Coogan Law, part V: Coogan Trust Account

The 15% that is set aside from the minor’s compensation pursuant to the order of the Superior Court that ratified the contract for artistic or creative services must be put into a “Coogan Trust Account”.


California Family Code

Section 6753(a) The trustee or trustees shall establish a trust account, that shall be known as a Coogan Trust Account, pursuant to this section at a bank, savings and loan institution, credit union, brokerage firm, or company registered under the Investment Company Act of 1940, that is located in the State of California . . . The trustee or trustees shall establish the trust pursuant to this section within seven business days after the minor's contract is signed . . .

Coogan Law, part IV: 15% Set-Aside

When the Superior Court ratifies the minor's entertainment contract, it is protecting the employer of the minor from later being deprived of the benefits of the contract. But the Coogan Law also provides for a protection for the minor by requiring that 15% of the minor’s compensation be set aside and put into a trust account for their benefit. The funds will remain safely in the trust account and mature there until the minor reaches the age of majority. This forced savings plan is designed to protect those funds from being squandered by the minor him or herself, or, more likely, by the minor’s parents.


California Family Code

Section 6752(b)(1) . . . the court shall require that 15 percent of the minor's gross earnings pursuant to the contract be set aside by the minor's employer in trust, in an account or other savings plan, and preserved for the benefit of the minor in accordance with Section 6753.

Coogan Law, part III: Court Ratification

This next section of the Coogan Law dictates that an entertainment contract entered into by a minor can be ratified by the California Superior Court.

California Family Code

Section 6751

(a) A contract, otherwise valid, of a type described in Section 6750, entered into during minority, cannot be disaffirmed on that ground either during the minority of the person entering into the contract, or at any time thereafter, if the contract has been approved by the superior court in any county in which the minor resides or is employed or in which any party to the contract has its principal office in this state for the transaction of business.

(b) Approval of the court may be given on petition of any party to the contract, after such reasonable notice to all other parties to the contract as is fixed by the court, with opportunity to such other parties to appear and be heard.

(c) Approval of the court given under this section extends to the whole of the contract and all of its terms and provisions, including, but not limited to, any optional or conditional provisions contained in the contract for extension, prolongation, or termination of the term of the contract.

(d) For the purposes of any proceeding under this chapter, a parent or legal guardian, as the case may be, entitled to the physical custody, care, and control of the minor at the time of the
proceeding shall be considered the minor's guardian ad litem for the proceeding, unless the court shall determine that appointment of a different individual as guardian ad litem is required in the best interests of the minor.

Coogan Law, part II: Contracts for Artistic or Creative Services

Here is the first part of the Coogan Law that defines the types of contracts that are covered by this law and are eligible for ratification by the court. Ratification of an entertainment contract (i.e. a contract for artistic or creative services) with a minor deprives the minor of the right to later disaffirm that contract:

California Family Code

Section 6750.

(a) This chapter applies to the following contracts entered into between an unemancipated minor and any third party or parties on or after January 1, 2000:

(1) A contract pursuant to which a minor is employed or agrees to render artistic or creative services, either directly or through a third party, including, but not limited to, a personal services corporation (loan-out company), or through a casting agency.

"Artistic or creative services" includes, but is not limited to, services as an actor, actress, dancer, musician, comedian, singer, stunt-person, voice-over artist, or other performer or entertainer, or as a songwriter, musical producer or arranger, writer, director, producer, production executive, choreographer, composer, conductor, or designer.

(2) A contract pursuant to which a minor agrees to purchase, or otherwise secure, sell, lease, license, or otherwise dispose of literary, musical, or dramatic properties, or use of a person's likeness, voice recording, performance, or story of or incidents in his or her life, either tangible or intangible, or any rights therein for use in motion pictures, television, the production of sound recordings in any format now known or hereafter devised, the legitimate or living stage, or otherwise in the entertainment field.

(3) A contract pursuant to which a minor is employed or agrees to render services as a participant or player in a sport.

(b)
(1) If a minor is employed or agrees to render services directly for any person or entity, that person or entity shall be considered the minor's employer for purposes of this chapter.

(2) If a minor's services are being rendered through a third-party individual or personal services corporation (loan-out company), the person to whom or entity to which that third party is providing the minor's services shall be considered the minor's employer for purposes of this chapter.

(3) If a minor renders services as an extra, background performer, or in a similar capacity through an agency or service that provides one or more of those performers for a fee (casting agency), the agency or service shall be considered the minor's employer for the purposes of this chapter.

(c)
(1) For purposes of this chapter, the minor's "gross earnings" shall mean the total compensation payable to the minor under the contract or, if the minor's services are being rendered through a third-party individual or personal services corporation (loan-out company), the total compensation payable to that third party for the services of the minor.

(2) Notwithstanding paragraph (1), with respect to contracts pursuant to which a minor is employed or agrees to render services as a musician, singer, songwriter, musical producer, or arranger only, for purposes of this chapter, the minor's "gross earnings" shall mean the total amount paid to the minor pursuant to the contract, including the payment of any advances to the minor pursuant to the contract, but excluding deductions to offset those advances or other expenses incurred by the employer pursuant to the contract, or, if the minor's services are being rendered through a third-party individual or personal services corporation (loan-out company), the total amount payable to that third party for the services of the minor.

Coogan Law, part I: What is it?

The California Coogan Law governs contracts with minors in the entertainment business.

The Coogan Law is contained in the California Family Code sections 6750-6753.

The details of how this law works will follow in a series of segments that explain and discuss it.

Disaffirmance of a Contract by a Minor

A minor person can later get out of a contract that they have signed. This means that the minor can "disaffirm" a release that they sign to be in a film. While the contract will be valid if not disaffirmed, on a whim the minor can disaffirm it as if they never signed it in the first place.

Let's look at the California Family Code again:

Section 6700. Except as provided in Section 6701, a minor may make a contract in the same manner as an adult, subject to the power of disaffirmance . . .

Section 6710. Except as otherwise provided by statute, a contract of a minor may be disaffirmed by the minor before majority or within a reasonable time afterwards or, in case of the minor's death within that period, by the minor's heirs or personal representative.

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Why would a minor disaffirm a contract to be in a film?
Maybe they didn't like their performance.
Maybe they did not have a good experience working on the film.
Maybe after they got older they looked back on the film and felt that they looked silly.
Maybe they just want to squeeze more money out of the producers.
In fact, they don't have to have a reason!

Parties to a Contract

Now that we've talked about what is a contract, we get back to who can be the parties to a contract.

Per California Civil Code:

Section 1556. All persons are capable of contracting, except minors, persons of unsound mind, and persons deprived of civil rights.

Section 1557. (a) The capacity of a minor to contract is governed by Division 11 (commencing with Section 6500) of the Family Code.


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So this brings us back to where we started.

Minors do not have capacity to enter into a contract.

California Civil Code section 1557 refers us back to the beginning of our discussion and that Family Code section that I cited.