Breaching a Contract

BREACHING A CONTRACT

First What is a Contract?

A Contract is defined as a binding agreement between two or more persons or parties; Especially; One legally enforceable. When signing a contract the person signing signs the contract, to render services for a certain amount of time or for a certain amount of material, which is labeled a term in the agreement. In every contract there are certain duties and rules that are to be followed and obeyed. When disobeyed or rules are broken then that leads to what is called a breach in contract. When at a breach in a contract accurs then that means that legal action shall take place. But in some instances there are ways to get out of contracts with out breaking any rules or encountering any legals suits.

What is a breach of Contract?

A breach is defined as the breaking or violating of a law, right, or duty, either by commission or omission. A breach of contract is " Failure, without legal excuse, to perform any promise which forms the whole or part of a contract".If the artist cannot or does not perform to the standards then a breach of contract can also be deemed.

When Does A breach of Contract Occur?

As stated before, when one side fails to stick to his or her part of the bargain this is understood in being a breach of contract. For instance, when one party to a contract makes it impossible for the other parties to the contract to perform, such as a party to the contract does something against the intent of the contract, or a party absolutely refuses to perform the contract. Not all breaches of contract are necessarily "contract killers" which would end up in a lawsuit. Much would depend on whether the breach is "material" or "immaterial" and who the parties are. If the breach is immaterial, you may have the option to: ignore or excuse the defect and continue on as if nothing occurred, point out the problem to the responsible side and give it/she/him an opportunity to fix it, refuse to pay anything more until it is fixed, or correct the work yourself and deduct the cost from any payment.

A Musical Artist under some severe circumstances, is allowed to break an existing Recording Contract . For a new recoding artist in the recording industry, receiving an agreement with a Production or a record company is the best of all situations. But like in a lot of contracts, there are always some circumstances that will make an artist want total freedom from the contract that he/she has signed. Do to the unknown status of a new artist, the first record deal is usually an 1 sided deal in favor of the label over the artist. The artist in a situation like this has very limited Negotiating power. But, if the Artist creates or is featured on a hit song and credibility increases in the music world, than the artist might fell that the agreement doesn't fit his/her standards with there new found status. Situations like this have caused many legal recourse on record companies, in the means of leaving the leaving the contract or even the company to pursue more money for there talent.

Recently a few top selling artist in their attempt to leave an exclusive contract have filed for bankruptcy (bankruptcy is defined as; utter failure or impoverishment). The Federal Bankruptcy Code states that "existing contracts may be rejected if they impair a debtor's ability to get back on his/her feet and recover or improve on their financial status. The Bankruptcy Law has given Artist seeking to break or renegotiate their agreement or contract a very powerful use of information in the legal aspects of the business. In 1998/99, the world famous singer Toni Braxton filed for Bankruptcy in the U.S. Bankruptcy court in L.A. Toni's Bankruptcy plea was that her liabilities were higher than her assets. But said by Music business critics, Toni filed for Bankruptcy to exterminate any and all existing recording agreements that she had once made with LaFace Records. The trio group named TLC also filed for Bankruptcy in 1996/97. The court settlement was simply a new contract , but still under the LaFace Label. In 1999/00 there was a bankruptcy bill pending that would prevent contracts and existing contracts to void of bankruptcy proceedings. This to be done so that Artist can no longer threaten bankruptcy to get out of contract or even to get a contract renegotiating.

Another common technique used in cancellation of a Recording contract is the use of Civil Code Section 2855, also called "Seven-Year Statute". In this statute "a contract to render personal service, may not be enforced against the employee beyond seven years from the commencement of service under it". This also prevents a record contract from being enforceable against an artist for longer than seven years. Most recording contracts run for a period of one year, with four, one year optional periods( this is seen in the "TERM" of the agreement). The period s are contigent on delivery of recorded product. So instead of providing that, the term based on delivery would be open-ended, because the period is dependent on upon an unknown future date when the recordings are actually delivered. Few Artist contracts are written for a 7 or more years, because of section 2855. Under Section 2855 the record label is allowed to sue the artist for monetary damages if, after the seven year period the artist does decide

to terminate the record deal and signs with a new company ,but in doing so still owes the first company a certain amount of recordings or records.

In 1992/93 Luther Vandross filed for section 2855 against epic records claiming he was no longer bound for his 1981/82 contract.

The California Civil Code Section 3423, is another tactic that an artist can use to terminate a record deal. Equity will not require a party to perform under a personal service contract, such as a recording agreement. Equity can, however prevent an artist from performing personal services for someone else if a valid contract exists which makes the artist's services exclusive to the first party. Such a remedy is in the form of an injunction (An Injunction is defined as a writ granted by a court of equity whereby one is required to do or to refrain from doing a specified act) which would prevent an artist from leaving the current label and going to another label. Section 3423 also goes by the nickname of "9,000 Plus Provision" , and it requires that a record company is obligated to make increasing minimum annual payments to an artist in order to obtain an injunction. The new law reads that a record company can get an