Breach of Licensing Agreements
11-24-09
When there is a breach of a Licensing Agreement this causes a conflict between the Licensor and Licensee. Problems of this nature are usually due to the Licensee not living up to the full agreement in some way. Rarely is it the fault of the Licensor (who really just wants to earn income on their Property the Licensee wants to utilize.
If the Licensee is not able to correct the problem within an agreed upon time frame (usually stated in the Agreement), then a material breach has been made and the Licensor may take legal action to either have the Licensee correct the breach or have the licensing contract terminated.
What needs to be done is ensure that in the licensing contract there are clauses that plainly state what consequences will happen if – a, b or c breach is not corrected within a clearly defined time period. This way it is evident to all parties involved what will happen and it helps judges overseeing court cases make good, quick decisions and fair compensation settlements during the legal process.
The other way to solve this matter is to have the Licensee agree that all the possible breaches, even minor ones, are considered total material breaches of the contract and to have the penalties and/or compensation defined for each breach clause. It is hard for either party to argue in court that they were not in a total breach if the phrase is stated plainly that it is (in every breach clause) and what exactly will happen if this breach is not corrected within the proper time limit.
Penalties for breach of a Licensing Agreement can range from immediate termination of the contract to financial penalties and other concessions that both parties need to agree to during the creation of the Licensing Agreement.
Of course, the best case scenario is to have both parties live up to the Licensing Agreement in full. Some of the above could also be taken into consideration for almost any contract.
Sandford Tuey
Entertainment Licensing and Branding Specialist
info@Playdigm.com
Tags: Breach of Agreement, Breach of contract, Breach of Licensing Contract, contract, Licensing, Sandford Tuey, Tuey