An Oral Contract is as legally binding as a Written Contract, the issue with an Oral Contract is in proving its existence. To begin, the existence of a Written Contract is fairly obvious, either there is a writing or there isn’t. An oral contract, by definition, does not have a writing to support its terms, conditions or even existence. So how can we prove that it exists? One way is to use witness testimony. If A and B enter into an oral agreement, and C and D are present at the time the oral contract is made, C and D can be used to prove the existence of the oral contract. Their testimony that they heard the terms of the agreement will be sufficient to prove the existence of an Oral Contract.

Course of Conduct is another way to prove the existence of an oral contract. Let’s assume that X offers to buy a radio from Y for $50. Y accepts and hands the radio to X, who then gives Y $50. The parties’ course of conduct indicates that an oral contract existed. If the radio were defective, or if Y changed his mind, he could not say that a contract did not exist. Another example of Course of Conduct would be your typical neighborhood newspaper delivery. For the most part, the newspaper boy delivers a newspaper to you and you pay him on a weekly basis. There is rarely a written agreement with the newspaper boy to deliver newspapers. You simply tell him, “please deliver a paper to me, and I will pay you”. If the newspaper boy delivers newspapers to you for a few week, and you pay him, an oral contract exists based upon the parties course of conduct. After this time, if the papers are delivered and then you refuse to pay, you cannot allege that there is no contract. The Course of Conduct indicates that an Oral Contract exists.

Credibility of the parties is another factor in proving the existence of an Oral Contract. Suppose that Patron walks into a local restaurant and orders a plate of spaghetti. When Patron orders the spaghetti, an offer is made by Patron to pay for a plate of spaghetti. When the server brings the spaghetti to Patron, an Acceptance occurs and a binding oral contract is made. Credibility comes into play where the Patron then refuses to pay for spaghetti, saying “I never agreed to pay for this, I thought it was free”. All of you can see that is an incredible statement. Should that type of matter go to court, a judge would look at the credibility of the parties in regard to the situation and likely find that an oral contract was formed. If you reconsider the spaghetti scenario, though, you can see where an oral contract would be just as legally binding as a written contract. If a lawsuit were to arise out of the patron’s failure to pay, any court in the land would find the existence of the oral contract based upon credibility.

The existence of an oral contract can be more difficult to prove in a different type of scenario. Imagine a scenario with P and Q. P and Q are complete strangers. P approached Q and offers to buy a Corvette from Q for $1,000. Q laughs, and says “sure”, then drives away in the Corvette. If P attempts to enforce what he feels is a binding oral agreement, will he succeed? He will have a very difficult time proving that a contract exists. There is no writing to show the agreement. There is no prior course of dealing between the parties. There were no other witnesses to this alleged conversation. Credibility becomes an issue here, along with believe-ability.

As you can see, the difficulty in enforcement of an oral contract lies in the parties' ability to prove what the terms of the contract were. Absent proof of the terms of the contract, a party may be unable to enforce what it believes to be a firm contract. Evidence, such as witness testimony, prior dealing of the parties, course of conduct and credibility of the parties are some factors that may play into the enforcement of an oral contract. If sufficient evidence can be established that the parties orally entered into a contract, the terms of that contract will be enforced. If the proof is strong, then an oral contract is just as binding as a written one. The question at hand lies with the sufficiency of that oral evidence.

By: Greg Artim
Greg Artim is an Attorney based in Pittsburgh Pennsylvania. For more information on related legal issues, please visit his website at http://www.gregartim.com.

Featured by Resources For Attorneys.

Let’s start with basic contract law. In order to have a Contract, there must first be an Offer. The “Offer” can be an offer for a good or a service or almost anything else for that matter. In Example 1, A offers to by a car from B for $1,000. In example 2, X says to Z “If you pay me $50 I will paint that room”. Clearly both of those statements are Offers. For the most part, the Offer will be along the lines of someone promising to do something, buy something or give up something.

The next step in Contract formation is called an Acceptance. The Acceptance regarding the above scenarios would be B’s reply “Yes, I will sell you my car for $1,000" or Z’s reply “Yes, I will pay you $50 to paint the room”. Take note that a Counter-Offer will not act as an Acceptance, but rather as a Rejection. Referring to the above scenarios, B says “I will sell you my car for $1,200 instead of $1,000". This is a rejection of the initial offer, and becomes a Counter - Offer to A. A must now choose to Accept or Reject B’s Counter - Offer. If A rejects the Counter - Offer, the Original Offer is no longer on the table. The process must begin again.

The third aspect of Contract formation is called Consideration. Consideration means that something of value must be exchanged. The Consideration in the car scenario for A would be receiving the car. The Consideration for B would be receiving the $1,000. Consideration in a Contract must be mutual, that is, both parties must receive something of value. Take note, that the value need not be equal or necessarily fair. A can offer to buy B’s new Corvette for $1,000. If B Accepts, then a Contract will be made, even though it should be obvious that this is not a fair deal. That sums up Basic Contract Principles.

By: Greg Artim
Greg Artim is an Attorney with offices located in Pittsburgh, Pennsylvania. For more answers to your Contracts or other legal questions, please visit his website at http://www.gregartim.com/contracts.htm.

Featured by Resources For Attorneys, a legal services and lifestyle portal.

For more law articles see Legal Articles.

Need a laugh, visit Lawyer Jokes from Resources For Attorneys. For jokes and humor on other subject matter check out the Jokes index.

Comments: For those of you that would like to comment on this or any other post in this blog, go to the Contact me link on the upper right hand side of this page and send your comment via that link. If your comment is on topic, and even fairly well written, we will post it with the article. If you have a site that you would like to be linked to your comment please supply it and we will include that link.

QUICK LESSON IN BREACH OF CONTRACT

This quick summary is being sent as a memorandum to help other attorneys in understanding what a breach of contract is. Please continue to contact us with your questions or issues. This analysis is what we use in our offices when we approach any breach of contract case. The elements for breach of contract are strictly construed. It is imperative that you do not skirt around the elements when analyzing your client's case.

ELEMENTS OF A BREACH OF CONTRACT

1) INITIAL INFORMATION
In a breach of contract action, the plaintiff must plead the existence of a contract and its terms that establish the obligation at issue. The complaint must indicate on its face whether the contract is written, oral, or implied by conduct. If the action is based on an alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint, or a copy of the written contract must be attached to the complaint and incorporated by reference.

2) PLAINTIFF’S PERFORMANCE OR EXCUSE FOR NON-PERFORMANCE
The plaintiff must prove that he has fulfilled his obligations and complied with any and all conditions and agreements of the contract that he is required to perform. If plaintiff was unable to perform because defendant prevented him from doing so, plaintiff must allege such excuse for non-performance in the complaint.

3) DEFENDANT’S BREACH
A breach is defined as defendant’s unjustified or unexcused failure to perform. BAJI 10.85(3). The plaintiff must plead the facts constituting the breach in unequivocal language.

4) RESULTING DAMAGE
Any breach, total or partial, which causes a measurable injury, gives the injured party a right to compensatory damages.

SO WHAT HAPPENS WHEN YOU CAN PROVE THE ABOVE ELEMENT AND IT CAN BE CONCLUDED THAT THERE IS A BREACH OF CONTRACT?

Answer:
Generally, Compensatory Damages - the measure of damages for breach of contract is the amount which will compensate plaintiff for all detriment proximately caused by the breach or which, in the ordinary course of things, would be likely to result from the breach.

Other factors that need to be considered are:
• Certainty - damages must be clearly ascertainable in both nature and origin; but the fact that amount of damage is not susceptible of exact proof or is uncertain, contingent, or difficult to ascertain does not in and of itself bar recovery.
• Restoration - damages for breach of contract ordinarily include all amounts necessary to place plaintiff in same position as if breach had not occurred.
• Lost Profits - Note future profits can be recovered to extent they can be estimated with reasonable certainty; lost profits are recoverable to extent they are natural and the direct consequence of the breach.
• Rescission and Restitution - rescission and restitution are alternative remedies in action for damages where there has been repudiation or material breach of a contract, transfer of unique goods is involved, other remedies are inadequate, subject of contract still exists and interests of innocent purchasers for value and defendant’s creditors will not be unjustly affected.
• Specific Performance - Note: specific performance is granted only when money damages are inadequate.
• Real Property - specific performance is given in land sale contracts on the assumption that every piece of property is unique and money damages are therefore inadequate.
• Injunction (Very Limited Availability) - injunctive relief is largely within discretion of the trial court, considering inadequacy of damages to plaintiff, as well as harm to defendant.

By: Paul Cheng
The Law Offices of Paul P. Cheng is a full service firm with its main location in Pasadena, California. Paul Cheng is a master communicator and has lectured to thousands of individuals in many different areas of the law. His goal is to empower the public by giving them the basic legal knowledge to achieve their goals. To be placed on the e-blast for future lectures and exclusive offers email: paulchenglaw@aol.com To find out more about the Law Offices of Paul P. Cheng go to http://www.paulchenglaw.com.

Featured by Resources For Attorneys, a legal resources and lifestyle resources portal.

For more law articles see Legal Articles.

Need a laugh, visit Lawyer Jokes from Resources For Attorneys. For jokes and humor on other subject matter check out the Jokes index.

Comments: For those of you that would like to comment on this or any other post in this blog, go to the Contact me link on the upper right hand side of this page and send your comment via that link. If your comment is on topic, and even fairly well written, we will post it with the article. If you have a site that you would like to be linked to your comment please supply it and we will include that link.

In a nod to the rare occasion where a band, label, or curious web browsing fan ask about issues involved in recording contracts, here is a quick list of common things to look for in standard recording contracts (the often glossed-over but very important ones first):

1) Indemnification - If you are an artist who uses samples of other songs in your work (particularly in hip-hop or electronica), or a label who signs such artists, there generally will be/should be a clause in which the artist agrees to indemnify the record company from third-party claims that any tracks produced under the contract violate the rights of those third parties. Indemnification, basically, is the agreement to protect the other party to the contract from financial loss by taking financial responsibility for any liability issues that might arise. Liability is not being passed off, but the cost of that liability.

What this means for artists is, if you sample, clear the samples before submitting masters. Otherwise, you are on the hook if P-Funk comes down on you for ripping off even the most infinitesimal portion of a song (maybe we'll cover sampling in another article). Labels, if you've signed an artist and have such an indemnification provision, you still might be on the hook if your artist cannot financially uphold the agreement to indemnify. You might consider requiring proof that all samples are cleared before accepting masters.

2) Arbitration - More and more, contracts are devised to avoid expensive litigation from the get-go by language binding the parties to arbitration (also known as alternative dispute resolution). Arbitration provisions allow both sides to avoid judges and juries altogether by agreeing to have a private arbitrator handle any disputes that can't be handled like civil women and men. To learn more about arbitration, visit the American Arbitration Association. Ironically, arbitration is getting more and more expensive, too. However, it still tends to move much faster than filing suit in court.

3) Attorney's Fees - Lawyers are expensive (unless they are taking your case free, or as legal heads call it, pro bono). In general, the law does not by default allow the winning party to receive their legal fees from the other side. A clause that provides that the prevailing party is entitled to attorney's fees from the unsuccessful party (a nice way of saying winner and loser) is much more likely to allow attorney's fees to be recovered. Whether you are the artist or the label, this language might prevent litigation altogether, because it is more likely to quell frivolous or iffy claims where a party is afraid they may lose.

4) Joint and Several Liability - Labels want bands to sign the contract "jointly and severally", meaning that instead of the band signing the contract, each member is signing as an individual party to the contract with the label. So artists, if your band breaks up, each of you is on the hook for following through on the agreement. If one of you wants to take off to start a zydeco project, the label is coming with you.

Moving to the more commonly asked-about (and equally important) issues:

5) Exclusivity - This is pretty easy. Artists, labels tend to require that you make records for that label only. Sure, you might make a guest appearance on a record by another label's artist, but your label will get credited as giving permission for that, and probably get a chunk of change in the form of a royalty, too. This is a provision that binds up artistic freedom, but you might see it as a necessary evil (unless you're following the Music 2.0 model either as a self-publishing artist or have a really hip label). Labels, you might lose some artists over this, but it's a business call. Do you want to pump money into creating an album just for an artist to go flocking to another label at his/her/their leisure?

6) Copyright - Quick and dirty, as this subject is cumbersome in its own right. Copyrights come in two forms: (a) the musical composition (the song itself), and (b) the sound recording (the recorded track). Artists, you (or your publishing company) will customarily keep the rights to the composition. Labels, you generally take the sound recording. This gives the label the right to manufacture, distribute, and sell records of the recording, and to license the recording. Take a wild guess where the real potential for profit is: the composition or the recording? Hint: The sound recording is on the CD.

7) Money - Financing recordings is another complex area. Basically, the label is the bank, fronting the money for the record. The label recoups from the artists' sales. Artists, you receive a royalty for sales (another complex area). Labels, you get the rest of the sales.

8) Touring - Very important for indies, but a very different issue from deal to deal. Chances are, if you are an indie, you're going to be on your own here concerning funds.

9) Promotion - Artists are likely to be bound to promote their record (why wouldn't you? Maybe because you hate your label and have just created a pile of crap for an album). But you're trying to get a contract, not get out, right?

So these are common things that come up in contracts. Look for them, and think about what you want to agree to and what you don't. This goes for artists and labels alike. You both have bargaining power, because you both have things to offer that the other wants. Be reasonable, but be firm. And don't be afraid to walk away if you are not feeling good about the other side or the terms of the deal.

NOTE/DISCLAIMER: This article is not legal advice. It is important to note that devising and interpreting these provisions is not for indie DIY types. You should consult with your attorney before, not after, you negotiate and sign a contract. This information is general in nature, not legal advice and not warranted or guaranteed. Readers are strongly advised not to rely on this information. Because laws change over time and in different jurisdictions, it is imperative that you consult an attorney in your area regarding legal matters and an accountant regarding tax matters.

By: Barrett King
Barrett King is an attorney in Baltimore, Maryland. He writes a music blog catering to popular music tastes and independent music at http://www.anygiventuesday.info.

Featured by Resources For Attorneys, a legal resources and lifestyle information portal.

For more law articles see Legal Articles.

Need a laugh, visit Lawyer Jokes from Resources For Attorneys.

Comments: For those of you that would like to comment on this or any other post in this blog, go to the Contact me link on the upper right hand side of this page and send your comment via that link. If your comment is on topic, and even fairly well written, we will post it with the article. If you have a site that you would like to be linked to your comment please supply it and we will include that link.