In a licence agreement often not only the exploitation rights to the recordings are transferred. Rather, the artist often grants the exploiters his merchandising rights, trademark rights and live performance rights in addition (see below for more details). It also happens that the publishing rights are transferred as a lump sum, so that strictly speaking hardly any rights remain with the artist. Because of this comprehensive transfer of rights, these contracts are also called 360-degree deals.
2.) Definition and demarcation from the artist contract
In the case of a licence agreement the artist or producer undertakes to hand over sound recordings to a (record) company and to grant the corresponding exploitation rights to them. The artist finances the recordings and mastering himself/herself, but may in turn receive a financial advance from the record company.
With the so-called “artist contract”, the record company assumes the full production costs. In return, however, the artist’s financial participation in the exploitation proceeds is again lower than in the case of the band endorsement contract. In addition, the label will in any case reserve the so-called “right of final decision” as to which titles will be released on the album and which will not. With the artist contract, the artist must therefore expect that the label will want to have a greater say in determining the individual career steps and that this will be laid down in the contract. In other respects, however, artist contracts are very similar to band endorsement contracts.
In practice, the band endorsement contract is more common, as it is better suited to the changed recording and production conditions. It is easier nowadays to produce high quality but cheaply, so record companies are happy to leave this task to the artists. Furthermore, indie labels often do not have the possibility to fully pre-finance an album production.
3.) Delivery of contract recordings
Either a precise date for the delivery of the recordings is agreed or the recordings are already handed over when the contract is signed. The labels want to have planning security here, as promotion is already in full swing 6 to 8 weeks before release. A delay can really mess up the daily work of the label if the working time is exactly coordinated with the individual campaigns. Some contracts therefore provide for a contractual penalty in the event of late delivery (now rather rare). However, as an artist you should try to avoid this by convincing the label of your reliability, for example.
The label can also contractually reserve the right to refuse the recordings if it is not satisfied. Corresponding passages then read as follows:
“The company can make acceptance dependent in particular on the fact that the contractual recordings delivered correspond to the current production-technical standard and, from an objective point of view, to the artistic standard of comparable recordings”.
In practice, this means that the recordings have to be reworked if the label does not like them. Legally, there is no objection to this in principle, but the wording is very vague and open, so that there is considerable room for interpretation. If differences of opinion do arise later, one should try to resolve them amicably. This is because in the case of court proceedings, proving that recordings “correspond to the artistic standard of comparable recordings” is only possible with considerable effort (e.g. expert opinion).
It is also customary to transfer ownership of the master tape. In the past, this was the subject of many a dispute when artists and labels wanted to go their separate ways at some point, but in the digital age this regulation has lost importance. In the meantime, the master tape can be reproduced as often as desired in the same quality, so that it does not depend on the one copy for new pressings.
4.) Artwork / Promotion
If the artist supplies artwork (e.g. photos, graphics or texts) in addition to the contractual recordings, he/she grants the label the rights necessary for exploitation accordingly. The label needs these rights if it wants to have CD covers produced or for promotion activities.
5.) Exploitation rights
Here the artist transfers his rights to the sound recordings to the label. This can include the rights as a performing artist and as a producer of sound carriers. The latter may seem somewhat unusual, but in the legal sense the artist is the producer of sound carriers in the case of a tape transfer agreement, since he produces a sound carrier “ready for transfer” in the form of the master tape.
If the artist/author is a member of a collecting society such as GEMA, he/she can only grant the copyrights in an extremely limited way, since he/she has already transferred them to the corresponding collecting society in advance via the rights contract. As a rule, only the right to first publication of the work is relevant in the volume transfer agreements, provided it is a previously unpublished work.
In most contracts, there is usually a lot under the heading of exploitation rights, which can confuse the artist. This is due to the so-called transfer of purpose theory under Section 31(5) UrhG. Briefly summarised, this states that the scope of the exploitation rights is determined by the purpose intended by the contractual grant if the exploitation rights are not individually designated. In case of doubt, the rights even remain with the author. Many labels therefore have all rights granted individually to be on the safe side.
However, a formulation that provides for the “unrestricted transfer of rights” from the artist to the label should be avoided. Such a formulation per se prevents the negotiation of any rights, which is disadvantageous. The artist should always have the option of not giving certain rights to his contractual partner. If it is stated at the top of the contract that all rights are transferred “unrestricted in terms of content, place and time”, the artist in principle already loses his negotiating position with regard to the rights at this point.
If the editing right is transferred, the label has the possibility to use excerpts of the music recordings. For prelistening purposes on online platforms, this is necessary in any case. However, the artist should be aware that this arrangement opens up much wider possibilities of use. Subject to moral rights, the label can also license karaoke versions or remixes to third parties, for example. Another alternative is to make certain forms of adaptation, such as advertising or film dubbing, dependent on the artist’s written consent.
All rights are granted to the company “transferable”, which means that the label can transfer the rights to third parties. This provision is absolutely necessary because the label must have the right to allow its contractual partners to exploit in turn. If the rights were not transferable, the recordings could not be offered for download on the internet or played on the radio, for example.
There is usually a provision that rights to unknown types of exploitation that will only arise in the future are also transferred to the label. This means that if something as groundbreaking as the internet is invented, the contractual partner already has the corresponding rights of use and does not have to go through the hassle of obtaining them from the artist (as happened in some cases with old contracts from the 1970s and the rights for downloads/streams). Outdated contract templates only provide for an option to acquire these unknown rights. This is a big difference, because in the former you have already acquired the rights, whereas in the outdated one you still have to acquire them via the option. However, if the other party already owns the rights, the artist’s negotiating position with regard to financial participation is weakened. It would therefore be optimal for the artist if he could completely exclude the transfer of future rights of use, i.e. according to both variants. In this case, the amount of participation is once again freely negotiable.
6.) Evaluation area
The licence area is usually “World” or “Universe” by default (the song could be played on a space station…). At the beginning of a musician’s career, you will not usually think about this. Later, however, it can be worthwhile to see in which countries the contract partner is well positioned and where there is still a need to catch up. After all, it is usually only the major labels and large indie labels that are active worldwide. It is possible to split the evaluation area, for example, by defining individual country groups such as “Europe” or “GAS” (Germany/Austria/Switzerland). However, it is also possible to list only individual, specific countries. Alternatively, it is possible to agree on a reversion of rights for countries in which there has been no publication within a certain period of time.
7.) Exploitation period
Many contracts provide for a transfer of exploitation rights for the “duration of the statutory protection period”. This is 70 years after the release of the phonogram. However, it is certainly possible to negotiate this term and to stipulate a shorter exploitation period. Even the labels now openly admit that the fate of success or failure of a record is decided in the first few years after release. Consequently, a large part of the exploitation period does not matter from an economic point of view, so that, for example, 10 to 15 years can be agreed in good conscience (or even less, depending on negotiating skills).
8.) Contract period
The contract period must be distinguished from the exploitation period, which is often confused in practice. During the contract period, the artist and the label work together and there may be several releases. As a rule, two to three years are agreed upon here. However, if there is to be only one release and the artist has no other contractual obligations, a contract period does not necessarily have to be agreed. The artist delivers his recordings, the label publishes them and that is the end of the matter.
Some contracts stipulate that the contract period does not end until the record company accepts or publishes the recordings. Such a provision can be ineffective under certain circumstances if the label would then be able to delay the contract term at will. Imagine that the label and the artist are completely at odds, but according to the contract, recordings for a whole album still have to be delivered. Then the label could insist on the artistic performance with such a contract clause and claim that the contract still runs until the recordings are delivered and accepted by the label. Consequence: If exclusivity has been agreed (usually standard), the artist cannot sign a contract with another label and there is a threat of standstill.
At least a compromise would be a maximum contract period of five years – independent of the delivery of recordings. Such a span has still been deemed permissible by the courts. Anything beyond that is either invalid or requires a good justification (e.g. particularly high and extraordinary economic investment in the project). This is of little help to the artist, however, if he would first have to sue for a declaration of termination of the contract. This is because until a court decision is reached, potential interested parties could be deterred by the legal dispute. Even without litigation, rumours that the artist “will not be let out of the contract” usually spread very quickly …
The transfer of rights is usually exclusive. For the artist, this means that he cannot transfer the corresponding rights to third parties during the period of exclusivity. A distinction is made between different types of exclusivity:
a) Exclusivity in the recordings
On the one hand, there is exclusivity to the contractual recordings. This means that the artist may not transfer the rights to the specific recordings given to his label to any other company or exploit them himself. Strictly speaking, you would have to agree on corresponding exceptions at this point if you want to upload your songs to Facebook, Soundcloud, MySpace, etc.. This also applies if this is done exclusively for self-promotion and without (commercial) sale. Exclusivity makes no distinction here and applies without exception in favour of the label. In terms of time, the exclusivity on the recordings usually runs synchronously with the duration of the exploitation period.
b) Title exclusivity
Title exclusivity, on the other hand, means that the artist may not re-record the compositions on which the songs are based for a certain period of time, either for himself or for third parties. In this way, the labels want to ensure that the artist does not simply go back into the studio and re-record the songs in the event of a dispute. Without title exclusivity he could do this without further ado (and some artists have obviously already had this idea, which has led to the clause). The duration of the title exclusivity is expressly fixed and ranges from three to twelve years.
c) Personal exclusivity
Finally, personal exclusivity means that the artist may not make any new recordings for third parties during the term of the contract or may not give existing recordings to third parties. There are usually exceptions, e.g. for live recordings on radio and television. But this does not change the fact that this kind of exclusivity is quite restrictive for the artist and should therefore be well considered. If one is also working as a studio musician for other projects, such extensive exclusivity is hardly acceptable, so that an appropriate exception should be agreed upon at least for studio recordings for other artists.
On the other hand, however, older recordings that were already on the market at the time the contract was concluded may still be distributed. The decisive factor is that these are old recordings which had already been released at the time of the conclusion of the contract. Finally, the artist also undertakes to transfer in advance to the label all rights to the recordings which he has produced in breach of exclusivity. Such a provision is quite common and understandable.
10.) Naming rights / Trademarks
The right to a name means the right to commercially exploit the artist’s name or the band’s name in every respect. On the one hand, this right is necessary for the record company to be allowed to release the album under the artist’s name at all. On the other hand, many artists are not aware of the implications of the right to the name. This is because the contractual partner could then, for example, also label a perfume or a video game with the corresponding name of the artist. Admittedly, the likelihood that record labels will now suddenly start selling perfume is not particularly great. However, if the artist should come up with such an idea, the label can demand a share, since it owns the corresponding rights. If possible, the artist should therefore limit the rights to the name to the recording or music sector (including merchandising, if applicable).
In the same breath, companies are happy to grant themselves the right to register the artist’s or band’s name as a trademark at the trademark and patent office. This should be avoided in the case of pure band takeover contracts, as one is dependent on a reassignment by the label after termination of the contract. If there are differences between the contracting parties later, one side may be able to delay the reassignment. The consequence of this is that the label is still officially registered as the trademark owner although the cooperation has long since ended.
Some band takeover agreements contain provisions whereby the artist transfers the rights to existing / future websites to the label, which then also takes over the maintenance of the sites. It is not uncommon for the costs of design and maintenance to be apportioned to the artist (usually 50%) and the income from commercial exploitation to be split (again 50:50). However, such an arrangement makes little sense if the artist is able to manage and design his or her internet presence himself or herself. If monetisation is still lacking, good advice can also be sought from appropriately specialised agencies.
As sales figures in the recorded music business have declined noticeably in recent years, the merchandising sector has become increasingly important. Many well-known bands have founded their own merchandising companies, as they have realised the margins that are possible there. There are several conceivable contractual constructions for merchandising.
a) Merchandising rights remain entirely with the artist.
This is the optimal solution for the artist if he already has experience in the merchandising business and can fall back on reliable partners or takes over the merchandising himself. The label is not involved financially here, so that a large part of the proceeds remain with the artist.
b) Merchandising rights are transferred in full to the label.
This is the most convenient solution because the artist does not have to take care of anything. However, the revenue share is also lower than with option a).
c) Label gets option on the merchandising rights
With this option, the label can decide during the term of the contract whether or not to make use of the merchandising rights. If not, the corresponding rights go back to the artist. In this case, however, the label usually reserves the right to a percentage of the artist’s sales. It is debatable whether such a financial participation is justified without a directly attributable performance by the label.
In any case, with this variant, the artist should make sure that there is a clear regulation on the reversion of rights so that the merchandising rights cannot be blocked for the entire duration of the contract. Deadlines are helpful here, for example: the artist can ask the label 6 months after signing the contract to declare whether it will exercise these rights or not. The label must then declare in writing within one month of the request at the latest. If it fails to do so, the merchandising rights automatically revert to the artist. This prevents the label from keeping the option open until the end of the contract.
The amount of participation is generally higher for merchandising than for sound recordings and downloads. Depending on the type of contract, the artist should receive at least 30% of the net proceeds (in artist contracts sometimes only 20% is provided for). This rate can also be up to 70%, depending on the artist’s negotiating position.
Many band endorsement contracts do not include an obligation for the label to produce music videos, as these still represent a not insignificant cost factor. The label wants to keep the decision open and often makes it dependent on the success of record sales. Band endorsement contracts therefore usually only contain provisions on the costs of the music videos. As a rule, offsetting takes place with the artist’s royalties, the range here being from 50% to 100%.
14.) Rights guarantee
The artist guarantees that he is the owner of all rights and that he can transfer them to the record company. He assumes full liability for this and indemnifies the label from claims of third parties resulting from the violation of this guarantee.
The label wants to be sure that the artist has obtained the ancillary copyrights from all participating studio musicians and producers and that no copyrights are violated. It should also be ensured that the artist does not violate any personal exclusivity. In the case of a comprehensive personal commitment, he or she is in fact not allowed to make recordings for third parties. In practice, it is rather rare for someone to feel that their rights have been infringed by a recording and to take action against the record company. Nevertheless, the label understandably wants to protect itself.
Therefore, in the event of an infringement, it is often agreed that the label may meet third-party claims directly and offset them against the artist’s income. Of course, this is hard for the artist if the case should arise that someone makes unjustified claims against the label. Therefore, it should be added that offsetting is only possible with legally established claims. In practice, this means that first of all there are court proceedings and possibly several instances have to be gone through until there is a legally binding judgement. On the other hand, the label would have to bear the legal costs itself, which it is probably only willing to do to a limited extent.
15.) GEMA / Collecting Societies
If the CDs are produced at the pressing plant, the label has to pay GEMA fees for this. Sometimes it is agreed in the contracts that the artist has to pay these GEMA fees himself. If the artist is also the composer and/or lyricist of the recorded music, this can still be accepted. Because as the author, the artist receives a large part of the payments back through his GEMA distributions. Small productions would otherwise often not be financially viable. In all other cases, however, it is a cost allocation that should be well calculated and considered. In the case of downloads/streams, by the way, no GEMA levies are incurred for the label, as these are borne by the corresponding portal provider such as iTunes.
16.) Licence settlements
The basis for royalty settlements is usually the dealer selling price, or HAP for short. This is the price at which the distributor sells the sound carrier to the retail trade. If, for example, a CD is sold at Saturn for 14.99 €, one has to deduct VAT of 19% from this amount as well as approx. 28% to arrive at a HAP of 9.25 €.
In the case of digital sales, the net revenue amount per download is usually the basis for accounting. So if a title is sold on iTunes for €0.99, you have to deduct VAT, iTunes’ participation and any encoding costs (which tend to be low) from this amount.
a) Usual level of participation
A participation of the artists in the amount of 15% to 20% of the HAP is a usual range for the recorded music sector. In the case of a recording contract, however, the costs for studio, accompanist, mastering etc. must be deducted from the participation proceeds in order to arrive at the actual result. In the digital field, the margin is often higher, between 16% and 22% of the net proceeds. The reason for this is the lower costs of the label.
It is also common to agree on a higher share once a certain number of sales has been reached. So if the normal royalty rate is 16%, it can increase to 17% from 20,000 units sold and to 18% from 40,000 units sold. Care should be taken to ensure that the increases are within the realms of possibility. If no more than 10,000 units are expected to be sold at the beginning anyway, the artist has nothing to gain from increases from 100,000 units sold (people like to be blinded by such figures).
b) Participation customary in the industry
In licensing agreements, it is often stated that the amount of the royalty is based on the so-called “industry standard”. This is mainly stipulated in connection with types of exploitation which are not expressly regulated in the agreement. Sometimes it is also referred to as “customary in the business”. Such terms are very elastic and are sometimes interpreted to the disadvantage of the artist. If possible, one should therefore avoid them in order to have a better negotiating position.
c) “Punk deals”
Some labels offer so-called “punk deals”. Here the income is split 50:50 after deducting the label’s costs. While this arrangement may seem very fair at first glance, it should ideally be determined in advance which cost items can be deducted. This avoids surprises later on. Experience shows, however, that labels with such deals are extremely fair in their accounting. Often the “punk deals” are not even concluded in writing, but the contract by handshake still applies.
d) Reductions / deductions
Reductions or deductions occur mainly in the case of percentage participation based on the HAP (variant a above). The contracts then state, among other things, “66.6% of the basic participation”. The artist then receives, for example, not the full percentage of 20%, but 66.6% of this and thus only 13.2%. The reductions therefore mean that not the full royalty rate but only a part of it is paid out. The best known is probably the so-called “technology deduction” for the production of CDs (20% deduction). This is justified by the high production costs for CDs. Now one may argue whether this is still up-to-date or not. In practice, these deductions are common practice, at least with larger labels, and the artist must therefore deal with them.
In the case of online exploitations, at any rate, one can argue conclusively that the label cannot substantiate the deduction with corresponding expenses. It is argued that the promotion costs are higher in the online sector. But that cannot justify a 25 per cent deduction. The percentage participation of online portals such as iTunes are also not costs, but only factors that reduce earnings, which the artist has to bear anyway, since he or she participates in the net proceeds. After all, server costs are continually decreasing in the course of technical development.
For DVDs, the deductions are sometimes as high as 30%, which in turn is justified by the high production costs for DVDs. If reductions are provided for tie-ins (“compilations”), these can sometimes be corrected in favour of the artist, at least for company-owned tie-ins. This is because the effort here is not as great as when licensing rights to third parties. Finally, there are deductions for the various lower price categories (e.g. mid-price and low-price), but these can usually also be negotiated.
There are further reductions for foreign sales (increased expenditure) as well as for the promotion of the sound recordings on radio and television (in some cases up to 50%). The latter is justified by the costs of TV and radio advertising. If this arrangement cannot be avoided, one should at least try to limit the deductions in time. One variant, for example, is that the deduction is only allowed for the duration of the advertising campaign. In addition, one can make the deduction dependent on a certain budget amount (e.g. 10,000 euros) and limit it to the country where the application actually took place. The label should also be able to provide written proof of the campaign upon request by the artist.
In any case, in the case of extensive reductions, the contract must include the addition that multiple reductions are not permitted. This means that several reductions may not be applied at the same time. In such cases, it is usually stipulated that only the highest reduction will be applied. Otherwise there is a real danger that the artist’s participation will shrink to a minimum.
Some labels pay an advance which is offset against the later royalty payments. The advance is therefore nothing more than a loan which the artist pays back later.
In practice it works like this:
After signing the contract, the advance is transferred to the artist’s account. Later, he receives his quarterly or half-yearly royalty statement from the label, which shows a sum of XX euros in favour of the artist. Below this, however, there is a note that this amount will be offset against the remaining advance payment of YY euros. Consequently, the artist will not receive any payment from the label until the advance has been fully offset.
If the band takeover contract contains options, it is possible to agree on higher advance payments for future productions. The label will usually only exercise an option if the sales revenues were good. But then the advance can also increase. Often the advance is used completely to finance the album production. But there are also bands that produce very cheaply and finance themselves through the advance payment. In any case, the advance should not be “repayable”. This means that the label alone has the economic risk that the advance might not be recouped.
Whether an advance is paid at all depends on the respective negotiating positions. As a newcomer, it will be rather difficult. If, on the other hand, you can already prove that you have good sales figures, your chances are better.
The settlement cycles of the labels are usually 3 or 6 months. Once a year is definitely too little, as the artist would thus only receive a distribution once a year. In addition, the label receives payments from its contractual partners throughout the year, which would then be “bunkered”. It is customary to make payments only after a certain minimum amount (e.g. 50 euros) has been reached, in order to keep the administrative burden low. Ideally, the statements of account should later look like this so that the artist can immediately see through which specific sales channel his title has generated revenue.
In some cases, it is agreed in the contracts that proceeds from licensing to third parties are only paid to the artist after payment by the respective contractual partner. This shifts the payment risk to the artist, which is hardly acceptable. Therefore, the payment should already be made after settlement by the third party.
A so-called audit clause should be included in the tape transfer contract. According to this clause, the artist can inspect the label’s accounting documents and have them audited. In most cases, only a tax advisor, lawyer or accountant may carry out this audit. The reason for this is that these persons are bound by law to secrecy. This is because the accounting documents represent sensitive information of the label that should not be made public.
In practice, an audit is extremely rare. In most cases, it is sufficient to merely hint at the possibility to the contractual partner in order to obtain a more transparent accounting. Also, the costs of an audit should not be underestimated, so that these must be put into relation with a possible (additional) income. This, in turn, is almost impossible, so that quite a few shy away from the uncertain outcome.
Another common rule is that the artist is reimbursed by the label for the costs of this audit if the difference exceeds a certain margin (e.g. deviation of more than 5% to the disadvantage of the artist). The possibility of an audit is often limited in time (e.g. to the last two years preceding the audit), which is acceptable. It is not acceptable if the possibility of an audit is made dependent on the existence of a valid reason. After all, how is the artist supposed to know exactly that the accounting was wrong? The proof then only arises from the later audit.
Very few contracts contain a clause that obliges the label to publish the recordings. The artist should therefore attach importance to a corresponding provision in order to avoid his production languishing in the record company’s archives.
However, an obligation to publish is only useful if it is specifically directed towards “the publication of physical sound carriers on a customary scale”. Otherwise, a mere publication on a download portal would be sufficient. The artist would have nothing to gain if his recordings were to be found among millions of songs without additional promotion, because who would find them there? The wording “customary volume” is admittedly a bit vague, but you will only be able to elicit a concrete number of copies from your contractual partner in rare cases. It would be ideal to agree on an automatic reversion of rights if the recordings are not released within a certain period of time after delivery.
21.) Publishing contract
Some band endorsement contracts contain a clause in which the artist undertakes to conclude a publishing contract with the label’s own publisher. It is disputed in jurisprudence whether such a clause is effective at all, as it deprives the author of the possibility of freely disposing of his or her exploitation rights. The labels, on the other hand, argue on the basis of economic considerations. Nowadays, against the background of declining sales of phonograms, an album production can hardly be financed without publishing income. That may certainly be true in some cases. However, the artist should always ask himself whether the release of his album is worth so much to him or whether there are not “cheaper” alternatives.
22.) Live performances
If a lump-sum payment (usually 30%) for live performances by the artist is agreed in the contract without consideration, this should be rejected. This is justified with the declining revenues in the recording business and a “cross-subsidisation” of the artist due to the promotion financed by the label. In most cases, however, a booking agency will also be involved on the artist’s side, which also wants a share for the work done (between 15% and 20%). If a management is also involved, the artist is left with less than a third of the concert revenue at the end of the day. However, if the label also takes over the booking for the participation, there is basically nothing to be said against it. The artist should only make sure that the label already has experience in this area and can provide appropriate services.
Basically, one should pay attention to the basis of the participation. The terms “net proceeds” or “net fee” are dangerous because the artist cannot then deduct his costs. Better would be “net profit” or the explicit deduction of costs directly related to the performance.
Many contracts include an option by the label for further contract recordings by the artist. This means that the artist must deliver new recordings at the request of the label and that the same contractual conditions apply for this (unless otherwise stipulated in the contract, especially in the sections on licences and advance payments). The contract is then automatically renewed for a further contract period. Thus, if the artist has agreed to a tape transfer contract with a two-year term and two further options to extend the contract on the same terms, the maximum contract term is 6 years in total if both options are exercised.
The options always apply only unilaterally in favour of the label and should therefore be bound to certain exercise periods. This means that the label must declare, for example, no later than one year after delivery of the (first) contractual recordings, whether it will exercise the option and want further recordings or whether it will not exercise the option. If the option is not exercised, it expires automatically; the contract would then be terminated after two years according to the above example if the label does not exercise the first option.
24.) Group clause
The so-called group clause is only relevant for bands with several members. According to this clause, the record company can terminate the contract if a member leaves the band. The label can also reserve the right to have a say in a replacement member. However, such provisions are usually only found in contracts with larger labels. In the group clause, it is agreed in particular that departing band members have no right to use the band name.
If you have questions about the band transfer contract or other issues, I will be happy to advise you. It is not necessary for you to come to my office for this. You can send me your concerns in advance by e-mail (also with attachments). I will then make you a non-binding offer for a mandate and, if necessary, contact you by telephone. A mandate only comes into effect when the mandate is issued in writing.