Contracts are really not that confusing. If you think they are, then take a look at my primer here and get back to me. Now, please understand that even though oral agreements may have legal force in certain situations, it’s always better to have them in writing. But what should you actually write? Well, forget the idea of a handshake as a binding gesture. It’s better to consider a contract as a series of gears working in tandem with each other. Each gear affects another clause and the person drafting the contract has to keep up with how all of the pieces fit together. So, let’s take a look at some of the most popular pieces in an entertainment contract.
First, there is a concept called assignment. The legal definition of “assignment” means that you have the power to give rights and powers under the contract to another party. This definition is as broad as it sounds. You can assign economic benefits, obligations, or other features of a contract to another person, corporation, or partnership. Let’s say, for example, a painter paints your house for $100. The painter then tells you that he assigned his right to collect the $100 to someone to whom he owed $100. Now, the other party has the right to come knocking on your door for payment instead of him.
Why would you ever want to assign rights under a contract? If you purchase a television script, you may want to be able to assign your ownership rights to that product to a studio for them to develop into a hit show. Producers need flexibility with regard to assignment provisions because distributors likely require assignment rights prior to investing in a project.
Artists with clout may be able to demand that the power to assign rights be subject to their approval. For example, Joss Whedon would never assign the rights to Buffy the Vampire Slayer to a comic publisher without comfort in the quality of the end product. Sadly, most artists negotiate for this power in their contracts and end up with their products thrown into new mediums never contemplated at the time of the initial deal.
Right of First Negotiation
This is another common clause that can be very friendly for the production studio. Essentially, the artist is required to give the production company the first right to negotiate a deal in the event the artist decides to sell certain rights to a product. So, let’s say you sell your script to a studio but retain other rights (e.g., merchandising). This means that you would have to first negotiate with the studio before you can start negotiating with other parties on the open market.
Right of Last Refusal
Separate and distinct from the right of first negotiation, this basically means that the buyer (typically an investor or studio) has the right to purchase the artist’s offering for the same terms and conditions as a third party. So, if the artist secures a fantastic deal from Warner Bros, then the initial investors must be allowed to match that offer before a deal could be struck.
Obviously, this can have a chilling effect on an artist’s ability to sell additional rights to their properties.
Right to Cure
Sometimes things go wrong. That’ll land you in a breach of contract. But it may be okay! After a breach, the artist generally has some ability to cure a breach. These clauses are as varied as the imagination allows. If you’re negotiating on your own, don’t forget to talk about this.
This is as straightforward as it gets. You have the right to negotiate over the manner to communicate. So, if you want to have an email confirmation for every communication, then negotiate for it. You could have people send you certified mail with every official communication. Hell, negotiate for skywriting if you want. The point is that you should know how to formally communicate with the other side so that you never have a “I didn’t know that” moment.
When are your obligations to the studio/producer/investor over? Does missing a deadline end the contract? Will you be required to refund any money? You should definitely spend some time thinking about these provisions in connection with a right to cure defects.
Studios will obviously need to use your name and likeness in order to promote a show with your face on it. How much are they allowed to do this? If your name is strong enough to promote the product on its own, then you should definitely consider how much you’re being compensated for it. For example, if a horror movie comes out with Stephen King’s name on it, then he’s entitled to compensation for that.
Money, typically. Clauses relating to remedies detail how badly you can get hit if you screw up. Do you owe them an arm and a leg? Do you owe them their money back? Make sure to check these clauses. Also, look for any language taking away your right to a day in court. It’s basically standard these days to insist on arbitration clauses in the event of a disagreement. Some say that these clauses screw artists by keeping them out of potentially sympathetic courts. Then again, studios typically have more money than artists and can spend smaller parties into the ground. You should really consider talking to an attorney about this one. Your results may vary.
What happens if you hire an idiot who accidentally hurts someone? Most contracts for major studios will require you to carry insurance for these issues.
“But wait, didn’t we say something else before?” Integration clauses prevent ambiguity in contracts. Integration basically means that all previous agreements are null and void and the only living agreement is contained within the four corners of the current contract. As a result, you can’t claim that any previous agreements apply to the documents (although, some small exceptions may apply). Integration clauses are basically for any contract.
This should provide a starting place for your own research into the types of clauses you should think about when drafting your own agreements. At the end of the day, you really should consider hiring an attorney to help with drafting and negotiating these types of issues. What we’ve covered here only scratches the surface of the types of clauses you need to consider.
As always, thanks to Mark Litwak.