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Legal Eagle


D Michael Rose

Q: How can an agent stop their act being poached?

I have been asked to act as manager to a promising young artist. What guarantees can I seek to ensure he will not be poached in a couple of years by a big London firm after I have devoted my time, work and money to him? I have been told that I would be guilty of restrictive practice if I made him sign a contract longer than three to four years.

A: It is all a question of reasonableness and balanced judgement as to where the boundary line of enforceability is to be drawn. The court has jurisdiction to declare a contract unenforceable as being in restraint of trade. It also has equitable jurisdiction to grant relief in certain circumstances against unfair and unconscionable bargains, such as where advantage is taken of a young, inexperienced or ignorant person to introduce restrictions which no sensible well advised person or party would have accepted.

There may well have been a case such as you suggest between a manager and a performing artist where a contract longer than three to four years was held to be in restraint of trade or unconscionable, but there is no hard and fast rule to that effect, and each case must be judged on its own facts.

The court in considering such matters has to balance unreasonable restraint of trade against unreasonable restraint of freedom of contract. Inequality of bargaining power is a very important factor, and I would therefore advise you to make sure that the artist concerned obtains advice of a specialist lawyer with particular expertise in matters of this kind before signing the contract with you. This will still not guarantee enforceability but it is the best form of protection you can obtain, because in such cases the court is far more reluctant to interfere with the freely negotiated contract between the parties.

It is also desirable not to use a standard from of pre-prepared contract, but instead to use one which appears to be specially drafted for the particular circumstances of your particular case. It is also desirable when submitting a draft contract for approval by the artist or his advisers not to adopt a 'take it or leave it attitude' but to show yourself prepared to negotiate on reasonable objections to particular clauses.

Another important factor in balancing the justifiable aspirations of the parties is the custom and practice of the industry in relation to similar contracts and the commercial reasons by which such custom and practice are sought to he justified. Factors of this kind were examined in detail by the court in the recent George Michael case in which the judge accepted evidence to the effect that "considerable investments of money, time, people and energy are called for to produce a successful artist and then to foster and maintain his or her career (so) that only with the security of long term exclusive contracts does it become commercially viable for major record companies to make the necessary investments in artists, although this does not mean that recording agreements may be of limitless duration."

In the Michael case an overall time limit of 15 years on the term of the agreement was upheld but I stress that the case turned on its special facts which are unlikely to apply in your case.

Finally, it is possible that agreements of the kind which you mention may be challenged under European law prohibiting practices affecting trade between member states which have as their object or effect the prevention, restriction or distortion of competition within the common market. Again it is a matter of balanced judgement and the custom and practice with similar contracts within the European Union as to what is likely to be regarded as overstepping the mark in any particular case.

In any event, if you adopt the suggestions I have made above you will be far less vulnerable to successful challenge than would otherwise be the case.

First published May 1995