I am often asked by young bands whether they should enter into an agreement among themselves. Whilst my legal training says “Yes”, I am also conscious that this may open a can of worms.
Recently a client of mine, the charismatic and enigmatic lead singer of a well-known act, no longer wanted to be part of the band citing irreconcilable differences between the members. Instead he wanted to leave, find himself a new backing band, continue to use the same band name, play the same music and perform an almost identical “live show.” Now there’s a can of worms!
He believed that as a founding member, lead singer and principle lyricist, he should be entitled to do so. The band had a strong following, was making good money touring, and was about to release their debut album. Naturally, the remaining members of the band were mortified and wanted to continue business as usual, and simply find themselves a new lead singer. Thus began a long and spiteful dispute.
What many people don’t realise is that without a written agreement the Partnership Act (the Act) will apply. Partnerships are defined as “persons carrying on a business in common with a view of profit” while “business” is defined as “every trade or occupation.” If your band is more than a “hobby” it will be considered a partnership under the law. As my client did not have an agreement in writing we were forced to rely on the Act.
So what were the key provisions of the Act and how could a Band Agreement have helped resolve the issues?
Firstly, the Act assumes that all partners are equal. This surprises many bands and may be contrary to a band’s intention. The Act also states that subject to any agreement to the contrary, a partnership can be dissolved by any partner providing notice to the other partners of his/her intention to do so. My client’s actions and emails clearly conveyed his intention to dissolve the partnership.
Once this was done, the issue became who had best right to the band’s name, and who should have the right to perform their songs?
Aside from physical assets such as music equipment, pa’s, combie-van etc, a band’s primary assets are its name and its songs (depending on the bands internal arrangements regarding songwriting splits – if any!). Generally speaking, the Act provides that upon dissolution of a Partnership, each party has equal right as against the other partners to the Partnership assets. This means that each partner has equal right in all assets (including the band name and song catalogue) and no one partner has a greater right to the assets than the others.
While a literal interpretation may imply that each member could then run off and start their own band of the same name there exists “Fair Trading” legislation such as that would likely intervene where such actions may cause confusion in the market place.
The Act also provides that any partner can apply to the court to order a winding up of the Partnership business with assets sold-off and the funds distributed in accordance with each partners ownership holding (ie equally). In my matter, we needed to strike a deal as to who would get what under threat of such a court application. Thousands of dollars were spent trying to ascertain a “value” of the “business”. We eventually settled our matter by way of pay-out, i.e. my client agreed to forgo any rights to the name and ownership of the songs (subject to him continuing to receive his cut of publishing royalties) in return for a fee. The pay-out was modest and left my client feeling somewhat disgruntled. The alternative however was expensive legal proceedings.
There are often clauses in a Band Partnership Agreement that cover band members who want to leave. Such a clause would have spared my client much angst. “Leaving member clauses” usually provide that appropriate notice must be given by leaving members. They also provide that if a member leaves the Band, the remaining members may continue to perform under the Band’s name. This doesn’t have to be the case however and the drafting of the Band Agreement is entirely open to negotiation and dependant on the Bands particular circumstances. It may also provide that a leaving member is entitled to a pay-out of sorts for ongoing royalties and how such amounts should be calculated. This can be vital when a band has had success and there are ongoing royalties to be claimed.
A Band Agreement forces a band to consider a host of issues such as
- how many partners are there;
- the roles and obligations of each partner;
- song ownership splits;
- division of income from different sources;
- decision making processes;
- ownership of the band name;
- leaving member processes; and
- admitting new members.
Given the gravity of writing a Band Agreement, some bands will put it in the “too hard basket” and going with the “she’ll be right” attitude. Whilst no two bands are alike, I would advise all bands to consider entering into a Band Agreement and for starters, they may contact Arts Law to obtain a sample agreement to start considering the issues.
Darren Sanicki music and entertainment lawyers, www.dslawyers.com.au.