The contract signatories and their “skin in the game”

Before Midnight Mango became a booking agency, we were concert promoters. During this time Ian and myself received many contracts for the 1000’s of shows we promoted. Then, when we became an agency, it was a case of reverse-engineering the best parts of those contracts, to create our own version. Just like no song exists without being influenced by its predecessors, our contracts at Midnight Mango do not exist in isolation either.

As a result of our experience being promoters, I think we understand the pressures of promoting better than most. We never forget that our first responsibility lies with the artists we represent, yet we are also acutely aware that without promoters we wouldn’t exist. Without them being happy to sign our contracts, we would not exist either.

For the most part, all show contracts from all live music booking agencies will contain the same fundamentals.

Let’s start by considering The Signatories

This might seem obvious, but actually, it’s a really fundamental part of a contract.

As discussed in the blog post “A Special Type Of Employment Agency” Midnight Mango is never a signatory to the contracts we write. We prepare the contracts on behalf of the signatories – but we don’t sign them.

That’s not to say that we don’t have certain obligations to our clients, but they are not found in the show contract. They are found in our Terms of Business.

In both cases, The Artiste and The Purchaser signatories can be an individual or another organisation such as a company, a partnership or a charity. If a signatory is an individual then they themselves are responsible for the contract as a sole trader, however, if they are signing for an organisation then they could leave the organisation and someone else from the organisation could become the person delivering the show. In the case of the latter, the responsibility lies with the organisation rather than that of the individual.

It’s also important to remember that the organisation signing the contract may have its liability limited to the sum of its assets. This means that if it runs out of money it can file for bankruptcy. This can reduce the chance of being able to make a claim against them if things go south. Examples are limited companies (ltd), limited liability partnerships (LLC’s) etc.

So it is really important to consider who the signatories are, especially when it comes to the purchaser who is ultimately settling the bill.

Anyway…

At the end of the contract there will be space for each party to sign to say that they are in agreement. By this stage, there have probably been many conversations and emails with evidence that the two parties are in agreement. Whilst technically a judge could use such evidence to show that a contract had already been formed, they are unlikely to enforce any judgement until the document has been signed.

Regardless, we want to avoid the potential of ever getting in such a position, so it’s super important to get the purchaser’s signature.

Leverage the signature

As a consequence, in most cases, we will not allow a purchaser to announce their show until the purchaser has signed the contract. In fact, in many cases, we would rather pull the show out than go on sale without one.

However, this is the ideal situation and it would be naïve to say it is always possible to get that signature before the on-sale announcement and it would be untrue to say that all of the contracts we issue are signed by the purchaser. There are a small number of exceptions. Again this is all about trust and it needs unpicking a little to explain where these situations arise and what we do to tackle this problem.

Firstly we can say, that we always issue a contract and there is always written evidence to show an agreement has been reached. There are no exceptions to this.

Playing catch up with the signature…

We discussed how we confirm a show in the post “The Deal Memo Is Dead – Long Live The Deal Memo” Unlike most other agencies, we issue our contracts at the same time we confirm a show. This means that with every confirmation email, we attach a contract and say that the show is not fully confirmed until the contract comes back signed. Then we have a process which our agents follow to remind the purchaser to sign and return.

However, most of the time we are a B2B business – we are dealing with businesses that promote many shows a year. They are businesses who employ people to programme their events. They have their own systems in place, which means we can’t just say sign this immediately, sometimes it takes a bit of time to process the contracts we issue. So this can delay signing.

Some of these organisations have been working with us for many years and we have other shows, with other artists, on sale with them. We will have settled many shows in the past with them. They are often based in a solid theatre which isn’t going anywhere! All of this adds to the trust we have with this organisation that the show will be executed well. We are still going to get our contracts signed, but it may take a bit longer than we would like.

Imagine at the same time, that our artist wants to announce their tour, the tour is 16 dates, all 16 dates are confirmed, and all 16 contracts are issued but only 10 have been returned signed. The six outstanding contracts are with in-house programmers at various venues. We know they will get to signing these contracts imminently, we trust them because of all the work they have done with us before and we know they aren’t going anywhere because they are established. Then we may allow them to go on sale before we receive a signed contract back.

Skin in the game…

Here is the really important part – we have future shows with them which means we have “skin-in-the-game”. Essentially if they let us down, then it will affect our future relationship with them.

So to recap with some trusted clients if…

• They have done shows well with us in the past
• They get to signing our contracts in a “timely” fashion
• They have settled shows promptly in the past
• They are based in a building
• They have other shows with other artists on sale with us

Then we may allow a show to go on sale before the contract is returned signed. We know they will sign in due course and the show will happen properly.

Just as most B2B companies will provide a service or a product before receiving payment an agency may allow a show to go on sale before receiving a signed contract. To some extent, the fact that the purchaser has put the show on sale shows that they are in agreement with the contract.

However…

Now consider a situation where we haven’t worked with the venue before or one of the promoters is a sole trader we rarely use. In these cases, there is no way they will go on sale with their show before we have received a signed contract. We would rather the show didn’t happen than risk going through the hassle of chasing for payment at the end of the process.

Another Exception…

Large organisations we work with a lot. When I say a lot I mean where we have many high tariff shows with them and a lot of low tariff shows with them. For the shows with low guarantees of only a few hundred pounds, then we may not expect them to be signed at all.

In this case, the company concerned has read our contracts many times, they know the penalty if the show goes south. Of course, the higher tariff shows will still require a signature – but we consider the lower tariff ones as “tacitly” signed because we both have so many shows on each other’s books. It is definitely the exception, though, rather than the rule and only applies to one or two of our promoter clients.

Festivals – Possibly the most risky business on earth. There will always be a signed contract with a festival. The artists won’t be playing without one that’s for sure.

The artist’s counter-signature – As we have already said, at the end of our show contracts there is space for the two signatories – The Artist & The Purchaser. In many cases, the purchaser will want to see the contract counter signed by the artist. We have systems in place for this to happen efficiently. The Artist can log in get their contracts and sign them, then we can return them to The Purchaser.

However getting our show contracts counter-signed is not always a priority, here’s why…

The contract is for the artist to provide a performance and in return, the purchaser provides a fee. Technically the performance happens first and the payment comes second (more on the money in another post). Since the artist provides the service before the payment, it’s the artist who requires more protection against non-payment than the purchaser requires from non-performance. Essentially the artists doesn’t get paid until they deliver.

For every individual performance, we write to our artists asking them if it’s OK to confirm. The language is unambiguous and precise. We won’t confirm until they have told us to in writing. So we have evidence that they have agreed already to perform.

Although we wouldn’t exist without the purchasers who buy the performances, our first obligation is to get the signature of the purchaser on the contract.

Our artists are familiar with the contents of their/our contracts, they also understand that technically they are bound to them once they have confirmed and the purchaser has signed.

So we acknowledge that the artists should countersign the contracts to which they are party, indeed the systems are in place for that to happen. We are happy to facilitate them being countersigned. We just don’t chase that down, for the reasons mentioned above.

Further Reading

https://www.companybug.com/types-of-limited-companies/