In Nigeria's vibrant music scene, record labels are constantly discovering fresh talents and signing new artists, driving the industry to new heights. Yet once the excitement of signing a record deal fades, many labels and artists may find themselves trapped in protracted disputes when one party violates the contract terms.
While contractual disputes are not unusual, it is important for both artists and record labels to know how to handle issues as they arise. This will prevent disputes from escalating and damaging the business relationship irreparably. In this article, we explain what constitutes a breach in music contracts and outline the legal rights and remedies available to record labels and artists, respectively.
Common Contract Breach in the Nigerian Music Industry
A breach of contract occurs when one party fails to fulfil an obligation as agreed by the parties to the contract. In the music industry, a breach of contract may include:
- Delayed or Non-Payment: Records labels or artists may fail to pay the agreed amount at the agreed time. The amount may also not be in the ratio that was agreed to.
- Failure to Promote: Artists' exposure and professional development may be hampered by record labels' failure to fulfill their promotional obligations.
- Unauthorized Exploitation: If usage guidelines are not closely adhered to, it may be possible for an artist's work to be used without permission or for intellectual property to be stolen.
- Breach of Exclusivity: An exclusivity clause in a contract operates to restrict either party from entering into contradictory agreements with third parties or engaging in circumventing acts. A breach may include, but is not limited to, collaborating with other labels or artists working with another label.
- Failure to Deliver Agreed-Upon Content: When artists sign a contract to complete a certain number of albums or songs within a particular time frame, failure to meet the delivery requirement for any of the albums or songs is considered a breach of contract.
- Breach of Confidentiality and Non-Disparagement Clause: Disparaging remarks made in public about a record label or artist may violate confidentiality or non-disparagement covenants. Specifically, when such disparaging comments are made publicly and can harm the record label's or artist's reputation or destroy their brand, then they may constitute a breach of a covenant.
- Violating Morality Clauses: A morality clause is usually inserted in a standard entertainment contract between artists and record labels to protect the record label's reputation or brand from being compromised by the artist's behavior. If the contract forbids it, artists acting in a way that harms the label's reputation may constitute a breach.
In the Nigerian music industry, there are several common examples of contractual breaches, such as those listed above. The circumstances of each breach may differ, however, depending on the terms that were previously agreed upon by the parties. So, parties must know which action constitutes a breach and must also understand their legal rights if a breach does happen.
LEGAL RIGHTS AND REMEDIES FOR RECORD LABELS AND ARTISTS
Record labels typically make large financial investments in fostering and promoting an artist with the potential to "blow". In return, an artist will typically give the record label significant control over his/her career. As such, a breach of contract by either the artist or record label can lead to significant financial or reputational damage financially and reputation-wise. To guard against this, parties must be adequately prepared to protect their interests by exercising certain rights and remedies in the event of breach.
These remedies include:
1. Termination of Contract: In the event of a serious violation of the recording contract, the record label may terminate the agreement, putting an end to the obligations of the parties without prejudice to accrued rights and liabilities under the contract, as the case may be. This would allow the label to search for new talent and mitigate further loss. Conversely, where a record label is in breach of its contractual obligations, the artist has a right to terminate the recording contract. Doing this will free the artist to explore other options without being constrained by an unfair contract.
2. Damages: If a record label incurs financial losses as a result of a breach of contract by an artist, it may seek monetary compensation. The goal of this remedy is to restore the record label to the financial status it would have had under the terms of the contract. See the case of King Sunday Adeniyi Adegeye v. African Songs Limited.1
Also, an artist who has suffered any loss as a result of a record label's breach of the recording contract may pursue financial compensation. This covers unpaid royalties, lost earnings, and other monetary losses brought on by the label's breach of contract2.
3. Specific Performance: This remedy typically comes into play where monetary compensation would be insufficient. It involves the artist or record label asking the Court to uphold certain clauses in the agreement to make sure the other party carries out their end of the bargain.
4. Injunctions3: This remedy is useful for stopping the engagement, by the other party, in acts that violate the contract. The artist or record label may apply to court for an order restraining the other party from continuing to engage in any such violating activity. For instance, an injunction can prevent the record label from making unapproved recordings or using the artist's work for profit without permission.
5. Dispute Resolution Mechanisms: Artists or record labels may choose to settle a dispute through litigation or alternative dispute resolution mechanisms (ADR). Mediation or arbitration are common ADR methods used in music contract disputes; however, depending on the circumstances of the violation, other options may be available. Instead of going through the expensive and time-consuming process of traditional court hearings, artists and record labels may choose to settle their disputes through ADR.
6. Auditing Right: This remedy is unique to artists and often involves including an audit clause in the music contract. This clause grants artists the right to review the label's financial records to guarantee correct accounting and payment of royalties. If discrepancies or underpayments are discovered, the artist may file a lawsuit to recoup any outstanding money owed.
It is crucial that record labels and artists ensure music contracts are carefully written, with each party's rights, responsibilities, and remedies spelled out in detail. Record labels, artists, and other stakeholders in the Nigerian music industry are advised to work with experienced legal professionals who are knowledgeable and conversant with the specific laws, procedures, and regulations that are applicable in the space. Hiring legal experts with experience in entertainment law can be quite beneficial for contract drafting and handling disagreements that result from breach of contract.
Conclusion
To sum up, in the Nigerian music industry, contract violations can have serious consequences for both record labels and artists. Through the adoption of best practices in contract management and an awareness of their legal rights and remedies, stakeholders can reduce risks and promote a more open, equitable, and vibrant music ecosystem.
At The Trusted Advisors (TTA), we recognize the crucial importance of retaining experienced legal professionals to draft or review contracts before signing them. As professionals who have worked in this area of practice, we know that not only do legal experts help protect your interests, but they also ensure every clause of the contract is enforceable, clear, and compliant with current Nigerian laws. This proactive approach will ensure the business and intellectual property rights of the contracting parties are protected. It also affords a solid framework for managing conflicts when they do occur, which would eventually promote industry stability and confidence.
Footnotes
1. (2019) 2 NWLR (Pt. 1656) 335 @ p. 365 – 366
2. King Sunday Adeniyi Adegeye v. African Songs Limited 2019) 2 NWLR (Pt. 1656) 335 @ p. 365 – 366. An instance is the dispute between Shallipoppi, Muyeez, and Dapper Music, where Muyeez accused the record label of overworking him, neglecting his welfare, failing to pay him royalties, and allowing him to starve.
3. This could be interim or interlocutory. An interim injunction is granted in urgent matters requiring immediate relief. An interlocutory injunction is granted pending the hearing and final determination of a case. An interim injunction usually has a short time frame compared to an interlocutory.
See Chocolate City Label v. Olawale Ibrahim Ashimi (Brymo) Suit No: FHC/L/1422/2013 (unreported) (where the Court initially granted an injunction against Brymo to ensure compliance with his Exclusive Recording Agreement, although the Federal High Court eventually dismissed the case, allowing him to continue his career independently.)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
