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The Signicat Blog

What brown M&Ms can teach you about contracts

We've collected five of the world's craziest contracts. Here's what you need to know before getting yourself into legally binding agreements!

# 1. Contracts are really about trust

# Why the Beatles made the worst deal in music history.

Paul, John, George – and Pete. The original four boys of the Beatles were under 21 years old when they signed on their first manager Brian Epstein in 1962. Therefore, they had to ask permission from their parents. Once that was done, it wasn't long before the manager gave the guys "bang for their bucks". He only took 10 percent of what the musicians earned and soon the Beatles took over the world: After the manager told them to stop eating food on stage and made them take a bow after their concerts.

Everyone wanted a piece of The Beatles. Soon they were flying to the US for a tour, and when questions about merchandise came up, Epstein asked his lawyer to handle the many requests. But the lawyer teamed up with a guy called Nicky. Together they believed they should get 90 percent of the income. You know, in order to deal with everything from t-shirts, wigs, dolls, posters and things that would soon be torn away by fans. The Beatles and Epstein had no idea of the success that lay ahead, and settled for: Again, this 10 percent.

In today's terms, the worst deal in music history means the “fourtette” missed out on a billion dollars. The Beatles had trusted their manager blindly. In the future apparently they would never trust anyone again. .

The aforementioned original contract with Epstein was sold at an auction in 2019 for £275,000.

# 2. Read the contract carefully

# The sweet M&M contract that turned out to be quite strict.

The rockers of Van Halen had thought of something clever. Prior to their concerts in the 1980s, they had asked to always be served a bowl of M&Ms. Fair enough, but not all colors were allowed. All the brown ones had to be removed.

It sounds very "diva" to be Van Halen, but lead singer David Lee Roth later explained that it was a safety issue. It was a way of ensuring that the technical stuff and insurance specifications in the contract were carefully read. If someone hadn't read the contract carefully enough, they wouldn't have remembered to remove all the brown M&Ms, and thus: the person would be in trouble...

# 3. Know how the contract regulates your future

# How a Swede signed away the right to go to space.

When a football team decides to buy players, we´re often talking about wild sums of money. So it's perhaps not surprising that this one club didn't want this expensive - and in this case - blonde Swedish footballer to be leaving Earth all of a sudden. When Swedish player Stefan Schwartz was offered a spot at the British football team Sunderland in 1999, the club had to pay a record sum: Over £5 million. They signed him and he was (probably) happy. But a while later, someone discovered a rather odd ticket purchase made by one of Stefan's advisors.

Someone had booked a seat to space 13 years in the future. One of the world's first commercial space flights was about to take place. A journey Stefan had indicated he would like to take part in. The owners of Sunderland didn't think it was such a cool idea.

So they pulled out the paperwork again, and sled in from the sidelines - as Stefan would have done out there in midfield during a tackle: A clause – saying that Stefan would not be allowed to travel to space in the foreseeable future. Should he somehow end up outside the Earth's atmosphere, the contract would automatically be annulled.

It was important to keep his feet firmly planted on the ground - well, on Earth, anyway.

# 4. Understanding the underlying values

# The bet that made us realize the value of index funds.

When Warren Buffett – one of the world's most famous and successful investors – made a 'small' bet in 2007, he eventually opened the eyes of many small investors around the world. Today, many know that buying index funds often yields better returns than actively managed funds that need constant scrutiny. And the way we found out?

Buffet bet 320,000 dollars that a specific and fairly cheap index fund, the S&P 500, would do better on the stock exchange than a selection of hedge funds. One of them, Protégé Partners in New York, bet against it with the same amount.

Ten years later, Warren Buffet won. The index fund had grown three times as much as the five active funds. And so Buffet strolled on with his life with the winnings from his contract signing: One million dollars.

PS. He gave it all away to Girls Inc, a charity that, among other things, helps teenage foster children.

# 5. Use incentives to get what you want

# The contract that gave us the hipster mustache.

In the world of sports, no contract is particularly short. There's so much money at stake that all reservations must be taken into account! Do you want the athlete to keep the weight off? Then it has to be in the contract. Does a clever coach of an American baseball team want as many players as possible to grow a mustache? Add an incentive. As was done in the contracts in the 1970s, when all the players on a baseball team in Oakland, USA were paid 300 dollars if they grew a mustache. The coach wanted to sell tickets, and Rollie Fingers, one of the players, wanted to go all the way.

So he grew a sleek, black twirly mustache – exactly like that one which today has become the "hipster mustache".

It's not impossible that it's because of him and this specific contract that today we are given a cardboard mustache on a stick every time we enter a photo booth at a party or a wedding. Nor is it impossible that it was because of the joint mustache experiment that the team won the world series in 1972, 1973 and 1974.

PS. Rollie Fingers has turned 77 years old, and still hasn't shaved it off.