Another essential point that needs to be corrected is the “term” that the artist is signed by the manager. The typical language that describes the term and options is the term below: term – The duration of this agreement will be for an initial period (1) from the date of the agreement (the “first contractual period”) plus the additional “contractual periods” that may be extended by the exercise of one or more of the options granted to the manager below. A typical duration of management agreements can only take 1 or 2 years. But it can be as long as five or six years, or even longer. The terms of an agreement are traditionally structured by a minimum year, followed by several options for additional years. Sometimes the term is based on “album cycles” and not on certain calendar years. In this situation, the term begins with the beginning of the recording of the album and lasts until the end of the tour or the associated promotional activities for that album. In the end, this period could be longer than a calendar year. As in the language above, options are usually exercised automatically by the manager. This gives the manager the right to terminate the contract by notifying the artist. Other possible restrictions for the duration of the agreement could be that if the artist does not earn a certain amount within a certain period of time, then the artist is free to terminate the contract. If this option is selected, a manager should ensure that all offers that the artist rejects as well as accepted offers are included in this total amount. This protects the manager, because an artist cannot reject valid offers to reduce earned income to get out of the contract.
Conversely, an artist should insist that, in order to rely on this minimum, an offer must be similar to what the artist had previously accepted. This prevents a manager from submitting only nominal or unsatisfactory offers in order to further expand the administrative agreement. If they do nothing, the option is exercised and the agreement continues. Ultimately, this is a point that should be negotiated between the parties, since the agreement may require mutual consent to exercise an option, or that it may contain a determined milestone to allow for an option (i.e., the artist must earn US$10,000 for one year to exercise the option or obtain a registration/distribution agreement). A “Sunset” clause is used to reduce an officer`s commission in the years following the expiry of the management contract. This clause reduces the percentage that the artist owes to the manager over time and ends up completely eliminating this obligation.