From Marilyn Manson to The Go-Go's, ex-band members can and do sue the band for a variety of reasons. A band partnership agreement can protect the band from various potential ugly situations and expensive legal battles.
For example, in 1990, Guns 'N' Roses had an issue with their drummer Steven Adler. Adler's live performance was impaired. Adler contended that it was due to an opiate-blocking drug, Slash thought Adler couldn't kick it anymore. Either way, Guns 'N' Roses wanted Adler out and had no way to expel him from the band.
Adler was given a pile of papers to sign and was told that they were for one purpose, when they were actually for another. The papers terminated Adler's partnership interest in the band in exchange for a lump sum settlement. Later, Slash testified that Adler was strung out on heroin when he signed the termination agreement. Adler sued the band claiming that he did not have the mental capacity to sign the termination agreement when he did. To avoid a legal dispute, in 1993, Guns 'N' Roses paid Adler $2.5 million plus a 15 per cent royalty on everything he recorded prior to leaving the band.
The situation may have been avoided if Guns 'N' Roses had a partnership agreement that described under what circumstance(s) a band member can be expelled, and how income would be distributed to expelled band members.
A band partnership agreement is relevant regardless of your band structure and should include the following salient points:
It is important to delineate how profits and losses are shared. It is common for band members to share equally in net profits and equally in losses. Sometimes this can vary depending on band structure, especially if one member contributes more than others.
In the agreement you should address what occurs when a band member leaves the partnership. A leaving member can receive an interest on activities that s/he participated in while a band member, but should not receive an interest in any future activities of the band.
Voting is an important and fair way for bands to make decisions. You should list the type of issues that band members can vote on and whether the issues will be decided by unanimous or majority vote.
In the event that the band disbands, you should address how income, debts, band property, and future income are distributed.
You should treat your band like a business. Assume that there will be disputes or disagreements between your band mates. A band partnership agreement is a professional way to resolve potential disputes or disagreements before they erupt and affect your band. Also, keep in mind there may be a business structure, other than a partnership, that could be better suited to your band's needs. Consult a lawyer or business professional to see what your options are.
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