Distribution Agreements
Contract , Record Labels / June 2004

CONTRACT LAW Record Labels ARTICLE: by Sarah Waddington The problems surrounding 3MV’s insolvency have brought to a head the sometimes thorny issue of ownership of stock. These problems should prompt every independent label to look at their own distribution agreement. A number of independent record companies distributed by 3MV may rue the day they did not pay more attention to the clause in their distribution agreement which governs when ownership of stock – records – passes from them to the distributor. Ownership of stock is one of the provisions in standard distribution agreements which need to be reviewed very carefully. The Sale of Goods Act 1979 allows contracting parties to agree the time at which ownership of goods will pass. In the absence of an express provision, ownership of goods passes when they are delivered. A number of 3MV’s distribution contracts expressly provide for ownership of records to pass on their delivery to 3MV and, in some circumstances, on manufacture. From that date those records are assets of 3MV. This is not in a record company’s interest – ownership of these records should be retained by the record company until payment for them is received. If ownership of records is…

Rapper Ras Kass Launches Action Against Priority Records, Capitol and EMI

CONTRACT Record Labels, Artists, Music Publishers Rapper Ras Kass (real name John Austin) has filed suit against Priority Records, Capitol Records, EMI Music and two Priority executives, claiming breach of contract, unfair competition, restraint of trade and other abuses. The suit, filed in California Superior Court in Los Angeles, seeks a rescission of the musician’s contract, and compensatory and punitive damages to be determined. According to the suit, in 1995, Austin, who was then a 22-year-old Patchwerk Records artist, signed a contract with Priority requiring delivery of one album, with an option for five more albums. The action claims that Priority failed to market and promote the albums “Soul on Ice” (1996) and “Rassassination” (1998). It also alleges that two Priority executives maliciously interfered with Austin’s career. The suit further alleges that the releases of Austin’s third and fourth albums were sabotaged, and that Priority interfered with a proposed group project for Sony that would have featured Austin, Xzibit and Saafir. According to the suit, owing to “fraudulent accounting practices,” Austin has received only $100,000 during the nine years of his contractual agreement, an average of approximately $11,000 per year. The 32-page filing broadly excoriates standard record-industry practices, and calls…

Maverick Records Launches Legal Action Against Warner Music
Artists , Contract , Record Labels / April 2004

CONTRACT LAW Record Labels, Artists Madonna’s Maverick Records label has filed a legal action against Warner Music Group and Time Warner Inc. for breach of contract accusing the record company and its former parent of mismanagement and improper accounting that cost the singer and her partners millions of dollars. The lawsuit, filed in Los Angeles Superior Court, is the latest chapter in a long-running dispute between Madonna and Warner over Maverick, a joint venture the singer and record company launched in 1992. In the suit, Beverly Hills, California based Maverick accuses Warner Music and the other defendants of “engaging in acts of self-dealing and profit-taking, falsely accounting for receipts and expenses of the partnership … and secretly attempting to seize partnership opportunities for their own benefit.” Maverick claims Warner violated the venture agreement by failing to pay for “guaranteed” services like radio promotion, marketing and sales meant to support Maverick artists. The suit also contends Warner obscured label profits by using “artificial and improper accounting methodology to create the false impression of losses.” Madonna and her partners own a combined 60 percent stake in Maverick, whose artist roster includes Alanis Morissette and Michelle Branch. Warner owns the remaining 40 percent…

British Comedian Faces Damages Claim For Show Cancellation
Artists , Contract , Live Events / December 2003

CONTRACTS Artists, Live Concert Industry The British comedian Jim Davidson faces a claim of £35,000 after he cancelled a show at Plymouth Pavilions. The comedian backed out of the show after audience members in wheelchairs refused to move from the front row of the theatre before the show began. The venue refunded 1,700 audience members with the cost of their tickets (£17.50 and £19.50) and the cost of programmes bought. However, Mr Davidson justified his actions because his show involves him ‘taking the micky’ out of the front row of any show and in the circumstances he did not want to appear to be insulting the front row which was wholly made up of disabled patrons. It appears that Mr Davidson did not want to compromise his show or be seen to insult disabled patrons. Source: The Times 22 October 2003

Van Morrison Ordered To Pay Damages For Cancelled Contract
Artists , Contract , Live Events / December 2003

CONTRACTS Artists, Live Concert Industry English pub landlord Gary Marlow has been awarded approximately £40,000 in damages after Van Morrison cancelled a concert at the Crown Hotel public House in 2002. The singer, and his production company Exile, claimed that the contract had been breached by Marlow publicly advertising the event – but the court thought otherwise. The damages included the return of a £20,000 deposit. However, the damages fell far short of what Mr Marlow had asked for – he claimed the failed concert severely damaged the business of his pub and wanted damages of £400,000 for the long term damages to his business. This was not accepted in the High Court and Mr Marlow faces a substantial legal bill – it is also thought he may have turned down an offer of more than £40,000 from the singer to pursue the claim. A review of the judgement by Richard Taylor and Emma Stoker can be seen at:http://www.simkins.com/ebulletins/archive/default.aspx and see: http://www.ilmc.com

Judgement For Damages In Holly Valance Management Dispute
Artists , Contract / December 2003

CONTRACTS Artists Holly Valance’s Australian ex-manager, Scott Michaelson, has been awarded AU$350,000 (approx £160,000) in damages after the singer wrongly terminated his management contract. Justice Clifford Einstein found that the artist had breached the contract and awarded the damages for loss of earnings and management commission. Ms Valance will also have to pay costs. Mr Michaelson’s damages were limited to Holly Valance’s first album and he will not receive commissions from her yet to be released second album. See: http://www.theage.com.au/articles/2003/11/06/1068013328625.html

Ex-manager wins case against Holly Valance
Artists , Contract / November 2003

CONTRACTS Artists Holly Valance’s ex-manager, sacked by the star when her pop career began to take off, has won his action against the star in an Australian court. The Court held that Vallance had unfairly terminated the contract of Scott Michaelson in January 2002. Lawyers for Valance claimed Michaelson – like Valance, a former Neighbours actor – had been ill-equipped to manage the star’s burgeoning music career. Michaelson is seeking £160,000 in lost income, a 20% cut of sales of Valance’s second album and exemplary damages. The Court will now assess damages. Valance first found fame in Neighbours. She released her first album, Footprints, in October last year. See: http://news.bbc.co.uk/1/hi/entertainment/showbiz/3161392.stm

Limp Bizkit sued by irate fans
Artists , Contract / November 2003

CONTRACTS Artists Limp Bizkit are being sued by 172 rock fans who attended July’s infamous Chicago show, which ended after only 17 minutes when the band were booed off stage. A lawsuit was submitted yesterday to District Court in Illinois. The band were supporting Metallica on the Summer Sanitarium tour, at Chigaco’s Hawthorne Racetrack. The suit alleges that the plaintiffs were expecting a ninety minute show but the band’s front man, Fred Durst, fired-off a tirade against the city and the audience, before challenging the entire crowd to a fight. The breach-of-contract suit has been filed by Michael Young, the lawyer acting on behalf of the 172 aggrieved concertgoers, who are seeking a $25 refund from the July 26 show opening the door to up to 40,000 re-payment claims. See: www.dotmusic.com

DEAL MEMOS AND CONTRACTS: PRETTY PICTURES v QUIXOTE FILMS (2003)

CONTRACT LAW Record Labels, Music Publishers, Television, Radio, Artists, Internet With the quick-fire thrust and parry of email becoming increasingly popular as a means of communication, the possibility of inadvertently creating a binding contract is an ever present danger. However, a recent case which came before the High Court has reinforced the basic legal principle that if the parties only intend to be bound by signature of a formal legal document, then an affirmation of the principal terms of the proposed agreement in email correspondence will not suffice for that purpose. In Pretty Pictures v Quixote Films the question came before the court as a preliminary issue. The claimant, a French film distributor, alleged that a binding contract had been concluded with the defendant, the owner of a film called ‘Lost in La Mancha’. Over a period of two or three months the claimant and the defendant’s sales agent had corresponded by email culminating in an email from the claimant setting out his ‘revised offer’. This, in effect, was a bald statement of the principal terms: minimum guarantee, term, territory, rights granted and income splits. There followed further negotiations but ultimately an accord was reached and the defendant’s sales agent sent an…

DEAL MEMO IS NOT A CONTRACT BUT INVOICE CAN BE. RAP IS A ‘FOREIGN’ LANGUAGE

CONTRACT LAW Record Labels, Music Publishers, Artists Confetti Records & Others -v- Warner Music UK Ltd This UK case involved the purported licence of a sample of the track Burnin by the claimants to the defendants. The first claimant (Confetti) had been negotiating with the defendants about use of the track and had issued a ‘subject to contract’ deal memorandum which both parties signed. The first claimant then issued an invoice to the defendant and sent a recording of the track. Mr Justice Lewison held that ‘subject to contract’ had the same meaning in the music industry as other businesses and the document was not binding as such. It was for the defendant to prove otherwise. As the defendant had failed to do this, the deal memorandum was not binding. But Mr Justice Lewison went on to decide that the subsequent sending of an invoice with the track constituted an offer which was subsequently accepted by the defendant’s conduct in making use of the track and hence a contract had come into existence so there could be no copyright infringement as permission to use was granted. The third claimant, Andrew Alcee, brought a claim under Section 80 of the Copyright Designs and Patents…

FORMER MANAGER SUES DRU HILL
Artists , Contract / April 2003

CONTRACTS Management, Artists The R&B group Dru Hill have been served with a $30 million lawsuit from former manager, Kevin A. Peck, who claims the group owes him millions of dollars in management fees. The lawsuit, filed in Baltimore Circuit Court on March 20 2003, alleges unjust enrichment and is served against all of the original band members. Peck believes that his management contract entitled him to a percentage of the group’s income from all three of its albums, as well as the members’ solo releases. Dru Hill attempted to settle with Peck, but were unable to reach an agreement with him. Dru Hill achieved multiple platinum albums, several music awards and generated millions of dollars in publishing royalties and record sales, including ‘The Thong Song’ released by band member Sisqo in late 1999. See www.news8.com Meanwhile, former Guns N’ Roses songwriter and guitarist, Izzy Stradlin, has also filed a lawsuit in the Los Angeles Superior Court. He alleges that he mistakenly paid his management firm Big FD $231,575 in post-term commissions after the ‘old’ Guns N’ Roses broke up and that Big FD had no right to receive this, since according to the agreement he entered, the remainder of his…