Option agreement template film
Falloption agreementsshopping agreements. The motion picture and television industries have become increasingly informal in recent years.
In the past, agents would sign actors and writers before trying to sell their services or material, members of producing teams would sign collaboration agreements with their partners before taking a project to a studio, and producers would enter into written option agreements with writers under which they would pay money to exclusively option the motion picture and television rights to a property.
Although many producers and the studios doof course, still option rights, a growing number of independent producers have been turning to the Shopping Agreement, which offers them a simple, no-cost alternative to an option for obtaining the exclusive right to pitch a script, book, TV series format or other property to buyers.
While this type of contract is not new to Hollywood, it has become much more prevalent. Typically, under a Shopping Agreement, the producer simply promises to use her best or even good faith efforts to obtain a proposal from a studio, network or other production company for a development deal for the property. If the producer fails, nothing is lost and the parties go their separate ways.
If the producer does obtain an attractive offer from a buyer, and if the writer wants to negotiate with that buyer, then the producer will be attached to the project and the writer and producer will separately negotiate their respective rights and producer deals with that buyer.
If they enter into agreements with the buyer, they will both get to keep their separate compensation. Although this seemingly simple agreement does have benefits for both the producer and the writer, it is often used as a shortcut to avoid both the negotiating time and expense required for an Option Agreement. Like most shortcuts, however, it also poses substantial risks to both parties and must be carefully drafted. I discuss below the customary key terms of a Shopping Agreement and how they differ from an Option Agreement.
I will also illustrate some of the pitfalls that can arise from using a Shopping Agreement. Unlike an Option Agreement, the Shopping Agreement does not transfer any exclusive rights in a copyright and is simply a contract for services. Consequently, it can legally be oral or written. This is almost always a mistake.
The producer customarily pays no money under a Shopping Agreement. Since there is no payment to the writer, the term of the Shopping Agreement is usually shorter than an Option Agreement — generally only six to nine months.
Also, unlike an Option Agreement, the Shopping Agreement generally does not give the producer the unilateral right to extend this term. While this short term benefits the writer, it can pose a potential pitfall for the producer who may lay the groundwork for a deal with a production company during the termonly to be cut out by the writer once the term expires.
To protect against this outcome, the producer may add the following post-term clauses: In respect to clause bhowever, the smart writer or smart lawyer for the writer will insert a common exception: If the writer adds a new material element to the project after the term, such as, for instance, attaching Mark Wahlberg as executive producer, then the writer shall have no further obligation to the producer — the theory being that the new element is what sells the project.
The Shopping Agreement generally allows the writer more involvement in the selling of the property than the Option Agreement, while putting more restrictions on the producer.
Where an Option Agreement typically permits the producer to shop the property to any company she wants, the Shopping Agreement typically gives the writer written approval over where the producer can submit the property. Scott Fitzgerald to The Food Channel. Another pitfall of the Shopping Agreement for the producer lies in the important distinction between a property right and a contractual right.
Under an Option Agreement, the producer is granted the exclusive option to purchase the motion picture and television rights to the property during the specified term and consequently has exclusive control of these rights during this period.
No one can circumvent her during the option period — not even a major studio. In contrast, under a Shopping Agreement the writerretains full control and ownership of the rights at all times. The producer is simply granted the contractual right to shop the property to selected buyers.
It is true that the Shopping Agreement generally provides that during the term and sometimes after, to the extent described abovethe writer will not enter into any contract with a company shopped by the producer unless the producer is engaged by that company as a producer of the project.
But, in reality, if the writer becomes dissatisfied with the producer and decides to go around her back and sell the rights himself, it will be very difficult for the producer to stop the resulting sale. Her sole recourse will usually be an expensive and time-consuming breach of contract lawsuit. As noted, the Shopping Agreement generally provides that the writer retains percent ownership of all rights in the property unless and until he enters into a developmen t agreement with a buyer.
Despite this ownership, a rare but serious pitfall for the writer can arise if the producer is allowed to add to, or subtract material from, the property during the term. Such modifications may consist simply of giving a few notes, suggesting a couple concepts or making minor tweaks. Although this happens with screenplays, it more often occurs when the property being shopped is a TV series format, since such formats are fairly fluid and are often revised during the term. The problem can arise under Option Agreements, but is much more likely to arise under Shopping Agreements where the relationship between the writer and producer is often not clearly defined.
It is critical that the writer protect himself against this calamity. One way is to provide in the contract: That way, if the producer does make revisions, the writer will own them. The Shopping Agreement should further provide that upon the expiration of the term, the producer will have no further right to shop the property to any parties, or to use or disseminate any elements of the property for any purpose whatsoever and will immediately return to the writer all physical materials respecting the property in her possession.
As in an Option Agreement, the writer will typically warrant and represent that he is the sole and exclusive owner of the property and that nothing contained in the property, to the best of his knowledge, infringes upon or violates any personal, contractual or proprietary rights of any person or entity. The parties generally agree to indemnify each other for any damages, claims, liabilities, etc.
At any time during the option period, the producer or her assignee can exercise her option and purchase the motion picture and television rights to the property by simply paying the agreed-upon purchase price. The writer cannot change his mind or withhold approval.
In stark contrast, under the Shopping Agreement, the writer reserves the exclusive right to approve or disapprove, usually in his sole discretion, any prospective deal for the sale of the property that the producer presents to him. The producer will often seek to modify this restriction. However, the experienced writer, or the attorney for the writer, will usually agree at the most to state that the writer will exercise his approval rights reasonably and in good faith — a vague term that is difficult to enforce.
A little investment at the beginning of the relationship can prevent a lot of headaches up the road. It is purely intended for the purposes of general education and general discussion. Marcus Lindeen on his CPH: Filmmaker magazine is a publication of click here to learn more.
In the film industryan option is a contractual agreement between a potential film producer such as a movie studioa production companyor an individual and the author of source material, such as a book, play, or screenplay for an exclusive, but temporary, right to purchase the screenplay, given the film producer option agreement template film up to the terms of the contract.
The agreement details the exclusive rights, including the specified time period and financial obligations. The producer usually has to advance the essential elements, such as financing and talent, towards the creation of a film based on the work being optioned. Similarly, producers can also option articles, video games, songs, or any other conceivable work of intellectual property. Financially, the contract qualifies as a financial option and may be valued by applying real options analysis.
The term is often used as a verb in Hollywood. For example, " Paramount optioned the short story by Philip K. To be more specific, when a screenplay is optioned, the producer has not actually purchased the right option agreement template film use the screenplay; he has simply purchased the "exclusive right" to purchase the screenplay at some point in the future, if he is successful in setting up a deal to actually film a movie based on the screenplay.
This is usually a slow process in which a "package" of sorts is created. During this time, the producer must:. This process can last for a prolonged period of time known as development hell. If all this tentative planning falls into place, meaning actual agreements are signed and financing is secured, then the producer can start the pre-production phase.
A portion of the financing is usually used to exercise the option. Film options are exclusive, usually for an initial period of 12—18 months. After the expiration date, the producer no longer has an exclusive right to buy the screenplay, and the writer can option it to a different producer.
Most option agreements specify the prices of additional extensions most commonly one extension, also for 12—18 monthsshould the producer be unable to put option agreement template film movie together in the originally specified term, and choose to extend. The fee for the first option period is normally applicable to the option exercise price, while the fee for the extension if exercised typically is not applicable, though that is not always the case.
Options are not expensive by the standards of Hollywood movies. Option option agreement template film typically do specify the eventual cost of the screenplay, if the producer does end up exercising the option. Option agreement template film optioning a screenplay is far cheaper than buying it, options are very popular in Hollywood for speculative projects. The above rules generally also apply to the option contract for a completed play between playwrights and theatrical producers.
A significant difference is that the playwright may refuse to allow their product to be changed in any option agreement template film without consent and involvement. The option will provide for the provisions triggered by the purchase of the play when the producer has put his investors and money together.
Occasionally, a play will be commissioned by a producing organization, and in that case the writer will not be working " on spec ", and the notion of an option will not arise. From Wikipedia, the free encyclopedia.
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June Learn how and when to remove this template message. Pricing options on film revenueRisk 22, Van der Stede Using real options to make decisions in the motion picture industry. Real Options in the Motion Picture Industry: Evidence from Film Marketing and Sequels. Contemporary Accounting Research, Vol. Retrieved from " https: Film production Real options. Articles needing additional references from May All articles needing additional references Articles needing cleanup from June All pages needing cleanup Cleanup tagged articles with a reason field from Option agreement template film Wikipedia pages needing cleanup from June Articles with multiple maintenance issues.