They are: (a) one party makes an offer; (b) the offer is accepted by the other party; and (c) the parties exchange consideration, meaning they give each other something of value. Consideration is the glue that binds the contract; it's the essence of the commercial transaction.

Without being conscious of it, musicians make contracts all the time. You might agree with your band-mates that even though you're the main songwriter, you'll share the proceeds of the band's work equally. Or you need to buy a van and your drummer is willing to put up the cash as long as she gets to use the van whenever she wants. In both cases, even if you haven't written it down, you've made a contract.

A written contract records the agreement on paper. In law, oral and written contracts carry the same weight. But with an oral contract, it can be tough, once people start yelling at each other, to objectively prove the key elements. The fact that you've written and signed a contract is strong evidence of the subject of the agreement and the parties' intention to be bound by it. As lawyers have been writing since the Middle Ages, the piece of paper isn't the contract itself, but rather "witnesseth" the contract.

Along with the key elements of offer, acceptance, and exchange of consideration, setting out the intention of the parties is crucial. If you have a written contract, the intention behind the deal should be reasonably clear. However, intention is also made clear by the behaviour of the parties. You showed up at your Sudbury gig with all your gear, ready to perform. The club owner let you in to sound check and took people's money at the door. That shows the "offer" and "acceptance" parts of the contract. It also shows you intended to play, and the owner intended for you to play. If the owner stiffs you on your pay after your set, you have a case to argue that he breached the contract by failing to pay you the agreed consideration. The problem then becomes proving how much was agreed.

You can certainly take this written or oral contract to court to force the owner to pay. You can file in Small Claims by yourself if the agreed sum was less than five or ten grand (the amount varies from province to province). But although it's cheap to do, it's going to take a long time and cost you a number of headaches, so duking it out for a $100 cut of the door might not be worth it. And you can stand on your principles, but once you've sued, you probably won't be playing that club again any time soon.

If you're recording and releasing an album, though, the potential earnings and future avoidance of aggro are well worth putting things in writing. Even if you're dealing with your best friend's micro-label she runs out of her parents' basement, you should get the basics of your agreement in writing. Nothing comes between friends faster than money, or the loss of it.

Indeed, because musicians rely heavily on the support of family and friends, preserving good relationships is one of the best reasons to evidence your contract by putting it in writing. Don't get all worked up about the heretofores and notwithstandings: write it up in plain, simple language and talk it through with everyone involved before signing off. If, as the songwriter, you're willing to share everything except songwriting royalties with your band-mates, put this in writing between you. Then if you have a radio hit, you won't find your bass player pounding at your door looking for her cut of your songwriting genius.

On a cautionary note, once you've made a contract, written or oral, make sure everyone does what's agreed on and not something different. Contracts can be "varied" after the fact, meaning that if the parties agree to do A but actually do B, a court might decide that B is the real contract. So, if you and your band agree not to share songwriting royalties, but then you generously cut them in on the $7.42 you got from college radio play, when the song hits commercial charts they may be able to argue for a share of those substantially larger royalties too.

Unless you're happy to be a weekend warrior the rest of your life, you need to get your commercial ducks in a row to support yourself as a working musician. Making simple and clear written contracts every time you engage in a transaction may seem like stuffy overkill, but if you put it into normal practice, you're going to do three very useful things for your career: you're going to avoid painful struggles with people you care about, you're going to be taken seriously by the people you do business with, and you're going to get to a place where you can pay a real lawyer to do your dirty work for you.

Allison Outhit received her LL.B at Dalhousie Law School, and fronted Halifax bands Bubaiskull and Rebecca West.

Frequently Asked Questions

My friend's band wants to borrow my drums to play some shows. Do I need a contract?
Hell yeah! Think how pissed you'll be if they damage your drums. Write a straightforward agreement that says they are borrowing or renting them for X dollars, for X period of time, and that if they get damaged for any reason while under their use — even if they're not responsible — they'll pay up. A contract is a sure-fire way to make people think seriously about what they're getting into.

A guy wants to put some of our songs on his P2P site. Do we need a contract?
If he's making money and you want your share, you should get a contract. It's also important to have written evidence of who has the right to do things with your music, like making it available for public downloads, because if you get a chance at a distribution or publishing deal, those people are going to need to know what rights you may have already given away. Not knowing could be a deal-breaker.

Our manager is turning out to be kind of useless. We want to fire him, but it's not like he's stolen from us or anything. What can we do?
One of the most important clauses in a contract is about termination — when and how the parties agree the legal relationship can be severed. Every contract for employment or services should state clearly how long the contract will last, whether simply providing X weeks' notice can terminate it, whether it can be terminated immediately for wrongdoing, and what happens in terms of paying out money if and when the contract is terminated.

We had a contract with an indie label and now it's been bought by a major label that doesn't care about us. Another indie wants us. What should we do?
The label might terminate the contract if you ask. It's also possible that the indie label didn't have the right to "sell, assign, or transfer" your deal in the first place. Take a look at your indie contract. If the answer isn't obvious, now's a good time to talk to a lawyer.