Types of contracts

The types of contracts customary in the German cultural sector are explained below.

Annotated model contracts have been provided for some contract types in the performing arts and the visual arts. These explain what needs to be considered when the contractual partners are headquartered in different countries. They are intended to serve as orientataion aids and should be adapted to the respective situation or customised to reflect the specific negotiations.
 

An artist contract is typically a contract between an organiser and an artist, a theatre company, an artists' collective, a band, an independent ensemble, etc. It is also referred to as an engagement contract, concert contract or guest performance contract and can either be a contract to produce a work (Section 631 BGB) or a service contract (Section 611 BGB).

Contract to produce a work (Werkvertrag)
In the case of a contract to produce a work, the contractor (i.e. usually the artist or creative) is obliged to create an individual work for the contractual partner and deliver it to him/her. In return, the artist or reative is owed compensation by the contractual partner after acceptance of the work. Works can be both material or immaterial, for example photographs, sculptures or choreographies. The most important characteristic of a contract to produce a work is the conditionality of the compensation on the successful creation of a work. Thus, the result is what is important rather than the process (for information about copyrighted rights of use, please see also the License agreement section below).

Service contract (Dienstvertrag)
In contrast to the contract to produce a work, the service contract focuses not on the result but on the service to be provided by the service provider (i.e. the artist or creative) to the client. In the case of a service contract, the client is obliged to compensate the artist for this service even if the service does not lead to the expected result. Service relationships in the context of service contracts usually end if the contract is cancelled or when the agreed contractual period has expired. The provision of a service is generally an independent activity, which is not subject to the instructions of the client.
This is different in the context of employment contracts (Arbeitsvertrag): As one typical example of a service contract, they are characterized by personal and economic dependency and an obligation to follow directives on the part of the employee (for information on the difference between self-employed people and employees bound by instructions, please see also Types of employment in Germany; for information about copyrighted rights of use, please refer to the License agreement section below).
Fixed fee contracts (Honorarvertrag) are also a form of service contract. These, in turn, are contracts with self-employed people or freelancers, in which the contractor agrees to provide a service and the client to pay a fee for this service. The contractor is responsible for the payment of any taxes and social security contributions. Upon conclusion of the contract, regulations concerning the time frame, value-added tax, possible travel expenses, material costs, notice periods etc., among others, must be observed (for information about copyrighted rights of use, please see also the License agreement section below).

Purchase contract (Kaufvertrag)
If an artist sells a work from his/her studio to a collector, this constitutes a purchase contract between the contracting parties. The buyer owes the purchase price, while the artist owes the delivery of the work.

An annotated purchase agreement in the field of visual arts can be found here.

License agreement (Nutzungsvertrag)
Artists and creatives are entitled to an inalienable copyright for their works. However, they may allow third parties to use their works.
It can be useful to integrate agreements on the rights of use into the other types of contracts described here. It is therefore not necessary to conclude a separate licensing agreement; agreements can be entered into in the form of mixed contracts between artists and their contractual partners.
However, within the music sector it is adviseable to conclude separate license agreements due to the complexity of the partial rights.
If the artist is a member of a collecting society, he/she may consult the collecting society before any transfer of rights.

Contributor agreement (Mitwirkenden Vertrag)
This form of agreement is a licence agreement, i.e. a contract for copyrighted use and/or for the use of ancillary copyrights and other property rights in the performance/collaboration/service or in the work within the context of film, TV, radio or audio-visual productions and documentaries.
The following uses may be permitted contractually: film production rights, broadcasting rights, the right to public presentation, video rights, editing rights, dubbing rights, database and telecommunications rights, sound carrier rights, merchandising rights, ancillary printing rights, advertising rights, archiving rights, title rights, format rights, etc.

Loan agreement (Leihvertrag)
Loan agreements are often concluded between artists and exhibitors within the framework of exhibition projects. Freedom of form generally applies in these cases too, but written contracts are recommended, especially if the contractual partners are located in different countries.
Loans are free of charge by definition – in contrast to leases. In the context of a loan agreement, the lender thus undertakes to provide the borrower with the use of an object free of charge (at the same time, a loan agreement may stipulate a fee-based transfer of rights for such use; see also Licence agreement above).
After termination of the contract by cancellation or upon expiry of the contractually agreed loan period, the borrower is obliged to return the item on loan to the lender. During the loan period, the borrower is entitled to use the item as stipulated contractually (and only in this manner!). The borrower may not, for example, pass it on to third parties without the permission of the lender or modify/alter the work unless this has been contractually agreed upon.
The lender must be reimbursed for any damage caused by the borrower unless it is due to regular wear and tear as associated with the type of use outlined in the contract. An extended liability clause may be considered so as to include all possible damage beyond statutory liability (see also Liability insurance).
The phrase ‘nail to nail’ is customary with regard to the liability of the borrower, whereby, for example, a painting is insured from the time it is taken down in the studio until it is hung up again after the exhibition, even during transport (see Property insurance). In view of the non-remuneration of a loan, the borrower (i.e. the exhibitor) should bear the cost of transport, insurance etc. This should be established in the contract. The insured value should also be specified.

An annotated ‘mixed loan agreement’ – i.e. a loan agreement which includes a commission clause in the event that the work is sold during the loan period – can be found here.

Transport agreement (Transportvertrag)
Transport agreements, which are concluded with professional transport companies, are governed primarily by commercial law at a national level. In the cultural sphere they relate, for example, to the transport of objects of art, stage equipment, instruments etc., i.e. objects which are moveable in the legal sense.
In addition to agreements on costs, deadlines etc., questions of liability in the event of damage are also relevant. In terms of insurance law, the liability amount is tied to the transport volume, among other things, which often results in relatively low compensation payments – unless intent or gross negligence on the part of the transport company can be proven.
In the case of small-scale transports, it will usually only be possible to negotiate the legal conditions to a limited extent, since hardly any transport company will be willing to change its general terms and conditions on the basis of a small order volume. It may therefore sometimes be worthwhile to take out additional insurance for valuable works of art or expensive equipment (see also Transport insurance).

It is not easy to prove that certain damage was incurred during transport, especially considering the hustle and bustle prior to an exhibition opening or a performance. Only condition reports, i.e. the documented condition prior to the transport and upon arrival, can help with this. However, creating such reports is not always feasible, especially if the objects are taken abroad. For this reason, great care should be taken to prevent damage, especially through proper packaging and loading (see also Transport and customs).

Lease agreement (Mietvertrag)             
Lease agreements regulate the temporary lease of movable or immovable property in exchange for a fee (also referred to as rent). Lease agreements for rooms, e.g. rehearsal rooms or studios, should always be concluded in writing. In the cultural sector, lease agreements are often concluded for commercial properties. A studio, for example, is considered a commercial property. In the case of lease agreements for commercial properties, there is usually greater freedom of contract than in the case of tenancy contracts. For example, the term of notice is often agreed upon at the time of conclusion of the contract. Therefore, relatively short notice periods are possible. If no deadline is agreed, the statutory notice period stipulated in § 580a II German Civil Code (BGB) applies: cancellation no later than the third working day of a calendar quarter taking effect from the end of the next calendar quarter. A fixed lease period may be agreed upon to avoid uncertainty; naturally, this is binding for both contracting parties.

Management contract (Managementvertrag)
With this contract, the artist generally exclusively transfers all career development tasks to the manager, insofar as these are connected with the perfomance of his/her artistic activities, and grants the manager power of attorney to negotiate and conclude guest performance, work, service, usage, rental, purchase or other necessary contracts and agreements. Furthermore, these types of contracts are used to grant the right to make and receive declarations in the name of the artist as well as to commission and authorise third parties at his/her expense to collect receivables owed to him/her in or out of court. See also the information provided by the Association for Pop Culture in Bavaria (Verband für Popkultur in Bayern e. V.) (only available in German).

Agency contract (Agenturvertrag)
The contract used by the artist to commission the agency to broker his/her services is referred to as the agency or booking contract. The agency receives a commission for its brokerage service, which is a percentage of the artist's fee.
The artist and the agency should agree on specific details in order to avoid disputes. Is the brokered performance contractually agreed upon between the organiser and the artist? If so, the legal obligation to pay contributions to the artists' social security fund (Künstlersozialkasse, KSK) lies with the organiser. Or is the brokered performance contractually agreed upon between the agency and the artist, in which case the legal obligation to pay contributions to the KSK lies with the agency? How high is the commission? How is it calculated in the case of fixed fees including travel expenses? How is the value added tax calculated on the agency's commission if the artist is not subject to sales tax? Net or gross? When must the artist pay the commission to the agency (e.g. immediately after the performance or only after the artist has received his/her fee)? Who bears the risk if the organiser does not pay? Is an exclusive agency contract being negotiated, according to which all bookings for the artist are made through the agency?

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