Does not paying royalties constitute a breach of contract? 8 Answers as of March 19, 2013

I have a contract with a company to distribute dvd's of my seminars in exchange for bi-annual royalties. If they haven't paid in the past 3 years, does that constitute a "breach of contract" and if so does this render the contract void? Can they still distribute the DVD's or do I get the rights back? Apparently the company "went out of business" though they still operate, and the rights have been "purchased" by another individual at a "liquidation sale." The contract I signed expires in another two years and this individual is supplying the DVD's to stores, but I still haven't been paid royalties in over 3 years. Can I claim that the contract is void, and therefore the rights are now back to me, because of this breach? Or can still distribute my dvd's without paying royalties?

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Roe Law Firm
Roe Law Firm | Theodore M. Roe
This depends on a number of factors. First and most importantly are the specific terms of your contract with them. Generally speaking, if there were royalties to be paid which were not, you can likely use this as grounds to terminate the contract and sue for breach of contract. You should have the contract and relevant facts reviewed by a qualified attorney.
Answer Applies to: Oregon
Replied: 3/19/2013
Lawyer for Indie Media
Lawyer for Indie Media | Sue Basko
To know if the contract was breached, I would have to read the contract first and then get all the facts. It sounds like the company went through a financial reorganization and was forced to sell off its assets. Such a sale should be subject to the same contract with you, whatever it was. If you are not being paid money you are due, it is important to act quickly. It sounds like you are about 3 years overdue for a talk with a lawyer. Why not email a lawyer today?
Answer Applies to: Illinois
Replied: 3/19/2013
Farber & Company Attorneys, P.C.
Farber & Company Attorneys, P.C. | Eric Farber
Paying royalties in a distribution contact is a key term in the agreement and can definitely constitute a breach if royalties are owed. These are complicated situations. Have they tried to distribute, are they simply withholding or not paying? There are lot of questions to be answered before you know if you have an action in your case.
Answer Applies to: California
Replied: 3/19/2013
Lawyer for Independent Media
Lawyer for Independent Media | Sue Basko
You should contact a lawyer, show them the contract, and let them help you. I do this very kind of work and so do many other lawyers. No one can really tell you if your contract has been breached if they have not even seen the contract. Also, what you are experiencing could possibly have been avoided if you had the contract looked at and changed a bit before you signed. Most likely, you should act quickly on this, because it sounds like you are acquiescing to not being paid.

In any such a contract, you should have a clause that says you are entitled to an accounting every so often, so you know what sales have been made and how much you are to be paid. Most such contracts also have a threshold in sales that must be met before you are paid. The company will usually wait until the royalties add up to a certain amount before they made a payment. Also, if you took money upfront, you should have specified that was not an advance against royalties. If you took an advance that is recoupable from the royalties, it may be that you are still paying that off. To find out about all of this, of course, I would need to read the contract that you signed.
Answer Applies to: California
Replied: 3/19/2013
Sebby Law Office
Sebby Law Office | Jayne Sebby
Failure to pay royalties that are due is a breach of contract. Check your original contract to see what the specific terms are for payment and whether the distributor has the right to assign or sell the contract to another party. Then contact an attorney to send a notice of breech/cease and desist letter requiring immediate payment of past due royalties and notifying them of your intent to terminate the contract. You may be able to negotiate better terms if the company really wants to continue distributing your product.
Answer Applies to: Nebraska
Replied: 3/19/2013
    Law Offices of Neil Sussman
    Law Offices of Neil Sussman | Neil Sussman
    Their failure to pay royalties is certainly a breach of contract on their part. Whether that gives you the right to cancel the contract depends on what the contract says about what legal remedies you have. It would be worthwhile to have an attorney review the contract to determine your legal rights.
    Answer Applies to: Washington
    Replied: 3/19/2013
    Thompson & Associates LLC
    Thompson & Associates LLC | Benjamin S. Thompson
    This is not an uncommon issue. I once chased a royalty agreement for a client that had been through three liquidations across three different countries. Typically, when the rights of a contract flow to a new person, the obligations flow, as well. Without seeing your contract, it's tough to say exactly what you agreed to, but my guess is that it was nothing out of the ordinary. If this is the typical case, then yes, it is a breach of contract, and you are owed back pay. Careful, depending on the jurisdiction(s) you look to enforce within, the statute of limitations for your available be remedies may be coming to an end.
    Answer Applies to: New York
    Replied: 3/19/2013
    ARC Law Group
    ARC Law Group | Mark Pearson
    This is a complicated issue that would require further analysis of the agreement terms. That having been said, failure to pay royalties can constitute grounds for termination of a copyright license. I suggest you contact an attorney to discuss the matter.
    Answer Applies to: California
    Replied: 3/19/2013
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