General Principles of Contracts series, (Part 1) Introduction to contracts

Over the next eight weeks, the Music Matters site aims to publish a series of articles that cover the General principles that pertain to contracts.

The law of contracts is an enormous and highly-specialised branch of law that post-graduate students study in detail for several years. The intention behind this series of articles is therefore not an attempt to make you into an expert in contract law, but to give you a basic understanding of contracts in general so that you can understand the specialised contracts dealt with in the music business. Some of it might sound strange or irrelevant to begin with, but everything covered in this series is necessary for you to understand music contracts, and will protect you.

Because much of the author's background in the law is as it pertains to the South African legal system; the basis of the content covered in this series will be from that perspective. The law controls relationships in society and enforced by the state. Legal and moral rules often overlap, but are not the same, since the state makes and enforces legal rules but not moral rules.

The South African legal system originated from Roman-Dutch law and English law. Customary law - the traditional law of indigenous people - has developed parallel to common law. The main sources of South African law are as follows:

i) the most powerful source of law is legislation, which is passed by legislatures and recorded in statute books. The constitution is the supreme law (legislation) passed by Parliament.

ii) the traditional legal rules of a particular indigenous group make up customary law. To be binding they must meet certain requirements.

iii) Common law is the body of law that has developed over time on the foundation of the inherited Roman-Dutch and English law. Both common law and customary law may be found in judgments, academic textbooks or journals.

iv) Judicial precedent is judge-made law from superior courts and is recorded in published law reports.

v) foreign law - the law of other countries. vi) International law - law that operates worldwide, by agreement among countries. vii) Textbooks and other legal academic writings are also a source of law.

Essentially the law can be divided into two bodies: Public law and Private law. Public law governs the relationship between the State and the individual. The most important branch of Public law is Criminal law. The purpose of Criminal law is punishment, and the two parties in a criminal case are called "The State (or Prosection) and the Accused" (which can be natural persons or juristic persons).

The parties in a Private law case are called "Plaintiff and Defendant" or "Applicant and Respondent", depending on the procedural nature of the case. The Law of Contract is part of Private Law. There is another branch of Private Law called Delict, which deals with "civil wrongs" which are negligent or intentional unlawful acts, causing harm or loss, committed between persons (and are not, for our purposes, classified as breaches of contract). The same set of facts can be both a delict and a crime, and therefore give rise to a civil case and a criminal case.

The most important word in the music business is not "music", it is also not "money", it is "contract". The music business would, quite simply, not be able to operate and probably would not exist, without contracts. The three most common music industry contracts, would be namely; recording contracts, publishing agreements and artist/management agreements.

However in order to properly understand music (and all other) contracts, it is necessary for you to learn the general principles applicable to the formation of a contract. As with all legal topics, please remember that there are general rules, and exceptions to those rules.

Definition

A good definition of a contract is: "a legally binding agreement between two or more parties, written, oral or flowing from conduct, by which at least one of them promises to give, to do or to refrain from doing something (the terms)."

Only when a valid contract has been formed, do legal consequences occur (e.g. only then, can one party sue the other for breach of contract, for damages or to force them to perform as agreed.) While the definition is a good summary, it does not describe all the components of a contract, so we need to break the definition down into more detailed elements. Please note that most agreements do not have to be in writing to be binding. A valid contract still exists in law (in most cases) when entered into verbally or even by conduct.

Requirements for the formation of a binding agreement;

i) Consensus

ii) Capacity

iii) Physical Possibility

iv) Legal Possibility

v) Formalities

and over the coming several weeks, we will go into greater detail regarding each of these requirements.