2.0 Legal Doctrines

2.1 Undue Influence

The courts may set aside a “manifestly disadvantageous” agreement if it has been entered into in circumstances where undue influence has been brought to bear by one party to a contract against another. In the context of a management contract this does not mean that the artist has to show that he or she was taken to the pub and made to get drunk before then being pressured to sign the agreement or that a gun was held to his or her head. There is what is known as a “presumption” of undue influence if there is an existing relationship of trust and confidence. Trust and confidence lies at the very heart of any relationship between a manager and artist so that the presumption of undue influence immediately arises. If the court is to be persuaded to enforce a management contract then the presumption of undue influence has to be “rebutted”. There is an automatic assumption that the manager (often older, more experienced and more businesslike than the artist) is able to exert pressure on the artist to accept the terms of the contract in question. The only effective means by which to rebut the presumption of undue influence is for the manager to show that the artist was independently advised preferably by a lawyer with specialist knowledge of the music industry. This would normally be sufficient to enable the manager to show that there has been a genuine negotiation in relation to the terms of the contract and that its contents were properly understood by the artist or that at least the artist was given an opportunity fully to understand the implications.

2.2 Restraint of Trade

A management contract is usually exclusive in the sense that the artist may not permit any other person to represent him. This constitutes a restraint and thus most management contracts fall within the scope of the legal doctrine referred to as restraint of trade. This doctrine seeks to maintain a balance between the freedom of parties to contract upon such terms as they decide and the perceived ideal of free i.e. unrestrained trade. The court will enforce restrictions only if they are reasonable and only if they do not offend against public policy. The burden of proof in showing that any restriction is reasonable falls upon the person relying upon the restriction (a manager in the case of a management contract but these same principles also apply in the case of recording and publishing agreements which are dealt with later in this Guide). The test is whether the restriction only goes so far as to protect the legitimate interests of the party in whose favour it is granted and whether the restriction is justified as being in the interests of the party restrained, i.e. the artist. In applying this test, the court will consider the contract in the round. It will review all of the contract’s provisions and all of the surrounding circumstances. In practice, in the case of management contracts, a review of this kind will focus in particular on the duration of the agreement and the financial provisions. The UK courts have taken a particular interest in the application of those provisions under which a manager continues to earn commission even after the expiry of the management contract.