Legal Question in Entertainment Law in California
If an artist recording contract does not include specifications of allowable or reasonable reserves, does a record company legally have the right to hold reserves and if so, at what percentage and for how long can they be held? The contract in question is governed under CA law and pertaining to 100,284 unpaid units held over 4 years above and beyond all returns.
2 Answers from Attorneys
Wow. If the contract really says nothing about holding reserves, you should RUN, don't walk to a lawyer right away. The statute of limitations may prevent you from pursuing a claim that's 4 years old.
AGAIN, talk to a lawyer TODAY!
If reserves are not addressed in your contract then it is open to interpretation. If you ended up filing a law suit then industry standards would be considered which are usually between 15%-35% depending on the royalty stream (i.e., record royalties, mechanical royalties) and typically reserves are liquidated within a couple of years. This is a term that should have been specified in negotiations so that you have a clear breach of contract action. If your agreement has a breach notice provision then you should follow that and demand that the reserves are liquidated. If they do not respond then that may set up a breach of contract action.
Artist agreements are some of the most complicated entertainment agreements around because there are no guilds to regulate them. You should always consult a qualified entertainment to negotiate them.
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