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Drafting Addendum and Novation agreements and NOCs

1. In this case P should rather not enter a fresh contract if the contract of the first series is
in subsistence. In case, the agreement has expired P has to make a fresh contract and he
will be left with no other choice, however in contrary P can opt to draft addendums and
novation and amendment clauses to the agreement signed before the filming of first
series as the contract for the same will almost have the same terms and conditions and
any change in the same can be incorporated in a simple way by adding addendums and
amendments clauses which would save both time and cost for the producer P.

2. In case the producer P decides to add any new clause in the artist agreement, he has to
look after few important points which are:-
o The producer has to draw reference to the principle agreement and state the
clause which is being modified
o He has to specifically mention that both the clauses in principle agreement and
addendum should be read in conjunction and the addendum is to be considered
as an integral part of the agreement
o There should preferably a survival clause carved out if the producer wishes the
clause to subsist even in the case of termination.

3. There might be quite a few terms in the agreement which might not be in consonance
with one which was set in principle agreement and needs to be accommodated in the
new agreement drafted, so to add new clauses in the agreement which are in conflict
with the principle agreement, the clauses in the principle agreement need to be
amended so that there is no conflict as addendum is generally read along with the
principle agreement and conflicting terms cannot be complied with within one contract
thus such clauses needs to be amended before incorporating such changes.

4. An addendum is an addition to the subsisting clause and a previous clause of the


principle agreement remains unaffected and a clause which is so added is usually in
consonance with the principle agreement and is meant to be read along with the
principle agreement. It creates a new obligation on the part of the parties which was not
there in the original agreement whereas both amendment and novation deals with
modification and changes in the original agreement barring them to perform the same
obligation which were stipulated in the original agreement.
Novation and amendment technically have the same effect to the contract as both
eventually sets the performer of the contract free from the obligation and a difference
arises herein is if the clause in the contract is modified to the extent of the changes
incorporated and the other part of the contract still remains unaffected from any
changes it is amendment however in case of novation of agreements the party is free
from the obligation setup in the previous agreement and the agreement is modified as a
new agreement which can extend to the level of changes in the parties to the
agreement too and the effect of novation of agreements have statutory recognition
under Indian Contract Act, 1872 as defined under Section 62 of Indian Contract Act.

5. Since the parties in the original agreement are supposed to be changed therein, the
parties should go for a novation agreement as defined under Section 62 of Indian
Contract Act, 1872 wherein the production house P will be the nonvoter and the new
agency will be the novate.

Exercise 2

1. The terms which are to be ideally captured while drafting a no-objection certificate
maybe as follow:
o Grant specific license for the exploitation said material
o The exclusive and non-transferability clause should be drafted
o Time and extent of use which is permitted should be specifically captured
o The mode of exploitation of rights should be mentioned
o Indemnity clause in case of unwarranted exploitation and/ or violation of any of
the terms of NOC should also be captured in the agreement
o Territorial limits of exploitation should also be specifically mentioned
o Consequences in case of dispute between both the parties

An ideal clause for the following agreement can be drafted in the following way :-

The production house X gratuitously grants the license to exploit the video clipping of
PQRS movie for its promotional campaign and the license granted herein in form of a No
objection Certificate will be without any consideration payable now or even in future till the
NOC subsists.
The certificate is provide to prime video exclusively for the promotional purpose using
the approved clip of the movie PQRS which cannot be either transferred or used for any other
purposes therein.
This certificate will have its validity till 8 months of the first advertisement being aired
and can be exploited in any form of promotional event which will include but not be limited to
posters, snippet etc. and can be aired in any available platforms including but not limited to
YouTube, TV serial advertisement.

2. Since NOCs are exclusive right given out of the trust and understanding between the
parties, these rights are usually not transferrable and the clause drafted in this
agreement explicitly bars Amazon Prime from transferring rights to any other party.
However, it is left with the discretion of the producer to grant such transferable rights or
not.

3. Producer ‘X’ hereby grants No Objection Certificate to exploit the pre-approved for the
purpose of promoting Amazon Fire Stick which will include the pre-decided clip for the
cinematograph film PQRS and the modes of exploitation have been explained in the
above clauses and the right granted herein is exclusive for the purpose of promotion of
the new product and any unwarranted usage of the clip by other sites or for any other
purpose or the use of any other clip will make Amazon liable for the loses caused
thereto.

4. The Music Rights in the film are generally transferred to a music label and the producer
does not have a right in the music of the film so if there is exploitation of music rights
while granting the certificate it may lead to liability of the producers to grants rights of
materials which they do not hold the rights personally. However, if the encroachment is
minimal and does not really have any commercial impact in the sense of any gain to the
licensee or any loss to the music label the principle of ‘De Minimus’ rule may apply and
there shall be no liability on the part of the producer if it’s a mere incidental
encroachment without any commercial gain/loss. Now a day e-producer tend to retain
rights in the background score of the movie and if rights which are exclusively reserved
by the producer can be transferred to the licensee and there shall be no claim by music
label whatsoever.