Recent Answers to Agency Contract Law Questions

Randy M.

Answered Sep 10, 2025

Agencies often include early termination clauses that require a model to pay a fee if the contract is ended before the agreed term. Whether such a clause is enforceable depends on how it’s drafted, how large the fee is, and what state law applies. When Fees Can Be Enforceable Courts will enforce an early termination fee if it functions as a legitimate "liquidated damages" clause. That means the fee must represent a reasonable estimate, made at the time of signing, of the damages the agency would likely suffer if you left early. In modeling, agencies sometimes argue that damages are hard to measure because they involve not just lost commissions, but investments in test shoots, comp cards, web placement, or training. If the fee is tied to those actual expenses or a reasonable forecast of lost income, there’s a stronger chance it will hold up. When Fees Cross the Line If the fee is punitive rather than compensatory, courts typically strike it down. A flat $20,000 penalty whether you leave in month one or month twenty-four is a good example of a term that looks like a penalty. In the same way, if the agency invested little or nothing in you but still demands a large fee, a court would likely view the provision as disproportionate and unenforceable. Language in the contract matters here. If the clause is described as a “penalty,” that’s almost always unenforceable. Entertainment and modeling contracts are subject to additional scrutiny in certain states: • California: Talent agencies must be licensed under the Talent Agencies Act. The Labor Commissioner has authority to review and void unfair contract provisions. • New York: The General Business Law (Article 11) regulates employment agencies, including modeling agencies. More recently, the Fashion Workers Act has introduced protections to prevent abusive contract practices. • Other jurisdictions: Some states have “cooling-off” or rescission rights in service contracts, though these usually apply to consumer contracts rather than modeling agreements. Still, local labor or consumer protection laws can limit what an agency may charge. Practical Factors Courts Consider • Whether damages were genuinely uncertain at the time of contracting. • Whether the amount is proportionate to the agency’s actual investment or anticipated loss. • Whether the fee decreases over time as the contract runs its course. • Whether industry standards support the size or structure of the fee. • Whether the provision is unconscionable, either procedurally (presented as a take-it-or-leave-it contract) or substantively (so one-sided or oppressive that it’s unfair). Next Steps Review whether the contract calls the fee “liquidated damages” and whether it explains how the number was calculated. If it looks arbitrary or grossly out of proportion to the agency’s investment, you may have grounds to challenge it. Since statutes and case law vary widely by jurisdiction, the best step is to have an attorney experienced in entertainment or employment law in your area review the contract. The attorneys at Contracts Counsel would be happy to assist you.

Darryl S.

Answered Jan 17, 2025

Yes - this is allowed in the contract and is fairly common in my experience in the industry. However, it is also negotiable and you could say that you're not willing to agree to the exclusivity clause.