In this information sheet:Actors, musicians and bands often appoint agents or managers to act on their behalf. Visual artists often have a dealer who represents them. The manager or agent can enter into contracts that are binding on the person who appointed them (the principal). There are specific legal rules which apply to these agency relationships. This information sheet explains what an agency is, how it is created, the authority granted to an agent, an agent's obligations, and the important terms of agency agreements. It also deals with any state legislation that applies to agents, managers and venue consultants in the entertainment industry. Bands and visual artists should also read the Music management checklist and Artist-gallery checklist.
- Between the principal and the agent, which is discussed later in relation to an agent’s obligations
- Between the agent and the third parties with whom they deal on behalf of their principal, which is discussed later in relation to what can an agent do?
- Between the principal and the third parties with whom the agent makes commitments on behalf of the principal, which is discussed later in relation to what can an agent do?
- 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;
- you can limit the scope of the agency to certain activities – for example, a musician could limit their agent to getting gigs, or to marketing or promotion tasks but specifically exclude signing record deals; or
- you can limit the amount of money the agent can spend on your behalf.
- you may not be able to get out of an agreement made by your agent 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 against you. 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.
- seeking and securing work (commissions, gigs, film parts, etc);
- negotiating terms of an agreement for an artist’s commissioned work or sale of artwork contract,
- negotiating arrangements relating to the attendance of the performer at a performance, arranging recording contracts or music publishing or other publishing agreements; and
- management of the reputation or career development of the writer, artist or performer and arranging publicity activities.
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.
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.
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.
The agent is not permitted to further their own interests, or those of any other person, in conflict with your interests. That is, an agent has to avoid any conflicts of interest, and fully disclose any conflicts to the principal. An agent must not, except where the principal consents, make seek to take financial advantage of their activities that are carried out on behalf of the principal; such as, by taking secret commissions in transactions. These duties are also known as the ‘fiduciary duties’ of the agent, which exist where there is a relationship of trust and confidence.
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.
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.
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 by one party must be in accordance with any express termination provision;
- 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 with one another to terminate the agreement; and
- the agreement will end on the death of either the principal or agent.
The contract should specify how long the agreement lasts, and include any options to renew it.
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?
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?
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?
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.
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.
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.
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 information sheet Alternative Dispute Resolution and the Arts Law Mediation Service for further information.
NSW legislation regulating managers, agents and venue representatives in their dealings with 'performers'In NSW, the Entertainment Industry Act 2013 (NSW) and the Entertainment Industry Regulations 2014 (NSW) regulate the relationship between performers (including any actor, singer, dancer, acrobat, model, musician or other performer of any kind) and their managers or agents. The Act regulates the following:
- ‘performers representatives’ (such as agents and managers) defined as any 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 terms of an agreement for, and the conditions of, a performance,
- finalising arrangements relating to the payment of the performer,
- negotiating arrangements relating to the attendance of the performer at a performance,
- administering the agreement between the performer and an entertainment industry hirer,
- making arrangements for publicity attendances and related publicity responsibilities of the performer,
- ‘venue representatives’ who are defined as any person who, for financial benefit, acts on behalf of an entertainment industry hirer to arrange a performance by a performer at a particular venue; and
- ‘entertainment industry hirers’ defined as any person who engages or contracts any performer for the purpose of a performance.
- in relation to work in the film, television or electronic media the cap is 10% of the total amount payable to the performer for the performance;
- in relation to work in live theatre, or a live musical or variety performance, the cap is 10% for any period up to 5 weeks and 5% for any period after 5 weeks.
- Artist-Gallery checklist
- Music Management checklist
- Artist-Gallery (Long Term) Agency sample agreement
- Gallery and Touring Agency sample agreement
- Music Business (2012) 4th edition, by Shane Simpson & Jules Munro, Omnibus Press, Chapters 4-6