"Attorney, are there any clauses in this contract that work against me?"
This is the question I hear most often when asked to review contracts, and also the most difficult one to answer. When you open a contract, clauses unfavorable to the client are hidden throughout. Yet knowing how hollow it sounds to tell a newcomer creator just taking their first step, "This clause must be deleted," my answer inevitably becomes cautious.
In a cold market, it is difficult for a newcomer to sign a contract that is 100% favorable to themselves. To release a first work into the world and stand on stage for the first time, accepting a degree of disadvantage is the reality. What matters is not the 'existence of disadvantage' itself, but whether it is at a manageable level and whether it leads to irreversible risks. That is why the goal should not be a perfect contract, but the 'best contract' that can protect oneself. To that end, I will outline several practical criteria that must be checked when signing a contract.
First, set specific standards for revenue and costs.
Many creators focus on the distribution ratio, but what actually matters more is 'what serves as the basis for division.' In particular, when net profit is the standard, if the scope of deductible costs is unclear, a structure can be created in which settlement proceeds effectively become zero no matter how successful the work is.
Therefore, deduction items such as original work fees, marketing costs, and platform fees must be specified as concretely as possible, and it is important to discuss with the counterparty how net profit is actually calculated and understand the precise calculation method. Furthermore, securing the right to inspect settlement data or the right to conduct an audit is essential.
Second, carefully set the ownership and scope of intellectual property (IP) rights.
In an environment where One Source Multi Use (OSMU) has become common, setting rights at the initial contract stage is a key factor that determines the future revenue structure. Focusing solely on the size of the contract fee and comprehensively assigning rights including the right to create derivative works is not uncommon, and this can become the greatest opportunity cost in the long term. In particular, as new forms of use continue to emerge with technological development, a 'comprehensive assignment' clause can result in transferring rights into unforeseen areas, and disputes over its interpretation are actually on the rise. Where possible, it is necessary to design a structure that allows for renegotiation of derivative rights or maintains a certain share of revenue. It is also essential to verify how the attribution of rights is resolved when the contract is terminated midway due to the counterparty's fault.
Third, understand the 'termination structure' of the contract.
From the perspective of a contract that protects oneself rather than a perfect contract, the most important part of a contract is not the revenue distribution clause but rather the termination and cancellation clause. Even if it is difficult to change contract terms favorably with current bargaining power, a structure must at least be prepared to safely exit the contract when problems arise later. This is why contract duration, renewal conditions, and the possibility of termination in the event of the counterparty's fault must be examined carefully.
To assert 'grounds attributable to the counterparty,' one must first specifically understand what the counterparty's obligations and one's own rights are within the contract. A breach can only be asserted when a contractual obligation clearly exists.
As a practical tip, not every breach of the counterparty's obligation needs to be pointed out immediately. For example, if a clause such as the obligation to provide settlement data exists, its non-performance can be consistently accumulated in records and later serve as key evidence to prove the counterparty's fault when the contract is terminated.
Fourth, communication outside the contract must also be managed.
A contract is the final product of an agreement, but its interpretation is made through the entire signing process. Emails, messages, and statements exchanged during negotiations may, in some cases, be used as supplementary material for contract interpretation or recognized as separate agreements. Especially when contract wording is ambiguous, such materials become important clues for dispute resolution.
For example, when a dispute arises over the calculation of net profit, if conversations about the calculation method exchanged before signing the contract have been preserved, they can serve as decisive evidence.
Since oral statements are difficult to prove, it is advisable to reconfirm key agreements during the negotiation process in written form, such as through email.
Fifth, consider the counterparty's position at least once.
A clause that appears unfavorable to you may actually be a structure that strengthens the counterparty's motivation. The success of a work is not completed by the creator's efforts alone. Planning, production, promotion, and distribution must work together to produce results.
For example, if revenue is distributed 3:7 between you and the counterparty, it may appear unfavorable on the surface. However, a structure in which the counterparty takes a larger share can function as a motivational device that drives the counterparty to actively contribute to the work's success. Rather than simply raising your share by 1%, maintaining that ratio while inducing the counterparty to invest more in marketing or production costs can bring substantially more favorable results.
Therefore, when reviewing a contract, I recommend expanding your considerations beyond 'how favorable is this to me' to 'is this clause designed to produce the best outcome for both parties.' Ultimately, one must always remember that the best results can only be achieved when all contracting parties work hard together.
Let us return to the original question.
"Attorney, are there any clauses that work against me?" My answer to this is clear. Clauses that cause losses do exist. What matters, however, is whether that loss falls within a manageable range and whether it reaches a level that forecloses future options. There is no perfect contract, but the best contract to protect oneself certainly exists.
