Top ten signs you have a bad contract
10. It has no specific term or expiration date.
No term or expiration date means your contract is probable terminable at will. The bad news is, it offers you no security, but the good news is, you can terminate it simply by giving notice to the other side. I’ve gotten more than one artist out of a bad management agreement by using the “no term” argument.
Example: I remember this well because my Client was so happy he gave me a nice Takamini 12-String Guitar. This client was in a bad management agreement. As a singer-songwriter, he wanted his music and career managed and the Manager was doing neither, but wouldn’t let him out of his contract. In order to hire another Manager, an Artist must be free from past agreements. If he still has another Management Agreement and a new manager approaches him and tries to get him to sign, the new Manager could be liable for interference with the first contact—even if the first contract was breached by the original manager. Most Managers won’t risk that.
So, I filed a lawsuit in County Court and asked the Judge to declare the contract void based on strong caselaw stating that a contract with no term is terminable at will. The Judge agreed and nullified the contract! That was it—the client was free and I got a new guitar. Lesson: No term = you can walk away whenever you choose.
9. It does not contain an attorney’s fees clause.
Such clauses allow the winner of a formal dispute to recover their attorney’s fees from the loser. These clauses are important for those reasons—sure. BUT, the more important reason is it makes it easier to hire an attorney to pursue your contract dispute since they could get paid by the other side if you win. Often, these clauses also help to negotiate a better settlement and hopefully aren’t needed for litigation, since that process rarely…very rarely…results in a profitable result.
It’s a sad day when you can’t get an attorney to take your case, but that often happens when the contract does not provide a way to collect attorneys’ fees if you win.
8. It’s one-sided even for the entertainment business.
After doing this for more than 25 years, I’m not surprised that powerful people think unfair, one-sided contracts are good for them, but I can’t think of one that didn’t result in a dispute that hurt both sides—Many, many entertainment disputes could have been avoided if the relationshop began with a reasonable and fair contract. If my client is asked to sign a truly one-sided contract, part of the negotiation is to convince the other side that some clauses guarantee disputes and sour relationships early. If the other side won’t make the contract terms at least fair and within industry norms, I advise the client to walk away.
7. It does not contain an accounting clause.
6. It does not have a venue clause or venue for disputes is set outside of your state.
5. The other side encourages you not to consult an attorney of your own.
4. You are being pushed to sign quickly (1 week or less).
3. The contract is presented as nonnegotiable: “take it or leave it”.
2. You like the contract, but not the people behind it.
1. You don’t like some of the terms, but the other side assures you that things will get better after you sign.
If your contract or offer has any of these issues, you need a competent entertainment attorney to help you and of course, you should consult a qualified attorney before you sign any significant contract. I plan to expand on each of the Top Ten Signs in my next message—stay tuned.