Posts Tagged ‘damages’

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Never Rent Your Theater To Cannibals

Thursday, July 14th, 2016

By Brian Taylor Goldstein, Esq.   

Dear Law and Disorder:

We have a non-profit theater company with our own performance space. We are looking for additional ways to increase our revenue stream within the terms of the lease. Two questions: Can a non-profit collect revenue for rented space or must it take the form of a voluntary donation? Do you know off hand if there are tax implications?

Yes, you can definitely collect revenue for the rented space.  However, this is called Unrelated Business income (UBI) by the IRS, and it would constitute taxable income as it’s not related to you non-profit’s mission as a theater company—assuming, of course, that the missing statement filed with the IRS does not include running a catering hall. This might be different if you were renting the space to other non-profit organizations constituent with your own mission, such as local dance groups, community theater, theater camps, etc.

Regardless, I wouldn’t try calling the rent a “voluntary donation” to avoid the taxes.  It’s not voluntary if the lessee is required to pay it, and it’s not a donation if the lessee is receiving something of value in return for the money. Being entrepreneurial is admirable. Committing tax fraud is not.

In addition to considering the tax implications, you should also consider the liability and insurance implications as well. Regardless of who rents your space, should anyone be injured while on your property, your organization will be the one named in a lawsuit—especially if you will be renting it for any purpose that will involve children—the little darlings are pits of liability! While it’s a great idea to make any renters be responsible for any damages or claims, you need to require them to have insurance as well as obtain your own independent insurance. Making a renter contractually responsible does not mean they will actually pay.

Lastly, in additional crafting a well-drafted rental agreement (which means having terms that actually apply to your group, as opposed to borrowing a template from the strip club down the street that rents itself out for bachelor parties), you want to have specific written rules and guidelines as well as the ability to refuse to rent to any group or organization that you deem to be inappropriate—provided, of course, that such decisions are not made for discriminatory reasons. Just as people will blame your organization for any accidents or injuries that occur on your premises, people will associate you with tacit approval of any group or organization that rents your premises. So, hosting the North American Association of Cannibal’s Annual Banquet and Pot Luck may not be a wise idea.

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For additional information and resources on this and other GG_logo_for-facebooklegal, project management, and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.com

All questions on any topic related to legal, management, and business issues will be welcome. However, please post only general questions or hypotheticals. GG Arts Law reserves the right to alter, edit or, amend questions to focus on specific issues or to avoid names, circumstances, or any information that could be used to identify or embarrass a specific individual or organization. All questions will be posted anonymously and/or posthumously.

__________________________________________________________________

 

THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

The purpose of this blog is to provide general advice and guidance, not legal advice. Please consult with an attorney familiar with your specific circumstances, facts, challenges, medications, psychiatric disorders, past-lives, karmic debt, and anything else that may impact your situation before drawing any conclusions, deciding upon a course of action, sending a nasty email, filing a lawsuit, or doing anything rash!

 

 

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Posted in Arts Management, Insurance, Law and Disorder: Performing Arts Division, Taxes, Venues | Comments Closed

Termination For Convenience

Thursday, April 28th, 2016

By Brian Taylor Goldstein, Esq.

Dear Law and Disorder:

I recently received the following clause from a performing arts venue in a contract they sent:

TERMINATION FOR CONVENIENCE: Either party may terminate this Agreement at any time upon written notice to the other party. If this Agreement is terminated before the performance, the University shall have no obligation to pay Artist. If this Agreement is terminated during the performance for any reason other than the Artist’s breach of this Agreement, the University shall compensate Artist on a prorate basis. 

I told them that, in my mind, this makes the contract virtually worthless.  They came back with this: 

TERMINATION FOR CONVENIENCE:  Either party may terminate this Agreement at any time upon written notice to the other party. If this Agreement is terminated before the performance, the University shall have limited obligations to pay Artist, as defined below. If this Agreement is terminated during the performance for any reason other than the Artist’s breach of this Agreement, the University shall compensate Artist on a prorate basis.  Under no circumstances will either party be liable to the other for indirect, consequential, or incidental damages, including but not limited to anticipatory profits. The University may from time to time, under such terms and conditions as it may prescribe, make partial payments and payments on account against costs incurred by the Artist in connection with the terminated portion of this contract whenever in the opinion of the University the aggregate of such payments shall be within the amount to which the Artist shall be entitled hereunder. 

I feel that I wouldn’t be doing my due diligence as a Manager to sign this, but it’s a very important venue to me and I do quite a bit of business with them.  But I think this is unconscionable. Am I wrong?

“Unconscionability” implies a certain level of moral indignation is generally unwarranted in a simple engagement negotiation. The venue is merely proposing terms that are in its own best interest, not demanding that you sacrifice a sack full of kittens! If acting in one’s own self-interest were unconscionable, then most artists would have an incalculable amount of karmic debt. However, you are quite correct that the terms they are proposing are unfair to your artist. I’ve seen more and more presenters and venues trying to give themselves the unilateral right to cancel. I get it. Times are tough. Tickets are hard to sell. But it’s unreasonable and unfair to expect an artist to bear the entire loss of a cancellation. The venue’s proposed compromise is basically to reimburse the artist for any out-of-pocket costs, but not to pay the artist for the lost performance or the fact that the artist may have turned away other engagements. That’s not exactly what I would call an equitable compromise.

Regardless, the point of a contract is not to provide some false sense of security or protection, but, rather, to enable the parties to identify any issues that need to be negotiated, evaluate the pros and cons of a deal, and determine whether or not to proceed. In this regard, this contract has proven to be extremely valuable in that the venue has made it quite clear that they want to have the right to cancel without consequences. You have done your due diligence in reading and evaluating the contract. Now comes the hard part. What to do? You need to determine whether or not to engage in further negotiations, to accept the venue’s terms and sign the contract, or walk away and find another engagement. Ultimately, the decision is up to your artist. Your job as the Manager is solely to evaluate and advise your artist.

All art requires risk. The performing arts business requires a certain amount of risk as well. As the Manager, its your job to help your artist evaluate reasonable risks from unreasonable risks. Obviously, I don’t know enough about your specific artist or the specific venue to render an opinion. However, I can tell you that what is completely irrelevant to the analysis is whether or not the venue is important to you and whether or not you do “quite a bit of business with them.”  As a Manager, the focus of all managerial decisions must be what is best for your artist, not you. Is the venue particularly prestigious or important to the artist? Is the fee is particularly large? Does the engagement offer your artist a particularly advantageous opportunity? Then it may be worth advising the artist to take the risk. Otherwise, the artist should decline the engagement. The impact of the artist’s decision on your own relationship with the venue, past or future, is beside the point.

If your ongoing relationship with the venue is more important to you than the relationship with your artist, then you should drop the artist. I have often heard Managers say that artists come and go, but venues are forever. However, I don’t necessarily believe this. In my experience, if an artist is popular and in demand, and especially if an artistic director wants the artist, the presenter or venue won’t care if the artist is represented by Satan himself.

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For additional information and resources on this and otherGG_logo_for-facebook legal, project management, and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.com

All questions on any topic related to legal, management, and business issues will be welcome. However, please post only general questions or hypotheticals. GG Arts Law reserves the right to alter, edit or, amend questions to focus on specific issues or to avoid names, circumstances, or any information that could be used to identify or embarrass a specific individual or organization. All questions will be posted anonymously and/or posthumously.

__________________________________________________________________

 

THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

The purpose of this blog is to provide general advice and guidance, not legal advice. Please consult with an attorney familiar with your specific circumstances, facts, challenges, medications, psychiatric disorders, past-lives, karmic debt, and anything else that may impact your situation before drawing any conclusions, deciding upon a course of action, sending a nasty email, filing a lawsuit, or doing anything rash!

 

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Posted in Artist Management, Contracts, Law and Disorder: Performing Arts Division, Presenters, Venues | Comments Closed

Understanding Legalese

Thursday, May 28th, 2015

By Brian Taylor Goldstein, Esq.   

Dear Law and Disorder:

Every time someone sends us a contract, its always a lengthy document with lots of legalese that no one understands. Is there anything wrong with having a simple, one page agreement that everyone can easily understand and will sign?

A lot of people mistake “legalese” for language and terms they either don’t understand or haven’t considered. They see words on a page and immediately assume they can’t possible understand them.

This is legalese:

The party of the first part, which party has previously and hereinafter shall continue to be referred to as the Presenting Party, in and for the mutual obligations, conveyances, and other considerations contained herein, the sufficiency of which are hereby acknowledged, does for itself and on behalf of its officers, directors, employees, agents, and assigns (hereinafter the “Presenting Parties”), which the Presenting Party does herein attest, warrant, and represent that it has the authority so to represent and bind under the terms of this agreement, does herein and hereby concur, agree, and consent to prohibit, prevent, proscribe and preclude, so the best of its reasonable ability, the degree and extent of such “reasonability” to be determined herein as the term “reasonable” is defined in this Agreement hereunder, the recording and/or memorialization through any and all visual and/or audio and/or audio-visual means and methodologies now existing or hereinafter discovered, invented, or devised, including, but not limited to photography, analog and digital sound recordings, videotaping, screen captures, and any other human or machine-readable medium, the performance of the party of the second part, which party has previously and hereinafter shall continue to be referred to as the Performing Party, including, but not limited to, the performance or any portion of the performance of the Performing Party, including, but not limited to, excerpts, samplings, moments, movements, scenes, rehearsals, outtakes, or other manifestations of the performance or any portion of the performance of the Performing Party, for any purposes of any kind or nature, including, but not limited to…well, you get the idea.   

 This is not:

The Presenter agrees to prevent any unauthorized broadcasting, photographing, recording, or any other transmission or reproduction of any performance(s) or residency activity of the Artist, or any part thereof, by any means or media now known or hereafter invented, including, but not limited to audio, visual, or audio-visual means, and including any “archival” recordings, unless the express prior written consent of the Artist has been obtained.

The difference is that the first example uses unnecessary verbiage, poor grammar, and confusing structure. The second example just has a lot of detail. Don’t confuse “legalese” with “detail.” Whereas you don’t want legalese, you do want detail. Why? Because the whole point of a written document memorializing the terms of an agreement (also known as a “written contract”) is to convey information—not just to have a piece of paper that everyone signs.

Too many people want contracts that are “simple” and “brief” so that the parties will sign them, but that’s pointless. Merely having a signed contract does not mean that an engagement won’t get canceled, that commissions will get paid, artists won’t leave, or that any number of nasty things won’t happen to you. Signed contracts are not self-enforcing. If a dispute arises that cannot otherwise be resolved, the only way to enforce the terms of a contract is with a lawsuit. Lawsuits, as you know, achieve nothing other than making trial lawyers ecstatically happy and wealthy. No one in the performing arts can afford that, either personally or professionally. You don’t want to wait until a dispute arises to find out that you and the other party had vastly different assumptions about what was and was not expected and allowed. Instead, you want to make sure that everyone understands all of the aspects of a project or engagement at the outset and, hopefully, can discuss and evaluate the risks, challenges, advantages, obligations, and expectations of the relationship before they agree to it. In other words, you use a contract to educate, not to enforce.

What determines the length of a contract is the complexity of the project or engagement itself. An agreement for a single artist to perform a single recital is going to be shorter than an agreement for an orchestra to perform a world tour. Similarly, an assignment or transfer of all rights is going to be less complex than a recording agreement or an agreement to re-orchestrate an existing work.

Our industry is blessed with amazingly creative and dynamic professionals who are second to none when it comes to creating imaginative collaborations and engaging performances. However, they become slightly less than stellar when it comes to understanding the business and legal arrangements necessary to effectuate these plans. It’s one thing to discuss dates, repertoire, scheduling, and fees. It’s quite another to consider all of the various details, challenges, and misunderstandings that might come into play: will music or other copyrighted materials need to be licensed? If so, whose responsibility is this? Can either party cancel? Under what circumstances? What if someone gets sick or there is a fire at the venue? Who bears the loss of expenses cannot be recovered? Who is responsible if an artist is injured? Who is responsible for someone in the audience gets hurt? Who is responsible if an artist or crew member damages property of the venue? Who is responsible if someone from the venue damages property of the artist or show? Will visas be required for any artist? Whose responsibility is this? Is the engagement fee to be paid in dollars, pound sterling, euros, or other currency? Which exchange rate will apply? Who is responsible for taxes? Are deposits non-refundable?

This is where a contract comes into play. Yes, it takes time to create and read all of this detail. However, a detailed contract can be filled with all sorts of interesting and mutually beneficial revelations. For example, when recently negotiating the terms of an engagement for one of our own artists, I presented our engagement contract to the presenter—which contains a clause, much like the one above, prohibiting any recordings, including archival recordings. The presenter wanted to make an archival recording and assumed, incorrectly, that these were always permitted. We were able to find a workable solution and adjusted the contract accordingly. We also discovered that while the presenter had not factored in meals and transportation into the budget, we had misunderstood when the presenter actually wanted the artist to arrive. We were able to adjust all of these issues, none of which would have been discovered had we not taken the time to think through all of the various details. In the end, it didn’t matter whether or not the contract was even signed because going through the process itself allowed the presenter and I to discuss all of the details. The contract served its purpose.

In short, a more detailed contract that makes people stop and say “wait, I didn’t agree to that” or “what exactly do you mean by this?” is far better than an artificially simplistic one that everyone signs now and then squabbles about later whilst lashing out such cherished and time-worn drivel as “but that’s industry standard” or “that’s the way its always done.”

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For additional information and resources on this and otherGG_logo_for-facebook legal, project management, and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.org.

All questions on any topic related to legal, management, and business issues will be welcome. However, please post only general questions or hypotheticals. GG Arts Law reserves the right to alter, edit or, amend questions to focus on specific issues or to avoid names, circumstances, or any information that could be used to identify or embarrass a specific individual or organization. All questions will be posted anonymously and/or posthumously.

__________________________________________________________________

THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

The purpose of this blog is to provide general advice and guidance, not legal advice. Please consult with an attorney familiar with your specific circumstances, facts, challenges, medications, psychiatric disorders, past-lives, karmic debt, and anything else that may impact your situation before drawing any conclusions, deciding upon a course of action, sending a nasty email, filing a lawsuit, or doing anything rash!

 

 

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Posted in Agents, Artist Management, Arts Management, Contracts, Copyrights, Insurance, Law and Disorder: Performing Arts Division, Licensing, Music Rights, Presenters, Touring, Venues | Comments Closed

The Damaging Truth About Cancellation Damages

Thursday, March 12th, 2015

By Brian Taylor Goldstein, Esq.   

Dear Law and Disorder:

A presenter wants to breach our engagement contract by cancelling. Our cancellation clause says that, in the event of cancellation, we get 50% of the engagement fee or actual damages. They are offering 50%, but at this stage want the full fee.

If you have an engagement contract that has a cancellation clause, and a presenter cancels, then the presenter is not breaching your contract. A contract breach only occurs when someone fails to do something the contract requires (such as pay a deposit) or does something the contract does not permit (such as record a performance). In this case, if your contract has a cancellation clause, then you have given the presenter the right to cancel. So long as the presenter complies with the terms of your cancellation clause, then they are not in breach. They are merely exercising the right you gave them to cancel. If you don’t want them to cancel, don’t give them the right to do so.

According to your cancellation clause, if a presenter elects to cancel, they have to pay you either 50% of the engagement fee or actual damages. However, your actual damages may or may not be the full engagement fee. To determine whether or not you are entitled to the full engagement fee, you first have to calculate your “actual damages.” Actual damages are simply that: your actual out-of-pocket losses from the cancellation of that particular engagement. No more. No less. Calculating “actual damages” involves taking the full engagement fee and subtracting any costs or amounts you saved or did not incur as a result of not having to perform.

In some instances, the “full engagement fee” might include the performance fee as well as other costs, such as the value of travel and/or hotel that the presenter was covering. However, for the sake of simplicity, let’s assume that the full engagement fee was $5000, of which you needed $2000 to cover costs such as travel and equipment, leaving $3000 for profit. If by cancelling, you did not have to incur the travel and equipment costs, that means you saved $2000, and your “actual damages” are $3000. You would only be entitled to the full fee of $5000 if the engagement were cancelled too late for you to save or recoup any of your costs.

However, “actual damages” can never exceed the total value of the full engagement fee. As we all know, sometimes a single cancellation in a larger tour can also have residual implications. What if you were counting on the travel and hotel from a larger presenter to “underwrite” the costs of a smaller engagement fee from another presenter or run-out? If the larger engagement gets cancelled, that may necessitate the cancellation of the smaller one as well, or even the entire tour. Sadly, those losses are not “actual damages.” That’s just called bad planning.

Just because you were counting on something to make an entire tour break even, does make the loss “actual damages.” If the loss of a single engagement will trigger a domino effect, such as the cancellation of the entire tour, then, in addition to “actual damages”, you have suffered “consequential damages.” I know, that doesn’t make sense, but lawyers came up with these concepts hundreds of years ago and contracts still use the same broken terminology. This is the risk inherent in using contractual language you copy from someone else or don’t fully understand. You may inadvertently be using language that makes sense to you, but has a different legal meaning. The solution is simple: use English and be specific—even if it means (perish the thought!) using more words. For example, rather than write “we get 50% or actual damages” write what you mean:

If you cancel the contract, we get either a minimum of 50% of the engagement fee or all of the damages we actual incur as a result of the cancellation, including the cancellation of other engagements and/or any additional costs we must incur for travel, hotel, or other tour expenses, whichever is greater.

Wordier? Yes. Clearer? Indeed. An even clearer solution? Specify at the outset that the engagement is non-cancellable.

__________________________________________________________________

For additional information and resources on this and otherGG_logo_for-facebook legal, project management, and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.org.

All questions on any topic related to legal, management, and business issues will be welcome. However, please post only general questions or hypotheticals. GG Arts Law reserves the right to alter, edit or, amend questions to focus on specific issues or to avoid names, circumstances, or any information that could be used to identify or embarrass a specific individual or organization. All questions will be posted anonymously and/or posthumously.

__________________________________________________________________

THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

The purpose of this blog is to provide general advice and guidance, not legal advice. Please consult with an attorney familiar with your specific circumstances, facts, challenges, medications, psychiatric disorders, past-lives, karmic debt, and anything else that may impact your situation before drawing any conclusions, deciding upon a course of action, sending a nasty email, filing a lawsuit, or doing anything rash!

 

 

 

 

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Posted in Agents, Artist Management, Arts Management, Contracts, Law and Disorder: Performing Arts Division, Liability, Presenters, Touring | Comments Closed

The Divine Right To Cancel

Thursday, February 12th, 2015

By Brian Taylor Goldstein, Esq.   

We were in the process of booking one of our singers with an orchestra, when we encountered the following Force Majeure clause in the orchestra’s contract: “If, as a result of any event beyond the control of the Orchestra, including, but not limited to, war, national calamity, strike, labor relations, lack of funds, poor ticket sales, or other Acts of God or force majeure of any kind or nature, Orchestra determines it necessary to suspend, cancel, or terminate the giving of any of the performances specified herein, then the Orchestra, in its sole discretion, shall have the right to do so by giving notice to the Artist. Upon such notice, the Orchestra and Artist shall be relieved from any further obligations under this Agreement without any liability of either party to the other for any damages arising from such suspension, cancelation, or termination.” We asked if they would strike the reference to “lack of funds” and “poor ticket sales”, but we were told that their contracts must be approved by their board of directors and, as such, nothing can be changed. Have you encountered this before? Do you have any advice on how to respond?   

Telling someone that a contract cannot be changed because their board of directors says it can’t be changed is the equivalent of a parent telling a child “because I said so.” As I am frequently reminded when faced with the manifest irrationalities of my own parents: do not engage and back away.

I actually don’t doubt that the orchestra’s board of directors did, in fact, suggest and recommend such language. It’s just the type of thing a poorly formed board of wealthy corporate donors with no actual arts experience would come up with. (It brings to mind an occasion when I was called in to consult with a board of directors who was insisting that no season could be planned or programmed unless the artistic director was willing to guarantee exactly how many tickets would be sold to each performance!) Regardless, such language is absurd and quite frankly, insulting and unprofessional.

It is absurd because, as I have previously written, a force majeure clause is supposed to be limited to events truly beyond anyone’s control: floods, snowstorms, terrorist attacks, etc. Ticket sales and funding are not determined either by serendipity or the intervention of divine energies (though I often suspect many strategic plans are based on such notions.) I find it insulting and unprofessional because the orchestra’s board of directors is trying to obfuscate a cancellation provision under the pretext of a force majeure clause. By defining force majeure to include “lack of funds” and “poor ticket sales” the orchestra is attempting to give itself the luxury of being able to cancel at any time for any reason with no liability or consequence. Contractually, this would render the Agreement terminable at will by the orchestra and, thus, meaningless for the Artist.

As a compromise, I would propose amending the force majeure clause and adding to the agreement a proper cancellation clause whereby, if the Orchestra felt that it needed to cancel due to “lack of funds” or “poor ticket sales” then they would have the right to do so by paying a specific, pre-determined cancellation fee. If the orchestra refuses such a reasonable alternative, then I would simply thank the orchestra for its time and walk away.

I realize, of course, that, in practical terms, artists are not always in a position to walk away. Just like good art always requires risk, occasionally this applies to deals and negotiations as well. Perhaps the artist is young and needs engagements. Or perhaps the engagement presents an artistic or resume-building opportunity to the artist. Those might be reasonable reasons to take a risk. However, such risky transactions must be entered into with eyes wide open as opposed to wide shut. As the artist’s manager, it falls to you to make sure the artist understands the risks and that both of you understand that, should the orchestra avail itself of its contractually unfettered right to cancel, you will accept that and, whilst reserving the right to swoon, sway, and cry foul, resist the temptation to threaten a frivolous lawsuit.

_________________________________________________________________

For additional information and resources on this and otherGG_logo_for-facebook legal and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.org.

All questions on any topic related to legal and business issues will be welcome. However, please post only general questions or hypotheticals. GG Arts Law reserves the right to alter, edit or, amend questions to focus on specific issues or to avoid names, circumstances, or any information that could be used to identify or embarrass a specific individual or organization. All questions will be posted anonymously and/or posthumously.

__________________________________________________________________

THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

The purpose of this blog is to provide general advice and guidance, not legal advice. Please consult with an attorney familiar with your specific circumstances, facts, challenges, medications, psychiatric disorders, past-lives, karmic debt, and anything else that may impact your situation before drawing any conclusions, deciding upon a course of action, sending a nasty email, filing a lawsuit, or doing anything rash!

 

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Posted in Acts of God, Artist Management, Arts Management, Contracts, Law and Disorder: Performing Arts Division, Liability, Non-Profits, Presenters, Venues | Comments Closed

But I Don’t Want To Be A Producer!

Thursday, June 19th, 2014

By Brian Taylor Goldstein, Esq.   

Dear Law and Disorder:

We have booked one of our artists to perform at a venue. As we are the agent, our booking agreements are always between the venue and the artist, and we sign on the artist’s behalf. However, the presenter is insisting that, if we want to sign the contract and receive the engagement fee, as we do, then the contract must be between them and us. Is this correct?

If you are “producing” the artist—that is, you are being paid a fee by a presenter or venue to hire the artist and produce the performance—then, yes, the presenter is correct. However, if, as you say, you are the artist’s agent, then you are absolutely correct and the presenter is…well, confused.

Producers are paid a fee to provide the services of an artist. Typically, the producer will either accept a fee, use a portion of that fee to pay the artist, and pocket the difference; or invest his or her own money to hire the artist, and then keep the box office or other profits from the performance. Either way, a producer accepts a substantial amount of risk in exchange for a greater return. However, merely accepting payment on behalf of an artist, deducting your commission, and then paying the balance to the artist does not make you a producer. It doesn’t matter whether or not you use the word agent or producer in the contract. Rather, it all comes down to how the booking contract is phrased:

X is a Producer:

“Venue X enters into this Agreement with Agent Y to produce and provide the services of Artist Z”

X is an Agent:

“Venue X enters into this Agreement with Artist Z for Artist’s services, by and through Artist’s Agent Y”

Anyone who books a date on behalf of an artist, whether as a manager or as a booking agent, is working for the artist. The artist is your client. In legal parlance, the artist would be referred to as the “Principal” and the agent would be referred to as…get ready for it…the “Agent.” Under the Law of Agency (not to be confused with various state licensing requirements for booking agents—that’s something completely different), agents (ie: someone who acts for and on behalf of someone else) owe a variety of duties to their principals, including duties of loyalty, duties of care, and fiduciary duties. In exchange, agents are not liable for the contractual breaches of their principals, even if the agent negotiated the contract on behalf of the principal. This is important. If the artist decides to cancel at the last minute or otherwise causes damages to the venue or presenter, the agent is not liable whereas a producer would be liable…provided, however, that the agent did not inadvertently make themselves a party to the contract and agree to “present or produce” the artist. A booking contract, then, should always be between the presenter/venue and the artist. As the artist’s agent and representative, you can absolutely sign on behalf of the artist as well as accept money on behalf of the artist. However, the contract is between the presenter/venue and the artist.

I suspect your presenter is either suffering from the “That’s the way we have always done it” disease or the more common affliction of “I don’t know what I am talking about but will insist I am right.” It also could be a fatal case of “We are affiliated with a large university and must abide by arbitrary and inflexible rules that do not apply and no one understands.” Regardless, if they insist on having the artist sign the contract, I really don’t have a problem with that. In fact, in many ways, I actually prefer it as it eliminates the ability of an artist to come back to you later and claim they never approved the terms of the engagement. However, even if the contract is between the venue and the artist, the contract can still provide for you to receive all of the payments on behalf of the artist. Some battles aren’t worth fighting.

_________________________________________________________________

For additional information and resources on this and otherGG_logo_for-facebook legal and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.org.

All questions on any topic related to legal and business issues will be welcome. However, please post only general questions or hypotheticals. GG Arts Law reserves the right to alter, edit or, amend questions to focus on specific issues or to avoid names, circumstances, or any information that could be used to identify or embarrass a specific individual or organization. All questions will be posted anonymously and/or posthumously.

__________________________________________________________________

THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

The purpose of this blog is to provide general advice and guidance, not legal advice. Please consult with an attorney familiar with your specific circumstances, facts, challenges, medications, psychiatric disorders, past-lives, karmic debt, and anything else that may impact your situation before drawing any conclusions, deciding upon a course of action, sending a nasty email, filing a lawsuit, or doing anything rash!

 

 

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Posted in Agents, Artist Management, Arts Management, Contracts, Law and Disorder: Performing Arts Division, Liability, Venues | Comments Closed

Hypothetically Speaking About Liability

Thursday, May 1st, 2014

By Brian Taylor Goldstein, Esq.

Dear Law and Disorder:

If a hypothetical rental company is hired, either by a venue or by the client using a venue, to supply the sound and/or video system for a corporate, non-profit or association event; and this hypothetical rental company is asked to provide “top 40” music to be used during “walk in”, dinner, award winner walks up to the stage, etc. where in the liability chain would this rental company be? What if the end client hands the hypothetical rental company a stack of CD’s or worse, a drive full of MP3’s and requests/insists that they be played? If “ultimately” the owner of the venue is responsible of verifying that proper licensing has been obtained but “everyone involved” is at risk of being named in a lawsuit if proper licensing has not been obtained, how does the vendor in the middle point to either the venue or the end client as the responsible parties?  Is it enough to spell out specific language in the rental agreement? <sarcasm> I know that you are, no doubt, shocked to hear that this scenario might be possible.  However, IF it were to become “common practice” among rental companies to happily play whatever they and/or their client wanted without so much as a hesitation, it would be difficult for any hypothetical rental company to compete if they were the one’s constantly harping on usage rights with their clients. </sarcasm> 

In truth, I’m less shocked by the possibility of the scenario you propose than astonished—nay, agog—by your desire to be proactive about it—even hypothetically. It’s a welcome reprieve from the “let’s not call GG Arts Law until we’ve actually been sued by Disney” approach we are more familiar with.

Merely being named in a lawsuit doesn’t mean that you will necessarily be found responsible—or, as lawyers like to say “liable.” Liability requires that you had a duty to do, or not do, something which you did or did not do. In your hypothetical, its not entirely accurate to say that “ultimately the owner of the venue is responsible for verifying that the proper licensing has been obtained.” Rather, if licensing is required, everyone involved in the performance has a duty to make sure that the proper licenses are obtained—not just the owner of the venue, but the hypothetical rental company and the rental company’s client. Its more accurate to say that, while, ultimately, the owner of the venue is more likely to get sued, everyone involved could be held responsible.

However, you are correct that the hypothetical rental company can put language in its rental agreement that says that whomever is hiring the company (either the venue itself or the person renting the venue, or both) agrees to obtain all necessary licenses and, in the event the rental company is sued and found to be liable for copyright infringement, will cover all of its legal costs and expenses, as well as any damages it might be ordered to pay. The technical term for such a clause is “indemnification and hold harmless”, but there’s no need to use magic legal terms so long as the meaning is clear. While having such a clause in its rental agreement will neither protect the hypothetical rental company from getting sued nor protect it from being liable, it will give the company a contractual basis to turn to the party that signed the rental agreement and say “you agreed to take care of this problem. Fix it!”

Even with an indemnification and hold harmless clause in its pocket, whether or not the hypothetical rental company can happily play whatever it and/or its hypothetical client wanted without so much as a hesitation really depends on the venue where the company has been hired to provide services and where such venue lies on what I call the Risk-O-Meter.  On the low end of the meter lies most for-profit venues (hotels, rental halls, restaurants, conference centers, etc) which more often than not will have obtained the necessary blanket licenses from the major performance rights organizations (ASCAP, BMI and SESAC) to permit that stack of CD’s or a drive full of MP3’s to be played. So, no worries. On the high end you will find the non-profit venues, schools, community centers, and social halls which either don’t know they are supposed to get performance licenses or incorrectly believe that because they are non-profit they are also non-commercial and are exempt from the statutes, rules, laws, and other social orders by which the rest of us must abide. (While not all commercial venues are non-profit, almost all non-profit venues are also commercial.) Your need to harp on usage rights is directly proportionate to where you lie on the Risk-O-Meter—hypothetically speaking, of course.

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For additional information and resources on this and otherGG_logo_for-facebook legal and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.org.

All questions on any topic related to legal and business issues will be welcome. However, please post only general questions or hypotheticals. GG Arts Law reserves the right to alter, edit or, amend questions to focus on specific issues or to avoid names, circumstances, or any information that could be used to identify or embarrass a specific individual or organization. All questions will be posted anonymously and/or posthumously.

__________________________________________________________________

THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

The purpose of this blog is to provide general advice and guidance, not legal advice. Please consult with an attorney familiar with your specific circumstances, facts, challenges, medications, psychiatric disorders, past-lives, karmic debt, and anything else that may impact your situation before drawing any conclusions, deciding upon a course of action, sending a nasty email, filing a lawsuit, or doing anything rash!

 

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Posted in Artist Management, Arts Management, Contracts, Copyrights, For Profits, Law and Disorder: Performing Arts Division, Liability, Licensing, Music Rights, Non-Profits, Presenters, Publishing, Recordings, Venues | Comments Closed

Back Away From The Email!

Wednesday, December 4th, 2013

By Brian Taylor Goldstein, Esq.

Dear Law and Disorder

I recently had to cancel an engagement. We had a signed contract with the venue, but circumstances arose where we had no choice. I sent a very cordial and professional email to the venue, but got a very threatening and aggressive response. I wrote back and explained our situation, then I received a nasty email from the venue’s attorney threatening to sue us. This doesn’t seem very professional to me. We could have worked this out and now they are demanding either a written assurance that we will perform or else they will sue us for damages.

In an industry that depends on relationships and communication, email, more often than not, facilitates neither. Too many folks use email as convenient way to avoid what they perceive will be difficult or unpleasant conversations. What you perceived as a “cordial” and “professional” email may have been misread as dismissive and aggressive. Why? Because emails cannot convey tone or emotion or sincerity.

This is yet another example of why everything I needed to learn, I learned in theater. Emails are like scripts. Without an actor or stage directions to assist in interpreting them, they are just words on a page and subject to multiple interpretations and readings. “I loved your performance” can be read equally with deep sincerity or with eye-rolling sarcasm. Even something as simple as “I’ll respond as soon as I can” could be interpreted as “This isn’t important enough to me to demand my immediate attention.” Especially when you are delivering information you know the listener will not be receptive to hear, don’t be surprised when they do not give you the benefit of the doubt. Emails are great tools for confirming information or clarifying understandings, but lousy for any communication that calls for nuance or delicacy at the outset.

In this situation, if you had a signed engagement agreement, then you probably had no right to cancel. Thus, regardless of legitimacy of your circumstances, a cancellation is a breach of contract. Using an email to notify someone that you intend to breach your contract is like texting your wife that you want a divorce. How did you expect them to respond? It was unrealistic to think that your missive would be met with joyous rapture and a “thank you” note.

However, the venue is equally as culpable in the escalation. When the venue received your email, they could just as easily have responded with a phone call rather than respond with their own email. Certainly, when you received the venue’s angry response, you could have used that as an opportunity to reach out to them with a personal phone call rather than yet another email. There is no guarantee that a personal phone call would have resulted in a better outcome, but more often than not the sound of a plaintive voice acknowledging responsibility accompanied by contrite offers of reasonable solutions will offer both parties better odds of avoiding unproductive conflict. You can always follow up with an email after you have had a chance to make a personal connection.

_________________________________________________________________

For additional information and resources on this and otherGG_logo_for-facebook legal and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.org.

All questions on any topic related to legal and business issues will be welcome. However, please post only general questions or hypotheticals. GG Arts Law reserves the right to alter, edit or, amend questions to focus on specific issues or to avoid names, circumstances, or any information that could be used to identify or embarrass a specific individual or organization. All questions will be posted anonymously.

__________________________________________________________________

THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

The purpose of this blog is to provide general advice and guidance, not legal advice. Please consult with an attorney familiar with your specific circumstances, facts, challenges, medications, psychiatric disorders, past-lives, karmic debt, and anything else that may impact your situation before drawing any conclusions, deciding upon a course of action, sending a nasty email, filing a lawsuit, or doing anything rash!

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Posted in Agents, Artist Management, Arts Management, Contracts, Law and Disorder: Performing Arts Division, Non-Profits, Presenters, Venues | Comments Closed

We’ve Been Hacked!

Wednesday, September 4th, 2013

By Robyn Guilliams

Dear Law & Disorder: Performing Arts Division,

We are a small presenting organization, and we use an outside company to handle our ticket sales.  The company provides us with cloud-based software, which we use to process both online and box office ticket sales. We were recently informed by the software company that they’d been hacked!  The company told us that all of our patrons’ relevant information may have been compromised, including their credit card information. A lawyer on our board said that we are responsible for notifying all of our patrons of the security breach.  Is this true?  There are over 8,000 patrons in the system, going back quite a few years!  We don’t have the personnel to devote to this type of project.  One of the reasons we out-sourced our ticketing was to avoid handling and storing this type of sensitive information.  If we don’t handle the credit card information, why are we responsible if that information is stolen?

Oy, what a headache!

Unfortunately, I would guess that the terms of your organization’s contract with the ticketing software company require your organization to notify its patrons in the event of this type of security breach.  In fact, the contracts I’ve seen for this type of service require that the presenting organization indemnify the software company in the event of a breach.  This means that you are not only responsible for your own legal expenses and damages should one of your patrons suffer a loss as a result of the breach, but you’ll have to pay the software company’s legal expenses and damages as well!  And usually, these types of provisions are not negotiable.

In addition, you may want to take a look at the website of the PCI (Payment Card Industry) Security Standards Council, which sets the standards for companies who process credit card transactions (like your ticketing software company.)

See: https://www.pcisecuritystandards.org/faq/

Because your organization doesn’t actually handle or store credit card data, it’s not required to be “PCI Compliant.” However, as stated on this site, “it is the responsibility of the merchant to ensure that the data they share with third parties is properly handled and protected – just because a merchant outsources all payment processing does not mean that the merchant won’t be held responsible by their acquirer or payment brand in the event of an account data compromise.”

The good news here (such as it is) is that most states provide a mechanism for an organization like yours to protect itself in the event a third party credit card processor is hacked.  Generally, if you provide timely notice to your patrons of the breach, you can’t be held liable for your patrons’ damages (the theory being that if your patrons know about the breach, they can take steps to protect themselves.)  For instance, in New York (and many other states), your organization is protected from liability if you notify your patrons of the security breach “in the most expedient time possible and without unreasonable delay.”  The notice can be made in writing, electronically, or by phone.

Also, there are insurance policies that cover this type of cyber liability.  These policies usually cover the cost of notifying your patrons, as well as any legal expenses or damages you may have due to the breach.

In short, the volunteer lawyer on your board is correct. (As we don’t often agree with most lawyers, this is a rare occurrence, indeed!) Given the vulnerability of identification fraud and the potential exposure of your organization, you’d be wise to find a way to notify your patrons.

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Brian Goldstein and Robyn Guilliams will be attending the 2013 Midwest Arts Conference in Austin, Texas next week.

Our next blog will be on September 17, 2013.

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For additional information and resources on this and other legal and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.org.

All questions on any topic related to legal and business issues will be welcome. However, please post only general questions or hypotheticals. GG Arts Law reserves the right to alter, edit or, amend questions to focus on specific issues or to avoid names, circumstances, or any information that could be used to identify or embarrass a specific individual or organization. All questions will be posted anonymously.

__________________________________________________________________

THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

The purpose of this blog is to provide general advice and guidance, not legal advice. Please consult with an attorney familiar with your specific circumstances, facts, challenges, medications, psychiatric disorders, past-lives, karmic debt, and anything else that may impact your situation before drawing any conclusions, deciding upon a course of action, sending a nasty email, filing a lawsuit, or doing anything rash!

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Posted in Arts Management, Insurance, Law and Disorder: Performing Arts Division, Liability, Non-Profits, Presenters, Venues | Comments Closed

A Manager’s Deposit of Trouble

Wednesday, July 17th, 2013

By Brian Taylor Goldstein, Esq. Dear Law and Disorder: We are a small classical music presenter. Several months ago, I booked an artist for a performance this fall. Recently, I received a phone call from the artist’s manager asking for a deposit. Usually, we don’t pay deposits, although, sometimes we will if it’s an artist or manager with whom we have never worked before. However, we’ve worked with this manager before and she’s never asked for a deposit before. When I asked her about it, she said that she (the manager) was having a slow summer and that she needed the money to give her some cash flow to “tide her over” until the fall. She threatened to cancel if I didn’t agree. Is this legal? As a general rule, I’m a big fan of deposits. They provide artists with some “leverage” in the event of a cancellation and they provide presenters with some assurance that an artist has, in fact, been “booked.” However, once all key terms have been negotiated and agreed upon, whether or not a written booking agreement has been signed, then a manager cannot retroactively “require” a deposit. The requirement of a deposit is a key term which needs to be discussed, negotiated, and agreed upon at the outset of discussions. If the artist were to cancel because you refused to pay a deposit you never agreed to pay in the first place, then the artist would be in breach of the booking agreement. But that’s not really the problem here. The problem is that the manager volunteered that she was asking for the deposit not for the benefit of the artist, but for the benefit of the manager herself. It would be different if the manager wanted the deposit to reserve airline tickets or advance costs to cover the artist’s out-of-pocket expenses. However, according to you, that’s not what the manager said. She said she wanted it to “tide her over” for the manager’s own cash flow purposes. Based on that statement, and her subsequent threat to cancel if you refused to pay the deposit, the manager’s actions are not only unethical and unprofessional, in my opinion, but, more importantly, highly illegal. Managers and agents are legally bound to act only on behalf of and in the best interest of their client (the artist) and not on behalf of themselves or anyone else. In legal terms, these obligations are called “fiduciary duties.” Managers and agents can take no actions which are not authorized by the artist and most certainly cannot treat the artist’s money as if it were their own—including asking for and using deposits to float themselves loans to cover their own cash flow needs. This is why, among other reasons, managers and agents are supposed to keep their own, personal operating accounts separate from their client’s (artist’s) accounts. This should not be confused with legitimate situations where managers and agents sometimes ask presenters to split an engagement fee into two payments and pay a commission fee directly to the manager or agent and the balance to the artist. While I find this to be an ill-advised and awkward business practice, it’s neither illegal nor unethical. While I suppose its entirely possible that, in this case, the manager was acting with her artist’s knowledge and authority, I seriously doubt it. This means that the manager was acting out of her own self-interest and not in the best interest of her artist, is in breach of her fiduciary duties, is no longer acting in her legal capacity as a representative of the artist, and, in the event of a cancellation, would be personally liable for the return of the deposit and any damages. Given the manager’s self-admitted cash flow problems, that’s probably a risk you don’t want to take. I’d like to think that the manager is acting out of a genuine confusion over the duties agents and managers owe to their artists. Sadly, this issue continues to confuse even experienced managers and agents who believe that their artists work for them and not the other way around. Regardless, in terms of red flags, this one is ten feet tall and on fire. Run away! __________________________________________________________________ For additional information and resources on this and other legal and business issues for the performing arts, visit ggartslaw.com To ask your own question, write to lawanddisorder@musicalamerica.org. All questions on any topic related to legal and business issues will be welcome. However, please post only general questions or hypotheticals. GG Arts Law reserves the right to alter, edit or, amend questions to focus on specific issues or to avoid names, circumstances, or any information that could be used to identify or embarrass a specific individual or organization. All questions will be posted anonymously. __________________________________________________________________ THE OFFICIAL DISCLAIMER: THIS IS NOT LEGAL ADVICE! The purpose of this blog is to provide general advice and guidance, not legal advice. Please consult with an attorney familiar with your specific circumstances, facts, challenges, medications, psychiatric disorders, past-lives, karmic debt, and anything else that may impact your situation before drawing any conclusions, deciding upon a course of action, sending a nasty email, filing a lawsuit, or doing anything rash!

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Posted in Agents, Artist Management, Arts Management, Contracts, Law and Disorder: Performing Arts Division, Liability, Presenters | Comments Closed

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