Legal Beat: How Can I Get Out of My Contract?

I am sometimes approached by a new client who wants to terminate a contract. For instance, it could be a personal management contract, or a recording or publishing contract. This article will discuss some steps to take to avoid entering into contracts you will regret and possible ways to terminate them.

Before you enter into a contract, you need to do your research on who you are dealing with. You can have a great contract, but if it is with a dishonest person or company, they could very well breach it. So, by all means, do your due diligence: ask people about the person you are considering entering into an agreement with, Google them and try to determine their experience and reputation for honesty and integrity. Only once you have done this should you consider proceeding.

Assuming the person checks out to your satisfaction, have an attorney negotiate the contract for you. Sometimes if you have a personal manager they may negotiate the major deal points.

Try and limit the term, meaning how long the contract will last. For instance, if a manager requests a four-year term, perhaps you can negotiate it down to three years. If the term ends, you can always try to renew it.

Try and build in some “outs.” In other words, ways that you can terminate the contract early if things don’t work out the way you had hoped. For example, in a contract with a music production company that promises you they will ”shop” you to major record labels, you could try and negotiate your right to terminate the contract if they are not successful in getting you a record deal within nine months.

I have had a number of clients approach me wanting to terminate a management contract because they say the manager was not doing anything or had not really helped their career. It would be expensive and hard to win a court case based on such a claim. To terminate a contract in litigation you would usually have to prove that the other side materially breached the contract. Just because you think the manager is not doing enough, you have not progressed in your career or you do not like the manager, is usually not sufficient grounds to terminate the contract.

Another scenario I have seen is where a client is signed to a recording contract and after several years the record label has not even released one record. This is usually not grounds to terminate the contract if the contract provides that the label has no obligation to release any records (which is usually the case with a new artist).

Often the other side to a contract will resist an early termination. For instance, in a management contract, the manager may think you’re asking to be released because you are about to have some success and you don’t want to pay his or her commission. In my experience, over time the manager may agree to release you if you are unhappy as it is difficult for a manager to manage an unhappy client.

Sometimes you can negotiate a release by, for instance, agreeing that the contract is terminated but providing that the manager will have an “override,” meaning a reduced commission for a period of time after termination.

GLENN LITWAK is a veteran entertainment attorney based in Santa Monica, CA. He has represented platinum-selling recording artists, Grammy-winning music producers, hit songwriters, management and production companies, music publishers and independent record labels. Glenn is also a frequent speaker at music industry conferences around the country, such as South by Southwest and the Billboard Music in Film and TV Conference. Email him at [email protected] or visit glennlitwak.com.

This column is a brief discussion of the topic and does not constitute legal advice.