: Agency Agreements

Introduction

Many creators struggle to find the time, resources and connections to effectively market and promote themselves and their work. In these circumstances, an agent can be invaluable. A good agent can be a key factor in assisting an artist to achieve their creative and commercial goals.

Any artist (that is whether a writer, visual artist, musician or actor) can get an agent to act for them at any stage of their career, and almost any person can be an agent – though not necessarily a good one!

The role of an agent tends to depend on the stage of an artist's career, their reputation and status. It is different from the roles played by a manager and venue consultant.

When deciding whether to engage an agent it is important to consider the agent’s reputation, personality and nature of their agency, and, exactly what you want them to do.

What is an agent?

Legally, an agent is someone who has authority to create legal relations between a person known as a "principal" (in this case an artist) and others. Put simply, this means letting someone act for you. Just using the word “agent” does not mean that the person using it is legally recognised as an agent.

In NSW, the Entertainment Industry Act 1989 (NSW) and the Entertainment Industry Regulation 2004 (NSW) regulate the relationship between performers (including any actor, singer, dancer, acrobat, model, musician or other performer of any kind) and their representatives, including entertainment industry agents. An entertainment industry agent, under this Act, is a person who, for financial benefit, carries out any one or more of the following entertainment industry activities on behalf of a performer:

seeking or finding work opportunities for the performer;
negotiating the terms of an agreement for, and the conditions of, a performance;
finalising arrangements concerning the payment of the performer;
negotiating arrangements relating to the attendance of the performer at a performance; and
administering the contract of the performer with an entertainment industry employer,

but does not include a person who carries out those activities solely as an employee of such an agent.

How do you create an agency relationship?

Generally an agency may be created by written or oral agreement, or may be implied by the conduct of the parties – both the agent and the principal. For an implied agency, the law will look at the actions of the parties to determine objectively if an agency exists – that is, have you acted in a way that reasonably implies your intention to have someone act as your agent. For example, if you entrust a gallery with the sale of your works over an extended period, your relationship with the gallery could be seen as an agency rather than one of consignment.

However, there are laws which require that some agents be appointed in writing. For instance, in Tasmania if the agency is to continue for more than a year the agency agreement must be in writing.

In addition, the agency agreement must take the written form of a deed – a special type of legal document – in certain circumstances such as:

if the agent is signing a deed on behalf of the principal; or
in most states, if an agent needs to deliver a deed already signed by the principal.

The specific type of deed document required is a called a Power of Attorney. Be aware that there are also legal requirements in each state about Powers of Attorney including the requirement to register them in some circumstances.

If you are unsure if your agency agreement must be in writing or in a deed form you should seek independent legal advice on this issue. If you are an artist or arts organisation you may be able to seek assistance from Arts Law. In any event, it is always better to enter into any agreement in writing as a written document clarifies the terms of the agreement and can be used as evidence if things go wrong.

What can an agent do?

An agent can be appointed for a specific transaction, such as negotiating a commission of a new artwork with a particular buyer, or for more general ongoing purposes, such as to manage the creator’s business affairs on an ongoing basis.

An agent’s main role is usually to find, negotiate and conclude contracts for its artists. Remember, though, that your agent only has the power to negotiate and enter into agreements on your behalf if, and to the extent, that you authorise them to do so. In other words, an agent’s authority can be specifically created and limited by the terms of the agency agreement. This means, for instance, that:

you can retain the final right of contract approval so that you know of any deals being arranged by the agent before a binding commitment is made; and
a musician could limit their agent to getting gigs, or to marketing or promotion tasks or a writer may give express written instructions to their agent to negotiate with a potential publisher for the writing of a new novel.

An agent may also have additional implied authority, which supplements any rights expressly granted. For example, by giving your agent the power to book interviews, it may reasonably be implied that they can make a commitment for you to turn up at a particular time and date. If there is any evidence, however, that you have expressly prohibited this, then the authority cannot be implied.

The really sticky area is where an agent acts with apparent (ostensible) authority. This is where an agent purports to be acting within the scope of their actual authority granted by you, but is in fact acting outside of it (or is no longer your agent at all). In this situation:

• you may not be able to get out of an agreement made with third parties; and

• any third party that enters into an agreement with the agent, reasonably thinking that the agent has your authority to make the agreement, may be able to rely on and enforce that agreement. For example, you may find yourself bound to paint a commissioned work for an organisation you despise because your agent (acting under ostensible, but in fact not real, authority) signed you up for it.

Some of the activities associated with entertainment industry agents include:

seeking and securing work (commissions, gigs, film parts, etc) and negotiating the terms;
arranging for the necessary contracts to be drawn up (such as publishing agreements, sale of artwork contracts);
receiving fees and securing deposits for engagements;
arranging publicity;
keeping proper records and looking after the account keeping; and
forwarding payment to the artist.

A good agent can also provide knowledgeable and constructive encouragement, criticism and career advice.

An agent’s obligations

A legally recognised (correctly established) agent has legal obligations to their principal that impose a high level of trust and responsibility on the agent. In legal terms this is called a “fiduciary relationship” and this places certain obligations on the agent regardless of any contractual obligations that may be imposed on them. The main obligations an agent has is to act in the principal’s best interests and to act honestly. Some of the other duties of an agent may include:

Duty to fulfil agency

An agent must carry out instructions. If an agent goes beyond or acts contrary to these instructions, and then causes loss, they are normally liable to cover that loss.

Duty to act in person

Unless otherwise agreed, or in an emergency situation, an agent must perform the agency in person, and not delegate their work to someone else. In other words, if the agent is allowed to appoint sub-agents, it should be made clear in the agency agreement.

Duty of care, skill and diligence

An agent that is paid for their work is required to exercise the degree of care, skill and diligence that is reasonably necessary for the proper performance of their obligations.

Duty to promote the principal’s interests

The agent is not permitted to further their own interests, or those of any other person, in conflict with your interests. An agent therefore has to avoid any conflicts of interest, and fully disclose any conflicts to the principal.

Confidentiality

An agent must keep any information provided by the principal in confidence, completely confidential. Even after the end of the agency relationship, an agent is not permitted to use any confidential information acquired in the course of the agency in competition with the principal, or to the principal’s detriment.

Duty not to profit secretly from the agency

For example, an agent isn't allowed to make their own, undisclosed commission (a secret profit) for sealing a deal (that is, apart from any usual and customary commission when the principal knows that the agent will receive something (but not necessarily the amount) from a third party).

An agent breaches their duty if they receive a bribe, and can be liable to the principal for the amount of the bribe and for any commission payable in relation to the transaction for which the bribe was given.

There is also legislation in all States and Territories of Australia dealing with secret commissions, much of it in Crimes Acts, or their equivalents.

Proper management

An agent must keep proper accounts of all agency transactions for you, including of money and property held on behalf of the principal, and provide the principal with a copy of accounting records and statements when requested.

In NSW it is compulsory for an agent to keep any money handled on your behalf separate in a trust account and not mix it with the agency’s funds. It is standard and best practice to abide by this in all States and Territories and your agency agreement should clearly specify this.

Termination of agency

If there is no written agency contract and the relationship is for a short time or a specific purpose, usually either the principal or the agent may be able terminate the agency at any time.

Where an agency agreement involves a continuing relationship between the parties usually:

any express termination provision prevails;
if the agreement does not contain an express termination provision, either party can terminate by giving reasonable notice either orally, in writing or by conduct;
the parties can agree to terminate the agreement, so long as there is consideration (something exchanged between the parties) for the promises required for termination; and
the agreement will end on the death of either the principal or agent.

If the principal terminates the agency relationship, it may be wise to make this known, to avoid the possibility that the former agent continues to bind the principal to contracts with others.

The agency agreement

Arts Law strongly recommends that all agency arrangements are in writing, and that both parties get legal advice before signing an agency agreement.
It is important that an agency agreement, like other agreements, deals with each party’s expectations and that it details the rights and obligations of each party. Typical, and important, terms in an agency agreement include:

Term

The contract should specify how long the agreement lasts, and include any options to renew it.

Scope of agency

Is the agency exclusive or non-exclusive? In other words, can you appoint other similar agents? Many galleries, for example, require that an artist represented by them only exhibits and sells work through them. For this type of exclusive agency, it would be prudent to consider how long the agreement should last (term), and how and when the agency relationship will end (termination).

What are the agent’s functions and powers? To negotiate offers? To sign agreements? Does the principal want to retain the right of final approval of any deals before they are signed off on?

Territory/fields of activity

Where can the agent act for the principal? Again, can a gallery only exhibit and sell an artist’s work in a particular State or Territory? For performers, is the agent only to act in relation to particular kinds of performance?

Payment/Commission

Agents are usually paid by commission based on the gross income received for the principal. The agreement should give details of the way in which the commission is to be calculated and the timing and method of payment. Does the agent still receive commission if you obtain work without their help? What if a performance is cancelled?

Accounting requirements

The agent should be obliged to pay all money received for the principal into a trust account, and to keep good accounts that properly document the income and expenses associated with the agency. The principal should be given reasonable access to those accounts.

Insurance

For example, visual artists entering a gallery agency agreement should consider who is required to have and bear the cost of insurance to cover the risk that works are damaged or destroyed, and the amount of appropriate insurance.

Termination

The contract should set out the circumstances in which the principal or the agent is able to end the agency relationship, including what happens if you want to leave the agent.

Disputes

Arts Law recommends that there is a mediation clause in the contract. When compared to litigation and arbitration, mediation is a less formal and less expensive dispute resolution process. In addition, instead of imposing a solution, in mediation an independent person helps the parties in conflict to formulate their own solution to a dispute. See the Arts Law Mediation information sheet for further information.

NSW legislation regulating agents who represent “performers”

As mentioned above there is legislation in NSW called the Entertainment Industry Act 1989 and the Entertainment Industry Regulation 2004.

NSW is currently the only State or Territory in Australia to have this kind of legislation. It applies to all agents, managers and venue consultants carrying on business within NSW. Whether they are usually resident in another State is not relevant.

The Act seeks to apply certain standards and controls to minimise unfair practices and exploitation. For example, there is a complaints committee that can fine an agent for unfair or dishonest conduct, and all entertainment industry agents who work with performers must have a licence from the NSW Office of Industrial Relations. Managers and venue consultants (as defined by the Act) must also have a licence.

The Act also prescribes the maximum fees and percentages an agent may charge a performer in different situations. For more information contact the NSW Office of Industrial Relations on (02) 9743 7200 or visit their website at http://www.industrialrelations.nsw.gov.au/about/services/licensing/entertn.html

Further information

Other Arts Law publications for those considering an agency relationship include:

• Artist-Gallery checklist
• Music Management checklist
• Artist-Gallery (Long Term) Agency sample agreement
• Gallery and Touring Agency sample agreement

Other publications that may be useful are:

• Music Business (2006) 3rd edition, by Shane Simpson, Omnibus Press, Chapters 4-6
• Earning a Living in the Visual Arts (1997) 3rd edition, by James Stokes, Hale and Iremonger Pty Ltd, pp151-153

Arts Law’s publications can be ordered at www.artslaw.com.au or by telephoning (02) 9356 2566 or tollfree outside Sydney 1800 221 457.