Navigating Contracts: For Creators, Athletes, and Entrepreneurs
Updated: 3 days ago
The nuances of any contract can be overwhelming. Many professionals use this to their advantage; they bank on the fact that the fine print will go unnoticed or worse, that you won't bother to read the contract. Whether you're a creator, athlete, or a business owner, knowing how to approach contracts can be the difference between a deal that serves you and a deal that breaks you. Transparent moment: 6 years ago, I entered into a major contract without understanding all of the key considerations. The problem wasn't the terms I missed. It was the terms that were never included in the first place. To this day, I'm still digging out of the financial obligation that contract created for me.
The intent of this post is to give you a high level framework that you can leverage to avoid common pitfalls and negotiate favorable terms. Hiring a legal professional may be the better option, but if resources are tight, advocate for yourself.
A Few Things to Keep An Eye Out For in Entertainment Contracts
1. Parties Involved
You might be thinking, "well duhhh." To which I will reply, "yes, I understand this isn't riveting information . . . but you'd be surprised at the number of disputes that turn on identity and/or authority." As an example, imagine the contract was between a streaming platform and a film director. The streaming platform hired independent contractors to deliver for them but those contractors didn't show up on the date of the contractual engagement. The independent contractors weren't named in the contract. Is the streaming platform still liable? Can the film director sue the independent contractors? A solid contract will proactively address scenarios like this one.
The contract should clearly identify all parties involved. This includes the primary individuals and any secondary individuals or businesses that have rights/responsibilities related to the transaction.
2. Scope of Work
Pay attention to the "scope of work" section because it explicitly outlines the deliverables that are expected from each party. For example, imagine that a business hires an influencer to promote their product and website on social media. Their agreement requires the influencer to post promotional content once per week. It also requires that the business affiliate link be posted in the influencer's bio. In this example, some terms worth specifying in the contract are: the specific social media platform(s) to be used, the handle(s) associated with the influencer's accounts, the type of posts (e.g., feed post or story post; static post or video), the number of required posts, posting frequency, content approval process, deadlines for publication, required tags, required captions or messaging, duration that content must remain live, affiliate link tracking method, exclusivity obligations, restrictions on competing brand promotions, and any consequences for failing to meet the deliverables.
3. Compensation
Compensation details are crucial. Some details you might want to keep an eye out for include:
Payment Due Date/Net Terms - specify exactly when payment is due (e.g., upon signing, within 15 days of invoice, or within 30 days of delivery). Avoid vague language like “upon completion.”
Payment Amount - always negotiate and be clear on the base rates versus performance-based payouts.
Expenses & Reimbursements — clarify who covers production costs, travel, equipment, meals, and any other out-of-pocket expenses. Also be clear on whether pre-approval is required for expensing related to the engagement.
Cancellation/Kill Fee - specify what you're paid if the project is canceled after you've committed time or begun work.
Payment Method - ensure this is clearly articulated in the contract. You wouldn't want to be waiting for a paper check in the mail when there's a potential of you receiving payment instantly.
4. Rights and Ownership
This section defines who owns the work you create. For example, it could determine whether an artist retains the rights to the songs they create or whether those rights belong to the record label. Similarly, it could determine whether an influencer’s promotional content can be repurposed as paid advertising by the company that hired them to create it.
If there’s one thing you remember from this blog, let it be this: before you sign anything, make sure you understand exactly what the agreement means for ownership and use of your intellectual property.
5. Termination Clause
The termination clause outlines the circumstances that may trigger contract termination, and in some cases, obligations resulting from the termination. As an example, imagine a promoter cancels an artist performance because he or she didn't sell enough tickets to their event. The promoter had already paid a 50% deposit to secure the featured artist. If the contract terms were favorable to the artist, the 50% deposit might be non-refundable and the artist would be entitled to keep it; the underlying logic here is that the artist made themselves available for the engagement, regardless of whether it happened. The promoter might even be contractually required to reimburse reasonable costs incurred by the artist for this event. Examples of reasonable costs could include travel and lodging fees, for instance.
In an alternate scenario, where the contract terms were favorable to the promoter, the artist might be required to return the deposit and any other monies that were provided in advance.
Some "termination clause" terms worth specifying include: the specific circumstances that trigger a termination, any notice requirements, the specific amount due in the event of a termination, the timing of any owed payment, circumstances under which cancellation fees may be waived, and whether any additional costs or expenses must be reimbursed following termination (to name a few).
Common Pitfalls to Avoid
While navigating entertainment contracts, be aware of common pitfalls that can lead to unfavorable outcomes:
1. Not Reading the Entire Contract
It can be tempting to skim through a contract, especially if it is lengthy. However, every clause is important. Take the time to read and understand the entire document.
2. Ignoring Legal Jargon
Contracts often contain legal terminology. If you encounter terms you don’t understand, seek clarification or consult a legal professional. I'm always happy to answer quick questions, free of charge. Legal knowledge should be accessible to everyone.
3. Rushing the Negotiation Process
Negotiating terms can be uncomfortable, but it’s essential to advocate for yourself. Don’t rush through this process and never make decisions from a place of lack.
4. Overlooking Future Opportunities
Some contracts may include exclusivity clauses that could prevent you from being able to work with others in your industry. Be cautious of these clauses and consider how they may impact your future endeavors.
5. Seeking Substantive Legal Advice from AI
AI is a good place to start. However, don't take shortcuts when it comes to your interests and obligations. If you are unsure about any aspect of a contract, it’s wise to consult with a lawyer.
Tips for Negotiating Favorable Terms
Negotiating an entertainment contract can be challenging, but there are strategies you can employ to secure better terms:
1. Research Industry Standards
Come to the negotiation table with a good understanding of how engagements like yours are valued and executed in your industry.
2. Know Your Worth
Understand what you bring to the table and how it differs from what others have to offer. What sets you apart? How are you uniquely positioned to advance their goals? If you have a strong portfolio or a fan base, use this to your advantage during negotiations.
3. Be Prepared to Walk Away
If the terms are not favorable, leave. Sometimes, you have to close misaligned doors to open more aligned ones.
4. Build Relationships
Never underestimate the power of a strong network. Good relationships can single handedly make the price go up!
Professional Demeanor
Maintain a professional demeanor during negotiations. Be respectful and courteous. Because it's the right thing to do, and beyond that, people are more likely to compromise with someone they like. Ever heard the saying "you catch more flies with honey than vinegar"?
Conclusion
You deserve to be valued and your work deserves to be protected. Negotiate. Do your research. Understand what you're getting yourself into. You've got this, and I've got you!
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