What is a handshake deal in the music industry?

A handshake deal is a verbal or informal arrangement between two parties — most commonly an artist and a manager — without a signed written contract. They are surprisingly common in music, and surprisingly fragile. When the relationship ends, both sides often have very different recollections of what was agreed.

Are handshake deals legally enforceable?

In many jurisdictions a verbal contract can be legally binding, but proving its terms in court is a different problem. Without written evidence of commission rates, term length, and post-term entitlements, the dispute often comes down to which side a judge or jury finds more credible — an extremely expensive way to resolve a question that a one-page document could have answered upfront.

What does the Chance the Rapper case teach independent artists?

Two things. First, even successful, sophisticated artists can end up in multi-year, multi-million-dollar disputes when key terms are not written down. Second, sunset clauses, commission definitions and termination triggers are not 'legal fine print' — they are the actual commercial deal, and they belong in writing from day one.

How can artists protect themselves from a similar dispute?

Put the management deal in writing before commission starts being paid. Define the term, the commission rate, what counts as commissionable income, and what happens after the relationship ends. Have a music lawyer who is independent of the manager review the document. The cost is trivial compared to the cost of litigation.

Songpact — Music Contracts for the Whole Industry

One of the most instructive music industry court cases in years is not about copyright or AI. It is about something much more fundamental: a long-running artist-manager relationship built on a handshake that eventually turned into a $11 million legal battle.

As the trial in Chicago reveals, Chance the Rapper (Chancelor Bennett) and his former manager, Patrick Corcoran, worked together for nearly a decade without a fully executed written contract. While they achieved history-making success, including the first Grammy for a streaming-only album, their "at-will" arrangement has left a court to decide what was actually agreed upon.

A Handshake Founded in Family

The trial has revealed that the origins of this partnership were remarkably informal. Corcoran testified that it was his parents and members of Bennett's family, rather than the creators themselves, who initially sorted out the "loosely defined" details of their arrangement.

For years, this worked. Bennett testified that he paid Corcoran over $11 million between 2012 and 2020, consistently honouring a 15% commission on net proceeds. But because the "edges" of the deal (termination rights and post-term pay) were never documented, the relationship's end has become an expensive reconstruction of memory and business conduct.

The $350,000 Merch Loss and "Hidden" Commissions

A central point of Corcoran's case is that he was more than a manager; he was a "partner" who subsidised the artist's growth. Corcoran testified that he personally financed the infrastructure for Chance's merchandise business through his own company, Haight Brand, and lost over $350,000 in the process.

He argues that a sunset clause, allowing him to commission for three years after being fired, was the agreed-upon way to ensure a return on this early investment. Beyond the sunset period, Corcoran is also claiming commissions on three major opportunities he allegedly arranged before being terminated in April 2020:

A role on Netflix's Rhythm + Flow.
A major partnership with Ben & Jerry's.
A Live Nation tour.

The "Label" Irony and 50% Splits

One of the most vivid revelations from the trial concerns the nature of Bennett's "independence." While his public brand was built on satirising major labels as predatory, a 2020 email from his own legal team revealed that Bennett effectively operates as his own label.

Under cross-examination, Bennett conceded that he takes a 50% "label share" off the top of his projects for expenses and staff before splitting the remaining artist share with his collaborators. This serves as a vital lesson for independent creators: if you are performing the functions of a label, you need the same professional documentation to protect your business.

Tour Cancellations and the "UnitedMasters" Dispute

The trial has also shed light on the massive commercial stakes that can be lost when a team is not aligned. Evidence was presented showing that Bennett cancelled multiple high-value tours, including a European run just two weeks after winning three Grammys, and a tour for The Big Day that reportedly carried $30 million in guarantees.

Furthermore, the relationship reportedly fractured over a proposed $10 million equity stake in UnitedMasters. Bennett testified that he felt Corcoran "sneakily" tried to cut himself into the deal, leading to a breakdown in trust. By the time Bennett sent a formal termination letter in 2020, the two had reportedly been "basically estranged" for months.

Key Takeaways: What Should Be in Writing?

The Chance trial proves that even the most successful relationships can be vulnerable if core terms are left unwritten. At a minimum, every management agreement should clearly define:

The Commission Structure: Is the manager's commission calculated on gross or net?
The Sunset Clause: Does one exist? For how long? Corcoran claims three years; Bennett says it was never discussed.
Investment & Recoupment: If a manager spends $350,000 of their own money on your merch, how and when is that paid back?
Authority: What can the manager sign on your behalf? The UnitedMasters dispute shows how easily equity and brand value can become points of contention.

The Bottom Line

A handshake can start a career, but it is a much less reliable way to protect one. As we have seen in the Cook County courtroom, unwritten deals leave too much room for disagreement once money, termination, and post-term entitlements enter the picture.

Where a relationship is important enough to shape an artist's career, it is important enough to document properly. At Songpact, we believe that clear, plain-English agreements are not about a lack of trust. They are about ensuring that success does not end in a courtroom.

FAQ

What is a sunset clause in a management agreement?

A sunset clause allows a manager to continue receiving a commission (often at a reduced rate) for a set period after they are fired, protecting the "early investment" they made in the artist's career.

Are verbal management agreements enforceable?

They can be, but they are notoriously difficult to prove. In this trial, the central hurdle is the lack of "any text message, email or other document" mentioning a sunset provision.

Why are written agreements important in music?

Because they reduce ambiguity. They help parties align on commission, term, termination, expenses, authority and post-term rights before memories diverge and commercial stakes rise.

Chance the Rapper, Sunset Clauses and the Risk of Handshake Deals in Music

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