Contracts: How To Spot The Indefinable “Term”
Signing Contracts: How To Spot The Indefinable "Term"
Many years ago, contracts had a different purpose than they do today, and believe it or not, being an attorney used to be an honorable profession. Times have certainly changed. Contracts now do much more than spell out mutual obligations of all parties, and the lawyers are constantly learning new ways to sneak provisions in that could be dangerous to the unaware. Allow me to illustrate.
Let’s assume Quiet Riot signs a $20 million record deal with John Dolmayan Records (since Dolmayan made such an assumption in his DRUM! cover story), and the contract provides for a one-year initial term with four options that read, “one year, or a period of nine months after delivery of each album optioned, whichever is later.” At first read, it seems that Frankie Banali and the boys have signed a five-year contract, but this may not be further from the truth.
Lawyers are crafty people, and the wording of this contract provision is a perfect example. By all accounts, this could be a five-year contract. Quiet Riot could deliver the first album and tour in support all in one year. Then they could record a second album in three months (or less), and tour for nine months in support, and then record a third album in three months and tour in support of that for nine months, and then repeat a fourth and a fifth time. If that were the case, they’d be out of the contract at the five-year anniversary. But let’s be realistic — after nine months of touring, the guys are going to want a couple of months off. Also, no one can guarantee an album will be written and recorded in three months. It may take four or five months (or ten-plus years if you’re Axl Rose).
Under the terms of this contract provision, every month that you tack on during the “year” of each option is added to the end of that term. If, after the initial term expires, it takes you six months to deliver your second album, then your term for the first option becomes nine months past the date of delivery (total time of the option is now one year, three months). That is your new “year.” And now you can’t catch up. If your next album is just as late, you now have a contract that is six months longer than five years, and the effects are cumulative. You can’t ever get back on track again. Unfortunately, it would be nearly impossible for a contract with a term similar to the one above to actually be a true five-year contract. It is almost certain that it will last longer.
The good news is that no contract beyond seven years will likely ever be enforced (thank you, California), regardless of the “terms” as defined in the agreement. If the contract you sign doesn’t have terms that are solely defined by calendar years, make sure you look closely at the delivery requirements, or you could be signing on for a lot more than you bargained for.
This article is not intended as legal advice. If you have specific legal concerns, contact an attorney.