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Contract Craters

In Intellectual Propertyby lowndestechLeave a Comment

By Ahmad El-Gendi

Remember when contracts used to be two to three pages at most? Those days are gone. Today contracts are written like textbooks and what’s worse, is that the language used is so hard to understand that it can make Shakespearean English sound like slang.  So should you just skim through it, assume it is standard, and be happy that you even have an opportunity?

Absolutely not. “But I didn’t read it” and “I had no idea what that meant” are not valid legal excuses when the time comes for you to find out what you actually agreed to.

Here are three examples of contract clauses you should be aware of when agreeing to a deal:

1. Indemnity. This basically means that you agree to cover any costs that the other party has to pay in the event that they get sued or face any other kind of liability. In other words, if you agree to “indemnify” the other party and that party has a claim brought against them, you agree that you will cover the costs to defend that claim and pay any costs the party owes in the event a judgment is entered against them.  While this clause is fairly standard, the part that varies is the scope.  Agreeing to cover the other party for any harm that comes to them which directly results from your actions, may be reasonable so long as the provision is well defined, limited to just you or anything within your direct control, and the maximum damages are limited.  If you caused the trouble, it is not unreasonable that you should pay for it. Unfortunately, many indemnity clauses are broader than that. The other party makes you agree to indemnify them for “anything related to the agreement” caused by anyone related to you.  That exposes you to all kinds of liability.

2.  Intellectual Property Rights. These rights include copyrights, trademarks, and ideas which could serve as the basis for patents. The thing about intellectual property rights is that, because they are intangible, people often underestimate their value. Many contracts will have language stating that you agree that any intellectual property created as a result of the work covered by the agreement automatically goes to one party (and it is usually not the one who creates it). While a party with leverage is not likely to agree to let you have all of the intellectual property rights, they very well may allow you to share in the ownership or at least maintain license rights.

3. One Way Term Renewals.  A key part of any contract is how long the agreement between the parties is. The other party may try to put automatic term renewals that go into effect only if they want it to.  This can lock an artist into a contract where they are being significantly undervalued because while their publicity and marketability has grown, they are stuck to the same terms as when they first started.

The contract clauses above can make or break someone’s career. It may feel that you have no choice but to agree to them, but just remember, when you bring value to the table the terms are negotiable. Once you step into a contract crater, it is almost impossible to get out from them, so watch what you sign.

Bonus resource on contracts: https://www.allbusiness.com/key-contract-provisions-786-1.html

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