Analysis of an Internal Group Contract

The Internal Group Contract - also known as an Interband Agreement -- between the members of a band is fundamentally important, but many musical groups ignore this crucial early step. When two or more people associate for the purpose doing business, they create a partnership in the eyes of the law, and general partnership law applies to the association unless a written agreement states otherwise. General partnership law provides, among other things, that all partners equally own partnership property and share in profits and losses; that any partner can bind the partnership; and that each partner is fully liable for the debts of the partnership. In the case of most musical groups, a written agreement setting forth the arrangement between the group members as partners is preferable to general partnership law.

A Group Contract can address issues such as who owns the group name (and whether and in what capacity a leaving member can use the group name), who owns what property (including not only sound equipment but intangible property such as recording agreements, and intellectual property such as the songs and the recordings created by the group), and how profits and losses are divided. Since it almost goes without saying that members of a band inevitably leave and groups inevitably disband, it is important to structure an inter-band agreement in the early stages of a career. Once an interband agreement is created, it will function like a prenuptial agreement when matters start to disintegrate and help make the break-up process less painful.

Some bands may deal with this agreement among themselves, while other bands may have their lawyer prepare a basic interband agreement. If it is a fairly equal partnership where all members are writing and performing and sharing equally, it is a fairly simple process. However, in those instances where some members are songwriters and others are not, and where one member claims ownership in the name or another makes significantly larger financial contributions than the others, it can become a complicated process. If the band cannot work it out among themselves, they can either sign a conflict waiver permitting the group''s attorney to act solely as scribe (a term that means just putting the words on paper) and not as advisor, or each member of the group may need to get his or her own lawyer to protect each respective member''s interests.

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