Breach of duty of care by ex-manager of Dutch DJ Afrojack
Quarrelling with the manager seems to be part of the rock and roll lives of famous artists. Only last year, Dutch DJ Martin Garrix and his former manager faced each other in court. This year, it was Dutch DJ Afrojack’s turn. Afrojack had been summoned by his ex-manager because he had sacked his manager. Contract Law Lawyer Thomas van Vugt explains the judgment in this case.
Obligation to behave as a good contractor under Dutch law
The manager had been working for Afrojack since 2009. As a manager, he had the job of advising, representing, and looking after the interests of Afrojack. According to Dutch law, the manager must behave as a good contractor. For an artist’s manager, this means first and foremost that he must put the artist’s interests first and subordinate his own (financial) interests.
Manager set up a new company
This representation of interests was at stake when the manager proposed a far-reaching form of cooperation in 2013. He urged Afrojack to take part in a new limited company. In short, the manager would conduct the entire management and Afrojack would pre-finance the limited company with €1 million. In return, Afrojack would receive 40 % of the
The portion of registered capital of a private or public limited company
» Meer over share shares. The manager would be appointed as co-manager and business manager and would receive a commission of 10%.
Termination of agreement due to breach of trust in the Netherlands
Afrojack lost his confidence in the manager and turned to a lawyer. The lawyer terminated the management agreement with the manager on account of a breach of trust. The manager claimed millions in damages on account of unlawful termination. He also demanded compliance with the cooperation agreement.
Dutch court: ‘Conflicting interests’
The Dutch court found that the manager should not have made the agreements with Afrojack, such as those in the cooperation agreement, in this way. A manager and his artist will always have conflicting interests to some extent (for example, when it comes to the manager’s salary). However, the agreements that the manager envisaged in the cooperation agreement went much further.
Dutch lawyer in a breach of the duty of care
No independent adviser was present when the manager discussed the cooperation agreement with Afrojack in Los Angeles. The manager should have pointed out to Afrojack (on account of his duty of care) that an independent party should advise him. Instead, the manager himself had advised Afrojack on a cooperation agreement in which the manager was the other party.
Management agreement rightly terminated
The court concluded that the manager had breached his duty of care. He had given his advice wearing two hats. Afrojack was allowed to terminate the management agreement. The manager was not entitled to compensation, and all claims were rejected.