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Entertainment Law
University of Mississippi School of Law
Lantagne, Stacey M.

ENTERTAINMENT LAW LANTAGNE SPRING 2016
 
Contract formation in entertainment law
Three variations of contracts in:
Oral discussions only,
Unsigned writing or writings,
Signed short writing—deal memo on letter of intent
Deal memo—letter of intent documenting the material terms of an oral agreement
When will courts enforce deal memos?—when they are executed, contain definite language about material provisions.BUT,
Deal memos often based on many different recollections;
Courts do not want to write K parties have not made
How do we decide if parties reached an agreement? (Basinger)
Behavior following agreement;
Δ’s former behavior (look to other Ks, other activities);
Look for partial performance;
Bad faith in ignoring K?;
Look for Statute of Frauds problems (personal service Ks not performable w/in one year need to be written)
Entertainment industry financed by the few products that are successful
Contracts reflect high risk of uncertainty
Entertainment contracts do not follow typical contract formation process
Promissory estoppel—promisor reasonably expects to induce promisee’s action/forbearance and injustice can only be avoided by enforcement of K (reasonable reliance)
Preventive methods to avoid K formation problems:
Get K in writing AND signed;
State specifically that writing is binding;
Detail—particularly bargained terms (compensation, description of work, time period);
If possible, cross reference to previous deals;
Consider procedure/formula for issues to be agreed upon later;
Consider simpler, shorter form type K in lieu of long one;
Use recitals re:intent and reliance (“we understand this to be a K”)
Definiteness—disagreement on meaning of terms
K must be definite enough to determine there was a breach
How to fix definiteness problems?
Best efforts clauses—essential is a set of guidelines against which best efforts clauses may be measured and provision requiring ADR
Include period of exclusive negotiations (but disinterested party may go through the motions until period is over
Right of first refusal (may be like specific performance in certain instances)
Consideration/Mutuality—bilateral Ks (promise for promise), no consideration if one party makes illusory promise
Principle functions served by consideration requirement:
provides court w/ objective evidence of parties’ intent;
parties will act more carefully if they know their consideration will make promises enforceable
Reverse of definiteness—good faith clause is enough to find a K, but not enough to establish a remedy
Newell says, “Just b/c you have the upper hand doesn’t mean you should force leverage.”  Lesson—don’t get too greedy, approach adhesion
Newell says, “It’s important to be dull in K and legislative drafting.”  Lesson—prevents “there’s a reason this was stated differently.”
Capacity to Contract
Infancy/incapacity
Arbitrary age—18;
infant has power to disaffirm
infant not liable on K;
liable in quasi-K for necessaries;
Infant must restore goods in possession (and maybe depreciation)
usually some remedy, in necessaries, to party contracting w/disaffirming minor in
After majority, infant may ratify
Minors cannot use right to disaffirm to gain an advantage
Entertainment states (CA & NY) have special statutory schemes that provide for judicial approval of minors.If there’s judicial approval, minor cannot disaffirm
in CA—optional procedure for which either party can petition the court
Duration
No prohibition on long Ks under common law.  Especially important in music industry (artists receive advances/royalties in exchange for exclusive right to distribute recording and procurement of copyright ownership to music)
Attractive to labels but not to talent (power/money v. talent)
Label only commits for a limited time/#of albums, BUT
keeps option to renew K for longer
Artist unconditionally commits for as long as option period
18-20 mos. to produce an album x 8-10 albums
General unconscionability argument is an unsuccessful challenge although new artists often receive very unbalanced Ks (little developed case law, most end up being settled)
Public policy/Restraint of trade argument
CA legislation limits duration of employment/personal service Ks to 7 years.Can’t circumvent 7-year limit, but can re-negotiate an new term and a new K
Entertainment Contract Obli

gets net
Music.  Music groups finance the production of their own records (unlike movies or publishing)
Label acts as a bank that loans money to performers to make money.Label expects recoupment through withholding of royalties
Artists do not receive any revenue until royalties account for money advanced
Entitlements to payments
Owners of intellectual property have certain rights (right to reproduction, create derivative works, distribute copies, publicly perform work)
Entertainment Contract Remedies and Liabilities
Two major categories for remedies:
Equitable remedies (injunctions, specific performance)
Damages (must mitigate damages)
Injunctive Enforcement of Personal Service Contracts
General Equity Doctrine
Entertainment corporations rely on equitable remedies to prevent artists from evading contractual obligations
monetary damages difficult to prove;
turn to ‘negative injunctions’ when monetary damages are inadequate;
issue of ‘double injury’—company doesn’t get performance, AND loses artist to another company
K’s to perform personal services are not to be specifically enforced
court will not compel unwilling employee to continue providing services
difficult to monitor and enforce compliance of an unwilling party
13th Amendment ban on involuntary servitude
negative injunctions not issued against employees where probable result will compel performance involving personal relations, or leave employee w/o means of reasonable living
Courts will issue negative injunctions when
services were supposed to be exclusive,
services are unique and not readily replaceable, even w/help of monetary damages
court will consider company’s motives (trying to get employee back at their company?Not gonna work)