Case Study The New Kid Agreement

Introduction / Case Background The new kid agreement is a common contract in music industry. As mentioned in the case study, companies prefer the new kid agreement in order to manage their risks. However, this agreement proved a loss making deal for rock group. They are under obligation to finish all the eight recordings, even if it takes 12 years. On the other side, company can ditch the rock group any time. However, it is a legal contract that was signed by both the parties. It could be difficult for rock group to come out of this contract unless they declare themselves bankrupt. However, declaring bankruptcy may not be an ethical solution. Therefore Rock group is in dilemma to decide the best course of action for them.
Analysis
This case is an interesting case as it involves both legal and ethical issues. The problems in this case can be distinguished as business problems, legal problems and ethical problems. It is important that these problems should be resolved before rock group can decide upon its future course of action. These problems can be discussed as:
The second party or the rock group would find it difficult to legally challenge the first party, company.
Business problems: The Company operates in the market with a single aim of profit making. New kid agreement is a necessity for company because it has to manage its risks (Strömberg, 2007). The company cannot let the rock group go because it would be a loss making deal for the company. The rock group is aware of the fact that it has signed a wrong contract and they should get out of it if they want to focus on their