TMN Ask A Lawyer: Breach of Contract
TMN Ask A Lawyeris a semi-regular column where our readers receive expert legal advice from renowned entertainment lawyer Brett Oaten.
Q: My band is signed to a three-album label deal with a major and we want to get out of our contract after only recording two albums. What's the best way to approach our exit?
A: Generally when a band signs a three-album deal with a major label, it means that the first album will be a fixed commitment by the record label to fund and release the album, and the label will then have two separate options to oblige the band to record further albums.So, ultimately, it is the record label’s decision not yours whether or not you record the third album with the label.This means that you can’t get out of your contract unless the record label agrees to let you go.
However, there would be provisions in the agreement setting out how the options are to be exercised. This would be probably be that the record label has a certain amount of time after the release of the previous album to let you know that they are going to exercise their option for the next record. If they don’t let you know within that time frame, you would probably then need to notify the label, in writing, that they have not exercised their option and the label would then have a further period (probably 30 days) to let you know either way. If they still don’t let you know then you may be able to terminate the agreement.
Usually the record label will have to pay an advance or commit to providing a fund for recording when they exercise their option. This will be a consideration as to whether or not they exercise the option and is likely to depend on how successful your previous albums have been, what the band’s profile is and whether or not there are demos for a new album or other activity that they are excited about or believe has commercial potential. If based on those considerations, the label exercises their option and want to continue to work with the band, it is probably going to be more difficult to end the agreement.
If the label has more doubts about the future success of the band or had committed to advances or recording funds that they don’t think they can realistically recover, you may be able to negotiate an exit from the agreement. This may involve them simply agreeing to not exercise their further option or it may be on the condition that you agree to other terms, such as repaying amounts that remain unrecouped or to paying the label an override on future releases.
Oaten established his legal practice during the grunge era, and specialises in music and other entertainment matters. In the music industry Oaten principally represents artists and some current clients include 360, Angus & Julia Stone, Empire Of The Sun, Lorde, and Troye Sivan. Oaten is also a founding board member and life member of FBi Radio.