Contract law basics

Concluding contracts, form, content and termination

When is a contract concluded?

Not every performing arts commission is based on formal contract negotiations and a written contract. Often, only text messages are exchanged or meetings are held in cantinas. Binding contracts may also be concluded this way and establish fee claims.

There are 2 legal requirements for the conclusion of a contract:

  • An offer of the minimum content of the points of the contract (offer and consideration, ‘essentialia negotii’)
  • Acceptance and mutuality of the parties
Ein Vertrag ist abgeschlossen, wenn die Kernpunkte der Vereinbarung klar sind und beide zugestimmt haben
© Grafik: Panatom

Which points must be included depends on the type of contract. For example, a purchase contract must specify the purchased item and the price. A service contract must state the form and time of service and payment.

A contract on participation in a performance must include at least 3 points: the time or period, the fee and the service. Otherwise, a contract won’t be concluded.

The conclusion of a contract also requires one party to make and the other to accept an offer.

The other party may also make a counteroffer which the first party accepts, ‘Let’s say EUR 1,200 for rehearsals? Then I’ll do it!’ – ‘Okay, deal!’

The main points of the agreement must be clear.

1. Offer: Time, fee, service

Chat message:
Dear B., I would like you to be in my new play. The play will be performed at Mauerpark on May 15/16/17. Rehearsals will last the entire prior 2 weeks. Fee of EUR 1,000 for the 2 weeks of rehearsals and EUR 500 per performance. Hope to see you there!

2. Clear acceptance

Chat message:
Yes, I have time! Looking forward too!

 

►►► Result: contract concluded


 

Chat message (request):

Dear B, I am planning a new play which will probably be performed in May. Are you free the first 3 weeks of May?

Chat message (reply):

Yes, I have time!

 

►►► No contract concluded yet, no fee agreed!

What form does a contract need?

A service or work contract does not have to be concluded in written form to be enforceable. It may also be concluded orally, by email or tacitly (‘implicitly’).

However, there are exceptions. For example, only written employment contracts with employees are enforceable. Written form is also required by the Standard Stage Agreement (collective agreement for theatres of the Artists’ Association).

If contracts are only concluded in text form (e.g. text message), orally or tacitly, there is usually no evidence of the conclusion or conditions of the contract. This makes it difficult to enforce contractual claims, such as payment of a cancelation fee in case of cancelation. It is therefore important to document contractual agreements through confirmation letters.

Questions and answers:

  • Secretly recording contract negotiations is a personal rights violation. It is better to send the other party a short summary of the results by email and ask for confirmation. This allows you to relax while waiting for the written contract.

    Secretly recording contract negotiations is a personal rights violation. It is better to send the other party a short summary of the results by email and ask for confirmation. This allows you to relax while waiting for the written contract.

Content control of written contracts

If you have a written contract document, its provisions, e.g. about the fee, dates, rehearsal times, termination and copyright, apply.

However, contracts that repeatedly use standard phrases are subject to the content control of general terms and conditions Section 307 et seq. of the German Civil Code [Bürgerliches Gesetzbuch (BGB)]: Provisions may not ‘unreasonably disadvantage’ the other party and must be ‘clear and comprehensible’. Otherwise, they are ineffective and legal requirements apply instead of the written provisions.

Example:

If a service contract for a single day includes a standard clause about ordinary termination by the principal, this provision will be ineffective.

How are termination and copyrights handled without contractual provisions?

Written contracts in theatre usually include clauses about termination and rights of use. However, as stated above, these may be ineffective. In other cases, a contract may only be concluded orally or by email and say nothing about termination or rights of use. What applies then?

Without an explicit or effective agreement, legal requirements apply. For termination, liability and damages, these are the requirements of the German Civil Code [Bürgerlichen Gesetzbuch (BGB)] and, for copyright, of the German Act on Copyright and Related Rights [Urheberrechtsgesetz (UrhG)].

This isn’t necessarily disadvantageous: in many cases, the provisions of the German Civil Code provide a good balance of both parties’ interests and the German Act on Copyright and Related Rights is often better at protecting creators than they realize.


 

Unterschied zwischen Werkvertrag (Schaffung eines Werkes) und Dienstvertrag (Eine Tätigkeit verrichten).
© Grafik: Panatom

In a service contract, the performance of a service is owed. In a temporary service contract, the period must be specified. Service contracts are normally used to hire performers, such as musicians or dancers.

In a work contract, the contracting parties owe the creation of a work. Work contracts are normally concluded with directors, set designers or script writers.

►►► Neither party should be concerned about whether a contract is classified as a service or work contract.

Where can I find written contracts?

For uncomplicated cases, samples are available on the Internet, e.g. from chambers of commerce and industry, such as the Frankfurt am Main Chamber of Commerce and Industry. However, such sample contracts often lack industry-specific provisions, e.g. on rights of use or funding conditions.

Sample contracts for performing arts are provided by Touring Artists and Stefan Kuntz’s ‘Survival Kit‘ (fee-based).

Copyright: Which rights were granted?

In contracts without clear copyright provisions, rights are only granted or transferred where necessary for the performance of the contract.

What matters is what you were contracted for. It is therefore in the principal’s interest to specify the purpose and term of the contract.

Examples:

Only granting or transferring rights necessary for contract performance

  • A contract with a director was only concluded via messenger and does not have a copyright clause. Can the work you directed be performed without separate permission? Yes, because its performance was the purpose of the contract. By concluding the contract, the director tacitly agreed to grant the necessary rights. However, this may not apply to subsequent performances 3 years later.
  • A contract with a performer is also concluded via messenger. Does the performer have to be asked for permission to stream a recording of the play after it has been performed? Yes, because the purpose of the contract was the performance of the play and does not include further use, such as streams. However, this may not apply if the stream was communicated in advance.

Termination: Can both parties terminate a contract?

The termination options offered by law differ for temporary service contracts and work contracts. However, without an effective provision, neither contract may be terminated without fee claims, e.g. in case of cancelation.

  • A temporary service contract cannot be terminated ordinarily unless agreed otherwise. Cancelation of a performance will result in default of acceptance (Section 615 of the German Civil Code). Nonetheless, the performer will be entitled to the fee.
  • Work contracts can always be terminated. However, the parties will be entitled to part of the fee (Section 648 of the German Civil Code).
    In both cases, the costs saved, e.g. covered travel costs, must be deducted from the (partial) fee. Fee claims may also not be established in case of impossibility of a performance.

In both cases, the costs saved, e.g. covered travel costs, must be deducted from the (partial) fee. Fee claims may also not be established in case of impossibility of a performance.

Questions and answers:

  • There is temporary, legal and actual impossibility. An example of legal impossibility is if a performance is prohibited by the authorities. An example of actual impossibility is if several main actors miss their flight and the play cannot be performed. Responsibility and compensation obligations will be relevant later.

    There is temporary, legal and actual impossibility. An example of legal impossibility is if a performance is prohibited by the authorities. An example of actual impossibility is if several main actors miss their flight and the play cannot be performed. Responsibility and compensation obligations will be relevant later.

  • Agreement means nothing other than a contract. In addition to legally defined contract types, such as service contracts, work contracts or purchase contracts, there are also customary industry terms, such ‘event contracts’. These are not legally defined. An event contract may be both a service contract and a work contract. A project contract is usually a temporary service contract. These terms may be used if it is clear how they are understood in the industry. To be certain, an agreement should be explicitly called a service or work contract.

    Agreement means nothing other than a contract. In addition to legally defined contract types, such as service contracts, work contracts or purchase contracts, there are also customary industry terms, such ‘event contracts’. These are not legally defined. An event contract may be both a service contract and a work contract. A project contract is usually a temporary service contract. These terms may be used if it is clear how they are understood in the industry. To be certain, an agreement should be explicitly called a service or work contract.

  • The difference between a co-production contract, cooperation contract and a guest performance contract is not defined by law, but by the German Federal Association of Independent Performing Arts: in a guest performance contract, the production has already been completed. This is not the case in a co-production contract in which both parties contribute to its completion.

    The difference between a co-production contract, cooperation contract and a guest performance contract is not defined by law, but by the German Federal Association of Independent Performing Arts: in a guest performance contract, the production has already been completed. This is not the case in a co-production contract in which both parties contribute to its completion.

  • These forms of compensation are common, but not required. As long as the period or working time are approximate, a flat rate of EUR 2,000 may also be paid for 3 weeks of rehearsals under a service contract. In a work contract, the amount of time expended does not affect the fee which is paid for the contractor’s ‘risk’.

    These forms of compensation are common, but not required. As long as the period or working time are approximate, a flat rate of EUR 2,000 may also be paid for 3 weeks of rehearsals under a service contract. In a work contract, the amount of time expended does not affect the fee which is paid for the contractor’s ‘risk’.

  • No, for a flat rate under a temporary service contract, the contracting party only needs to know how long the work will take so that the amount can be calculated from an hourly fee per unit of time. An approximation, such as ‘EUR 2,000 for 3 weeks of rehearsals roughly 4 days per week’, suffices. This is also recommended by the Minimum Fee Application of the German Federal Association of Independent Performing Arts.

    No, for a flat rate under a temporary service contract, the contracting party only needs to know how long the work will take so that the amount can be calculated from an hourly fee per unit of time. An approximation, such as ‘EUR 2,000 for 3 weeks of rehearsals roughly 4 days per week’, suffices. This is also recommended by the Minimum Fee Application of the German Federal Association of Independent Performing Arts.