Music Industry Contract Law Exam #1
Quantum Meruit
"As much as he deserves" - the damages awarded in a quasi-contract case
Construction
"How does a court interpret this agreement?"
Appeal
(law) a legal proceeding in which the appellant resorts to a higher court for the purpose of obtaining a review of a lower court decision and a reversal of the lower court's judgment or the granting of a new trial
Remand
(v.) to send or order back; in law, to send back to jail or to a lower court
Forebearance Agreement
- Consideration for a contract whereby someone refrains from doing an act in which that party had a legal right to perform, could be valid •Hamer v. Sidway- Gave up vices for $5,000.00 - giving up the vices was valid consideration
Negotiation
- Efforts of the parties themselves assisted by counsel to amicably resolve the dispute - One side makes a demand for settlement or offers to settle - This can be accepted, rejected or a counter offer can be issued - Many courts require the parties participate in settlement discussions prior to trial - If the parties are able to resolve their dispute a written settlement agreement is prepared that describes the terms of the settlement
Statute of Frauds
- Is a legal principle which states that certain contracts must be in writing in order to be enforceable. - Evolved in America from the English law - Writing must be "signed" by the party against whom the agreement is sought
Rescission
- One party to contract has right to void the agreement - Equitable remedy - Ends the contract and restores parties to situation prior to entering into the agreement
Third Parties
- One who is not a party to an agreement - Not the offeror - Not the offeree - Do not have "privity of contract" - were not privy to the private bargaining relationship
Arbitration
- Parties select a neutral third party (arbitrator) to hear and decide the dispute - may be mandatory, as required by an arbitration clause in a contract - may be voluntary where the parties agree to submit a dispute to arbitration. - Less expensive than trial, is completed more quickly than a trial and is usually decided by someone who is knowledgeable in the area of law involved in the dispute
Highest State Court
- Supreme Court - hears appeals from intermediate appellate court, may choose not to hear, no new evidence or testimony
Legality
- contracts must be _______ to be valid; courts will not enforce illegal contacts; illegal contracts are considered "void"
Criminal Law
- dangerous behavior outlawed by society - gov't (DA/PA/State's Attorney) prosecutes accused - Guilt is determined - punishment or fine is imposed
The Agreement (Mutuality)
- focuses on the offer and acceptance of the offer - courts will often ask, "Was there a meeting of the minds?" - consider, again, the objective theory of contracts as opposed to subject concerns or concerns
Common Law
- from English Law - all the judge-made legal principles involving contract interpretation
General Jurisdiction Trial Court
- generally, divided by county - courts of record, hear testimony, juries, evidence, & decide cases - IE: Criminal and Civil Courts
Federal Courts
- have exclusive jurisdiction to hear cases involving: = federal crimes, bankruptcy, patent and copyright cases, suits against the US, and most admiralty cases. - Article III of Constitution provides for US Supreme Court & for Congress to establish "inferior courts"
State Courts
- have jurisdiction to hear cases involving subject matter that federal courts do not have jurisdiction to hear. - laws differ among states (some a lot and some very little) - Each state and DC has a separate court system created by their state constitutions
US Court of Appeals
- hears appeals from district court - did errors occur? - no new evidence or testimony
Intermediate Appellate Courts
- hears appeals from trial court - did errors occur; - no new evidence or testimony
US Supreme Court
- highest court in the land - hears appeals from US Court of Appeals, may choose not to hear (take very few) - no new evidence or testimony - President appoints 9 justices
United States Constitution
- law of the land, - establishes Congress, the Presidency, and Courts (branches of gov't) - gives to states powers not given to Federal gov't (checks and balances) - guarantees basic rights to all citizens
Offeror/Promisor/Obligor
- maker of the offer - "the ______ is the master of the offer" - has complete control of the means of acceptance (time, place, manner, etc.)
Contract Law
- provides consistency & stability - creates enforceable promises: a declaration or assurance that something will (or will not) occur in the future - memorialize our promises & defines what happens if we break those promises - deals with legal obligations, not necessarily moral obligations - found throughout our daily lives EXAMPLES = loans, leases, and virtually all business transactions
Civil Law
- regulates rights and duties between parties - plaintiff brings suit, not gov't - guilt not determined; responsibility is - compensation, or equitable relief, is generally ordered
Consideration
- third element of the contracts formula - the "price" of a promise - bargained-for exchange - give something of value in return for something of value
Minors
- those under 18 - have the right to enter into contracts - may disaffirm a contract/ voidable - but must put the other party in no worse position (restitution) - some contracts cannot be disaffirmed because of public policy
US District Courts
- trial court - DC and each state has at least 1 (94 total in U.S.) - Courts of record, hear testimony, juries, evidence & decide cases
Waivers/Releases/Disclaimers/ Exculpatory Clauses
- voluntary relinquishment of a privilege or a right - protect from liability for certain accidents, risks, negligence, etc.
Accord and Satisfaction
- way to settle debts for less (or different than what was bargained for (usually for less than what was owed) - A method of discharging a claim whereby the parties agree to give and accept something in settlement of the claim and perform the agreement, the accord being the agreement and the satisfaction being the performance - It is a new contract (with all the elements of a valid contract) substituted for an old contract which is thereby discharged - Subsequent modification/restructuring/settlement
Defenses
-That which is put forth by defendant to diminish plaintiff's cause of action or defeat recovery -In a contract action, defendant may acknowledge that a contract might exist, but one should be excused from performance for a legitimate reason OR deny plaintiff's allegations
Pre-existing duty rule
-if you already have a duty to do something, that does not count as consideration for a future agreement - requires a new bargained-for exchange between the parties in order to prevent forms of extortion
Summary Judgement Motion
A court filing arguing that the facts are undisputed and a party must win as a matter of law.
Summons
A document informing a defendant that a legal action has been commenced against him or her and that the defendant must appear in court on a certain date to answer the plaintiff's complaint. The document is delivered by a sheriff or any other person so authorized.
Mediation
A form of negotiation where the parties to the dispute agree to use a neutral third party (mediator) to assist them in reaching a settlement - Mediator does not issue a decision or award - Mediator acts as an intermediary between the parties, conveying their positions, pointing out strengths and weaknesses of each side's position and giving her opinion as to a reasonable settlement. - Parties may accept, reject or modify the mediator's opinion
Discovery
A phase in the litigation process pre-trial during which the opposing parties may obtain information from each other and from third parties
Restatement of Contracts
A set of statements reflecting generally agreed upon pronouncements of common law contract rules. - American Law Institute wrote this in 1932 & amended in 1979 - it sought to bring together the common law of all states - it is not law but a good compilation/summaries
Intended Beneficiary
A third party for whose benefit a contract is formed. - has rights in the contract - can sue the promisor if such a contract is breached.
incidental beneficiary
A third party who benefits from a contract even though the contract was not formed for that purpose. - has no rights in the contract and cannot sue to have it enforced.
Arbitration Clause
ADR; where parties submit dispute to 3rd party arbitrator who makes the decision
Sabbath (Sunday) Laws
AKA: "Blue laws" - some states or counties prohibit certain sales on Sundays; EX: alcohol
Releases
AKA: waiver, disclaimer, exculpatory clause -A contractual agreement by which one individual assents to relinquish a claim or right under the law to another individual against whom such claim or right is enforceable. - Used to avoid liability - Generally valid unless extortion, adhesion, gross negligence or recklessness
Force Majeure
Acts of God or Acts of Nature •What happens if performance becomes impracticable because an act of God? •This clause usually excuses performance by both parties
Assignment/Delegation Clause
Addresses whether, and to what extent, one or more of the parties to the contract can delegate or assign rights and duties to another who is not a party to the contract. •Tip - If one is included, you can: •Ask for it to be removed •Ask that you be required to give prior written consent •Ask that original party always remain on the hook
Non Compete Clauses
Agreement that prevents a party from starting or operating a similar business in a specified area for a specific period of time. Terms must be reasonable in both time and location. As well, clause must not harm public interest. - generally enforceable if reasonable in scope
Key Man Clause
Allows a party to terminate a contract should a "key man" (important person) leave •i.e.: Artist is allowed toterminate a management contract with a mgt company if their favorite manager leaves
Compensatory Damages/ Expectation Damages/ Benefit of the Bargain
Amount of money necessary to make up for the economic loss caused by the breach •General (non-economic) - compensation for pain, suffering, mental anguish, disability •Special (economic) - compensation for medical expenses, loss of income & direct economic loss
Condition Concurrent
An event that must occur at the same time as another condition in a contract. - found in most bilateral contracts (most common)
•A statute expressly prohibits it •It is against public policy •Involving the right to receive workers comp. benefits •Personal services contracts (those who have unique talents, abilities, skills) •Insurance policies (due to the unique nature of each "risk") •If the contract prohibits or limits assignment
Assignments are NOT valid if:
Monetary Damages
Compensates the party who suffered harm/loss of the bargain & puts the parties back to: a)where they were prior to the contract being entered or b)forward to where they could be had the contract been performed 1. Compensatory damages 2. Consequential/ Special 3. Incidental
- must be unequivocal & unconditional (mirror image rule) - timely: reasonable period of time - communicated to offeror or agent
Conditions of Acceptance:
Unilateral Contract
Contract - promise for an act Terms - provide broader rights to one party over the other
1. Predict 2. Provide 3. Protect
Contract Drafting includes:
Bilateral Contract
Contract- promise for a promise Terms- benefit both parties equally
- between two or more persons - meeting of the minds - a "legally binding agreement"
Contracts must be:
Four Corners Rule
Courts generally look only within the 4 corners of the contract and not to outside evidence
State Constitutions
Create state executive, legislative & judicial systems
Reformation
Equitable remedy used to reframe written contracts to reflect accurately real agreement between the contracting parties when the writing does not embody the contract as actually made •The goal, then, is to avoid "undoing" of contracts, while at the same time keeping them legal (compare, e.g., contracts that are otherwise legal except for the rate of interest being charged-usury laws).
1. Statements of opinion: "injury will probably heal" 2. Statements of intention: "I plan on doing this..." 3. Statements considered preliminary negotiations (with some exceptions) 4. Agreements to agree: "Let's agree today that we will agree tomorrow" 5. Advertisements: they are invitations to negotiate 6. Estimates for services: Must be in "good faith"
Examples of Non-Offers:
1. Special Federal Courts 2. US District Courts 3. US Court of Appeals 4. US Supreme Court
Federal Court Systems include:
Seek to use plain English - Clear, simple & business-like •This means, generally, to try to avoid legalese(i.e., special lawyer language) Say What You Mean, and mean what you say •i.e.: the word "shall" means shall; it does not mean "may" Define terms to avoid ambiguities •For example, "reasonable efforts" and "best efforts" mean different things Be consistent Define the parties and the purpose of the agreement (i.e., intent) When characterizing a party by a name, it is important to use that same name throughout the document Dates, times, addresses are vital •The date of the signing may be different than the term of the agreement Sign in blue ink (or non-black) if possible •This allows the parties to easily determine what the original document was The connector "and/or" really means "and or or" Abbreviations are okay, but if in doubt, define them •For example, •T/A = Trading As •D/B/A = Doing Business As •F/S/O = For the Services Of •A/K/A = Also Known As •Re = Regarding Do not be cute-avoid humor Avoidcontractions(don't; won't; can't) because that is too colloquial and unprofessional; Print only on one side of the page Numberthe pages Give subparagraphs titles Write out numbers in language, too ($100 is one-hundred dollars). Consider conditions in contracts: precedent, concurrent, subsequent
General Considerations for Drafting a Contract:
Plain Meaning Rule
Generally, courts do not get involved with the interpretation of words that have ordinary and unambiguous meaning - if parties have specialized meaning, those definitions should be set out in the contract
Audit Clause
Gives someone the right to audit financial records •Caution - Pay attention to whom the rights to audit are given.
1. Use a model 2. Use the form books 3. Consult other contracts 4. Utilize the Internet
How to Draft a Contract:
Default Clause
If it exists, it will outline what one should do if the other party is not performing under the terms of the contract •Often provides details about the defining the default; how to notify the alleged breaching party & the time frame (cure period) allowed for the breaching party to cure the default
- outline the full understanding of the relationship, including scope of work - protect both parties - minimize risk
In a perfect world, a contract should:
O + A + C + (leg. + cap.) Contract = Offer + Acceptance + Consideration + (Legality + Capacity) K= contract O= Offer A= Acceptance C= Consideration Leg.= Legality Cap.= Capacity
K =
- hold doctorate in jurisprudence - be licensed by each state in which he/she practices - remain in good standing with the licensing authorities, including CLE **no one should provide any legal service without a license - malpractice & malpractice insurance
Lawyers must...
•Personal services contracts (including expertise for someone's unique talents, abilities and skills) •When a contract prohibits it •It is against public policy •The delegate has a substantial interest in the personal performance by the delegator
May NOT delegate:
Motion
Oral or written request before, during, or after a trial in which a court issues a ruling or order.
Unclean Hands Doctrine
Principle that one who has unclean hands (acts unethical or in bad faith) is not entitled to relief in equity •The one who has defrauded his adversary in the subject matter of the action will not be heard to assert his rights in equit. •Therefore, one who comes to the court, must come with clean hands
Answer
Procedurally, a defendant's response to the plaintiff's complaint.
Remember the Four Corners Rule! Read and Re-Read Predict, Provide & Protect Read the Recitals •They provide insight into the business purpose of the contract Look at Words of Limitation or Breadth •Sole/solely - •i.e.: Manager shall have the sole right to approve use of Artist's images •i.e.: Promoter's sole recovery for breach of contract is $15,000 •Including, but not limited to - •i.e.: Manager's duties include, but are not limited to... Bilateral vs Unilateral Clauses •Clauses that benefit both or one party •Important to: •Recognize the distinction •Determine how each affects your rights when there is unequal treatment Obligatoryvs. Optional Language •i.e.: May vs must; Will vs shall Diagram the sentences •Make sure to know/understand every word •Circle words that are not understood Don't be Misled by the titles/headings Look at & understand the defined terms When reading, start at the top & use markings
Reviewing your Contract:
- Words are to be interpreted in their ordinary meaning - Missing terms or words may actually be incorporated into the contract "by reference." This means that the contract might refer to another document which interprets the proper meaning of the word - Courts are to view the intent of the parties as a whole especially when sub-portions of the agreement might be contradictory - Handwritten portions trump typewritten portions which trump preprinted forms - Words usually prevail over numbers - Good faith (bona fide) is always implied in any contract - Prior dealings between the parties can be considered - Trade customs (the way others deal in the same or similar industry) may always be considered - Ambiguities which cannot be resolved by the court are always be construed against the offeror (i.e., the offeror is the master of the offer) - Courts will not listen to parties and their explanations of terms if they contradict the words in the agreement, but courts will listen to parties to explain what the terms mean, if necessary
Rules of Contract Construction:
1. United States Constitution 2. State Constitutions 3. Statutes 4. Common/Case Law 5. Administrative Law 6. Treaties 7. Executive orders
Sources of Law:
1. limited jurisdiction trial 2. general jurisdiction trial court 3. intermediate appellate courts 4. highest state court
State Court Systems generally include:
Written Contracts
Statute of Frauds requires some contracts must be in writing
Novation
Substituting a new obligation for an old one or substituting new parties to an existing obligation.
- lapse of time - subject matter is destroyed before acceptance is made - death of either party before offer is accepted - supervening illegality before acceptance is made (law changes before acceptance was made)
Termination of the Offer - Revocation by Offeror Automatically by:
- usually ends when the action is performed - may end by another contract (agree to end prematurely) - may end by breach
Termination of the contract:
1. Title 2. Preamble (Recitals) 3. Definitions 4. Consideration 5. Body 6. Closing/Testimonium 7. Closing Signatures
The Structure/Framework of the Contract:
Trial
The court process to determine whether someone committed a criminal act
Breach of Contract
The failure, without legal excuse, of a promisor to perform the obligations of a contract.
Appellee
The party opposing an appeal from a lower court to an appellate court.
Appellant
The party who takes an appeal from one court to another.
Restitution
The returning the goods or value of the goods/services Return to the status quo
Statute of Limitations
The time within which one has the opportunity to file a lawsuit - varies among the states for breach of contract - some 3 or 5 years - under the UCC, its 4 years from the date of the breach
Reverse
To annul or make void a court ruling on account of some error or irregularity. To overthrow, invalidate, repeal, or revoke
1. have a serious intent to be bound - "would a reasonable person believe an offer was made?" 2. be definite - must be reasonably certain - they must not be ambitious 3. Communicated to the offeree or the offeree's agent
To be enforceable, the offer must:
Affirm
To declare that a court ruling is valid and must stand.
- contracts for the sale of real estate - contracts which cannot be performed within one year - contracts in which one is acting as a guarantor or surety - contracts for the sale of goods of more than $500 (some states say $1,000) - contracts in consideration of marriage (prenuptial agreements)
What are examples of contracts that MUST be in writing to be enforceable?
- full performance by the seller - partial performance by the buyer - admissions by either party - promissory estoppel (detrimental reliance) - specialized (customized) goods - personal benefit of sureties or guarantors
What are exceptions to writing requirement of the Statute of Frauds?
1. State Court Systems, including DC 2. Federal Court Systems *each of these court systems has the jurisdiction (authority/power) to hear different types of lawsuits
What are the 2 major court systems in the U.S.?
1. Pre-Existing duty rule 2. Past Consideration 3. Illusory promises 4. Gifts/ Donations
What are the Consideration Exclusions?
1. Four Corners Rule 2. Plain Meaning Rule 3. Parole Evidence Rule
What are the Evidentiary Rules?
1. Fraud 2. Duress 3. Mistake
What are the big three defenses for contract claims?
•will of the parties in a tangible form •essence of the parties' intent •with an eye to the future Answers questions: who, what, when, where, why and how
What do contracts represent?
agreements must be served; use courts
What is the sanctity of a contract?
Choice of Law Clause (Governing Law Clause)
What state (or federal) law controls is important to know what law controls the relationship and how that state's courts will apply same
1. Accept 2. Reject 3. Make a counter offer 4. Do nothing * Silence is not ordinarily considered acceptance
When one receives an offer, only 4 things can be done:
•Best efforts •Hazardous activity •Dangerous activity •Conduct detrimental to the team •Loyalty clauses - Morals clauses
Which Contract Clauses could Discharge Performance if certain things occurred?
Collective Bargaining Agreements (CBA)
a contract between the employer and the union member containing the general terms governing the relationship - EXAMPLE: an engagement - sometimes referred to as "standard contract" - there can be any sort of rider which is negotiated between the employer and the employee/agent
Impossibility of Performance
a contract that cannot be fully performed because of circumstances beyond the control of both parties to the contract may discharge their obligations under the contract
Parole Evidence Rule
a court will refuse to use evidence of the parties' prior negotiations in order to interpret a written contract unless the writing is (1) incomplete, (2) ambiguous, or (3) the product of fraud, mistake, or a similar bargaining defect
Complaint
a formal notice that a lawsuit is being brought; begins a lawsuit; filed by Plaintiff; must be served on defendant
Plaintiff
a person who brings a case against another in a court of law.
Competence
a person with mental illness or defect, who is unable to understand the nature and consequences of a transaction
Option Contract
a promise which meets the requirements for the formation of a contract and limits the promisor's power to revoke an offer - allows the parties to agree on a contract as long as certain conditions occur, or alternatively, do not occur - reserve the right to do something in the future
Jury Trial
a trial in which a group of people selected to hear the evidence presented decides on guilt or liability
Non-Jury Trial
a trial in which a judge decides both questions of law and fact. AKA: bench trial. Held in absence of jury.
Implied in Law
agreement is imposed by a court to avoid injustice or prevent unjust enrichment
Implied in Fact
agreement is indicated by conduct
Voidable
agreement that is binding and enforceable, but one of the parties to the agreement may reject/void
Valid
agreement that is legally binding and enforceable
Void
agreement that is not binding and is not enforceable
Non-Exclusivity Clause
allows a party to do acts other than what you are contracting them to do •i.e.: Manager may be an Artist's agent, but also be allowed to serve as agent for others
Condition subsequent
an act or event that could occur after the parties have agreed to a contract which then triggers some obligation or relieves a party from a duty
Condition
an event that must occur before a party becomes obligated under a contract & if the condition does not occur one party will probably be discharged without having to perform his obligation under the contract. - event - stipulation - prerequisite
Anticipatory Repudiation
an indication by one party that they will not perform, then the other party could suspend own performance. This would then allow for the request of an "adequate assurance of performance."
Defendant
an individual, company, or institution sued or accused in a court of law.
Good Faith
an intangible and abstract quality with no technical meaning; and may encompass many ideals, such as: absence of malice, honest intentions, honest belief, etc.
Fraud/Intentional Misrepresentation
an intentional misrepresentation of a material fact designed to induce the person receiving the miscommunication to rely upon it to her detriment, so that a loss is suffered
Equitable Remedies
any form of relief that does not involve a request for monetary damages; Usually involves the court ordering the parties to do or not to do something 1. Reformation 2. Mutual Rescission 3. Restitution 4. Specific Performance
Dutch Auction
auctioneer begins with a high asking price and works way down until the bidder agrees to price
Subject Matter Jurisdiction
authority of a court to hear cases of a particular type of case
Past Consideration
cannot count as future consideration
Federal Question Cases
cases arising under the US Constitution, treaties, federal statutes and federal regulations. There is no dollar amount on these cases.
Capacity
concerns the legal ability to enter into a contract; focuses on either: - age - mental capacity
Condition precedent
condition that must occur before one party has an obligation to perform under a contract
Implied Contract
contract doesn't have explicit terms, courts must rely on words or conduct of the parties to determine the terms 1. implied in fact 2. implied in law 3. promissory estoppel
Express Contract
contract has explicit terms (oral or written)
Reward Offers
contract law has developed in its own, unique way - most courts will enforce this as a matter of public policy (contract) even if one did not know the existence of it
Executed
contracts that are completed (or substantially completed)
Executory
contracts that are not yet fully completed
Personal Services Contracts
contracts that deal with unique talents, unique abilities, unique skills -Example: musicians enter into engagement contracts
Commission of a Crime
contracts to commit crime (murder,bribery) are void from the beginning
Contracts which restrain trade (antitrust issues)
contracts which promote monopolistic behavior are "illegal" under the Sherman Antitrust Act, Clayton Act, etc.
Objective theory of contracts
courts will consider what a "reasonable person" would have thought under similar circumstances
Administrative Law
created by agencies
Termination Clause
defines how the contract can be terminated earlier than by the term; generally notice & time periods must be followed
Incorporation by Reference
defines if and how other documents (exhibits) can be incorporated as part of the contract
Attorney Fees & Expenses Clause
defines who pays these charges in the event of a breach •Common law rule is that each side pays their own fees •Consider: •English rule - the party who loses in court pays the other party's legal costs •American rule - each party is responsible for paying its own attorney's fees, unless specific authority granted by statute or contract allows the assessment of those fees against the other party
Remedies Clause
defines, in advance of a dispute, what legal options for recourse are available to the parties if there is a dispute
Letter of Intent
document that demonstrates that the parties have negotiated the basics of the contract - promise to make a promise - AKA: memorandum of understanding/agreement
Mitigate
duty to exercise reasonable care to minimize damages after an injury or breach
Discharge
end of the contractual responsibilities - Accord & Satisfaction - Bankruptcy - Impossibility of Performance - This is not impracticality of performance/ frustration of purpose - Novation - Rescission - Unilateral Alteration
Common/Case Law
established by precedent, or earlier cases decided by courts/judges; facts are very important
Forum Clause (Venue Setting Clause)
establishes the specific court where any contract dispute will be held
Exculpatory Clause
excuses some behavior by one or both of the parties •i.e.: Promoter has no liability for Artist's injuries sustained as a result of Promoter's negligent acts
Closing/Testimonium
final paragraph demonstrating that the partiesassent to the contract without reservation or other conditions.
Judgement
final result/decision of a trial
Assignment
full transfer of a legal right
Agency Clause
generally creates a fiduciary relationship whereby the first party ("the principal") agrees that the actions of a second party ("the agent") binds the principal to later agreements made by the agent as if the principal had him/herself personally made the later agreements.
Intoxication
generally no defense to a contract if it is a voluntary event - Alcohol, Prescription drugs, Illegal drugs - may be a defense if it is involuntary (drink was spiked)
Advances Clause
getting paid some amount up front - in advance of the work •Caution -This is not a per i.e. which is extra money for daily living expenses
Extension Clause
governs the opportunity to extend the contract under certain circumstances •i.e.: Artist agrees that agent shall have the sole and exclusive right to extend the contract for one year.
Consequential/ Special
harm caused by unique situation of parties
Oral Contracts
if not required to be in writing, the agreement can be ________; generally not recommended
Severability Clause
if parts of the contract are held to be illegal or otherwise unenforceable, the remainder of the contract should still apply
Pay or Play Clause
if the job for which the artist is contracted is canceled, the artist will still be entitled to full fee
Duress
improper threat made to force another party to enter into a contract & there is no free will -Injured party claims that they had no free will therefore, no real bargained-for exchange in that they were presented a contract that they could not refuse due to a threat or perceived threat
Contract Riders (addenda)
include additional unique and particular aspects of a particular deal
Power of Attorney Clause
instrument whereby one person (principal) gives authority to another person (attorney in fact) to act on the principal's behalf •Caution - Read & know what powers you are giving •Caution - Know if it is revocable or irrevocable •Tip - Draft separate POA document
Auctions
involve offer and acceptance in an interesting context - offerors = bidders - offerees = sellers - auctioneers = agents for the seller * acceptance is the striking of the hammer
Indemnification Clause (Hold Harmless Clause)
is a contractual transfer of risk between two contracting parties generally to prevent loss or compensate for a loss which may occur as a result of a specified event. •Often includes lawyer fees too
Right of First Refusal Clause
is a right that gives its holder the option to enter a business transaction with the owner of something, according to specified terms, before the owner is entitled to enter intothat transaction with a third party •i.e.: Commissioning body shall have the right of first refusal of any form of recording of the work for a period of 6 months after the premiere performance
Gambling
is illegal unless a state statute/ constitution says otherwise; most states now allow for some sort of _______ activities
Mutual Rescission
is the undoing (i.e., canceling) of a K •Usually a statute allows for this in the case of consumer protection (fraud) and alsofor mutual mistake because no meeting of the minds
Mistake
is where the parties (both) entered into the contract with a misunderstanding of a material fact. -Must be mutual mistake (i.e., bilateral) -Unilateral mistake not enough - no meeting of the minds
Amendment Clause/ Modification Clause
it creates a restriction against making unilateral changes to the contract; it describes exactly how amendments will be allowed
This is not Impracticability of Performance/ Frustration of purpose
it would be outrageously costly to do so, or it would take a much longer time because of some external force such as the weather or other acts of God
Statutes
laws passed by federal & state governments (legislature)
Special Federal Courts
limited jurisdiction trial -- by court
Time is of the Essence Clause
makes dates and times found in a contract strictly enforceable
Silent Auction
many items are sold at one time in which the bidders write their bid on paper posted near the item (may be secret or known) - highest bid wins the prize
Preamble (Recitals)
may appear as the "whereas" section •identifies the purpose of the document •describes the transaction; the intent of the parties; and any assumed facts underlying the transaction. •identifies the parties •Identifies the date of the transaction
Alternative Dispute Resolution (ADR)
methods of solving a problem by bringing in an impartial outsider but not using the court system. Includes: 1. Negotiation 2. Mediation 3. Arbitration
Incidental
minor costs
Negligent Misrepresentation
misrepresentation made without due care in ascertaining its truthfulness; renders agreement voidable
Uniform Commercial Code (UCC)
model act that all states have now adopted in its entirety or to some degree - generally deals with sales or leases of goods
Informal Contracts
most contracts are _______
Material Breach
nonbreaching party is substantially harmed & for which it would be hard to compensate without discharging the contract •Breaching party may only be paid the market value of the work that is completed, not the contract price
Illusory promises
not consideration because they are "empty promises" or nudum pactum
Gifts/ Donations
not consideration, one way, cannot enforce
Quasi Contract
not really a contract, but it is one imposed by a court to uphold fairness - prevents one party from being "unjustly enriched" by another. that is, conferring a benefit without being compensated when a gift was not intended
Diversity of Citizenship
occurs if the lawsuit involves: - citizens of different states OR, - citizen of a state and a citizen/subject of a foreign country OR, - citizen of a state and a foreign country as plaintiff - AND the dollar amount of the controversy must exceed $75,000.00
Undue Influence
occurs when one party to a contract is in a position of trust and wrongfully dominates the other party; no free will EX: lawyer-client, doctor-patient, pastor-parishioner, employer-employee
Substantial performance
one has acted in good faith and has performed substantially all of the terms •If there is substantial performance, but some breach, then the party who performs substantially may receive full payment minus the cost of the uncompleted tasks
Exclusivity Clause
one or both parties are providing some sort of exclusive service •i.e.: artist appoints manager on an exclusive basis
Assignor
one who assigns a contract to another - may be oral or written
Delegator
one who delegates the contract to another - is not relieved from performing the contract terms but would be liable if the delegee/delegatee does not perform - should notify the other party
assignees
one who receives the assignment & they acquire the same rights as assignor (stand in the shoes)
Delegee/Delegatee
one who receives the delegation & they acquire the same rights as the assignor (stand in the shoes)
Freedom of contract
parties can agree to (almost) anything
Complete Performance
performance finished just as agreed
Offer
promise to do (or not to do) something in the future
Offeree
receiver of the offer; have the power of acceptance
Construction/Headings/Captions Clause
says that any particular headingused in the contract should not be construed as having any particular meaning. •Tip - •Watch as headings can be misleading, inaccurate or incomplete
"With reserve"
seller may choose NOT to sell
"Without reserve"
seller must sell to the highest bidder; sometimes referred to an "absolute auction"
Commission Clause
sets out the fee structure •Tip - •Standards among industries and genres (classical, jazz, pop, Christian, urban, etc.); presentation types (venues/events) and geography vary •How/when/who gets the funds •How are words defined, such as gross and net, and what type of income is included in each
Title
should reflect the subject matter of the transaction and, if appropriate, the parties
Limited Jurisdiction Trial
small claims court
Formal Contracts
special form, process or method - think notary public = a person who has been authorized by the state in which they operate to witness people signing a document
Renewal Clause (automatic renewal clause)
spells out any condition that could give rise to automatic renewal of contract
Term of Engagement Clause
spells out how long the agreement will be in effect •Caution - Read and know •Caution - Read in relation to other clauses, such as the automatic renewal clause
Scope of Engagement Clause
spells out the details of the work the parties owe to each other •Caution - Read carefully
Concurrent Jurisdiction
state and federal courts have ________ to hear cases involving diversity of citizenship and federal questions over which federal courts do not have exclusive jurisdiction. **If a plaintiff brings a case involving this in state court, the defendant can remove the case to federal court.
Usury Laws
state laws designed to protect against excessive rates of interest
Merger Clause
states that the contract, as written, is the full & complete embodiment of the partiesagreement (everything merges into this one final document)
Phase-Out Clause
the commission due to one party is phased out over time from the full amount to 0/Zero
Verdict
the decision a jury makes in a trial; the decision said by the jury
Net Income
the difference between total revenue and total expenses when total revenue is greater
Licensing
the legal process by which a state or govt grants an individual or business the right to do something in return for a fee - if the license is just to raise funds, then the contract by the parties might be enforceable - if the license is to protect from malpractice or harm, then the contract might not be enforceable
Remedy
the method a court uses to compensate an injured party & may include - order by the court - by agreement (settlement)
Closing Signatures
the parties who sign must be the same as the ones recited in the caption of the contract •Agency - use the word "by" or "on behalf of" to establish agency or authority •i.e.: such as when an employee signs the contract on behalf of the organization to bind the organization and not the individual employee
Litigation
the process of bringing, maintaining, and defending a lawsuit - difficult (with complex procedural rules) - time-consuming - costly
Specific Performance
the remedy of performance of a contract according to the precise terms agreed upon •Forces the party who has breached the contract to perform •Rarely available in professional services contract •May not normally be used to force an individual to work since that would be a form of involuntary servitude which was banned by the 13th Amendment to the Constitution •Usually involves "unique" things such as sale of land, paintings by artists, rare coins, cards, etc
Gross Income
the total amount of income from wages before any payroll deductions
Adhesion (unconscionable) Contracts
those that are so one-sided that courts will not enforce because it "shocks" the consciousness of society
Promissory Estoppel
used in extraordinary cases; party who has "reasonably relied" to his detriment based on another's promise, may be able to enforce
Delegation of Duties
when duties are transferred to another person who should perform the contractual duties BUT delegator (original party) is not relieved from performance
Representations & Warranty Clause
•Caution - Know what you are representing and warranting
Body
•Covenants - Memorialize the promises that are being made by the parties - i.e.: promises to deliver certain goods or to refrain from particular activities •Representations and Warranties - Identify the assumed facts underlying the agreement
Punitive Damages
•damages awarded to Plaintiff over and above what will compensate him for the loss; intended where the wrong was by violence, oppression, malice, fraud, wanton or wicked conduct; meant to punish the wrongdoer •NONE for breach of contract, but possible under a separate tort theory
Consideration
•should be explicitly stated since agreements must be supported by consideration •May be expressed as an exchange of dollars or of goods, or perhaps an exchange of mutual promises
Liquidated Damages Clause
•specifies a predetermined amount of money that must be paid as damages for failure to perform under a contract; should be the parties' best estimate at the time they sign the contract of the damages that would be caused by a breach.
