Artists often enter into contracts for the work they’ve done, for their performances, or for anything related to their artistic expression. However, when these contracts are violated, how does the Canadian law on contracts deal with such breaches? Find out more as we go over breach of contract in the entertainment industry.
Can artists sue or be sued for breach of contracts in Canada?
Contracts and agreements run the entertainment industry. These are important since they outline the rights and obligations of both the artists and the entities they deal with (e.g., managers, producers, distributors, advertisers, etc.).
However, when contracts are breached, Canadian law provides for remedies that either party can use to protect their rights and interests. This can result in consequences against the party who caused the breach of contract.
Under Canada’s law on contracts, a breach happens when a party to such contract – either intentionally or negligently – fails to fulfill their obligations as agreed in the contract. This breach can also be in violation of a specific term and condition that is written in the contract.
Case of a breach of entertainment contract
One of the actual cases for breach of contract was the lawsuit filed by Justin Bieber’s vocal producer, Chris “Tek” O'Ryan, against Scooter Braun, Bieber’s manager.
In 2022, O'Ryan filed a case against Braun in the County of Los Angeles, USA, on the allegations of breach of contract, promissory estoppel, and interference with the entertainment contract they’ve entered.
The lawsuit states that Braun and his company broke their 2018 contract, which entitled O'Ryan for “a point” or a percentage of the revenues of the songs that he helped Bieber produce.
O'Ryan further alleges that he was only informed that his entitlement to a point is only within Braun’s discretion and that he would not be receiving any royalties for the songs he helped produce.
As of this writing, the case has no official updates.
Read our article on recording contracts for more on agreements and deals in the music industry.
What are the grounds for suing for a breach of contract in Canada?
To prove breach of contracts in Canada, which includes entertainment contracts, the offended party or the plaintiff must establish the following elements:
- Valid contract: there must be a valid contract that is legally binding and is enforceable. This means that a contract must satisfy all the elements of a valid contract.
- Non-performance: that there was non-performance of the act agreed by the parties to the contract, or that there was a violation of its terms and conditions.
- No fault on the plaintiff: that the plaintiff has followed the contract or has been diligent in performing their own contractual obligations.
- Notice: that the plaintiff has notified or has informed the other party of the alleged breach of contract.
- Loss or damage: that because of the act or inaction of the other party, the offended party or the plaintiff suffered financial loss and/or non-economic damages.
Below are the elements of a valid contract in Canada, which is the very first thing to consider in determining whether there was a breach of contract:
- there was an offer, which was accepted by the offeree
- consideration
- legal capacity of the parties
- that the purpose of the contract is lawful
Watch this video to know more:
If you’re involved in a breach of contract, get in touch with an entertainment lawyer in your area. Those in Toronto or Ottawa can contact any of the Lexpert-Ranked best entertainment lawyers in Ontario.
Is breach of contract a crime in Canada?
Although a breach of contract usually results in a civil lawsuit, it rarely leads to criminal action.
Just the same, breach of contracts can be a crime under Canada’s Criminal Code. Section 422(1) of the Code says that a person can be guilty of criminal breach of contract if it results in:
- endangering another person’s life;
- causing serious bodily injury to another;
- exposing a valuable property to destruction or serious injury;
- deprives people of their access to light, power, gas, or water; or
- prevent the running of a common carrier.
This means that breaking an entertainment contract can only result in a criminal charge if it falls under the above-mentioned circumstances.
What are the penalties for breach of contracts in Canada?
The following are the possible outcomes in a civil lawsuit for a breach of entertainment contract:
- Specific performance: the guilty party will be compelled to execute an act (or be prohibited from doing so) as written in the entertainment contract; or
- Damages: the guilty party will be liable for damages, to be determined by the court which will base it on the contract, common law, and according to what is just; or
- Rescission: the contract will be rescinded or cancelled because of fraud, misrepresentation, mistake, incapacity, and undue influence.
Damages for breach of contracts
There are 3 types of damages that the court may award to the offended party or plaintiff in case of a breach of contract:
- Special or Pecuniary Damages: composed of the actual, financial, or economic losses suffered by the offended party. In an entertainment contract, this may refer to unrealized profits due to the breach.
- General or Non-pecuniary Damages: awarded to the offended party for their non-financial or non-economic losses. This may include the pain and suffering, or mental stress, brought by the breach.
- Liquidated Damages: damages awarded by the court following the contract’s terms and conditions. This applies when the contract provides for specific or estimated amounts that the violator may be held liable in case the contract was breached.
Canada’s common law has put a limit on the general damages that may be imposed. As of 2023, the maximum amount of general damages is capped at around C$450,000.
Non-compensatory damages may also be imposed by the court on the party who breached an entertainment contract:
- Punitive or exemplary damages: awarded by the court when the guilty party’s acts are too harsh or are malicious in nature.
- Aggravated damages: awarded by the court to compensate the plaintiff for the actual loss that they suffered.
- Nominal damages: a small amount awarded by a court to acknowledge that a legal wrong was committed against the plaintiff, even though there were no significant losses.
To hire a lawyer for breach of contract in the entertainment industry, reach out to any of the best entertainment lawyers in Canada as ranked by Lexpert.