film industry
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This article is written by Pearl Narang, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from Lawsikho.com. Here she discusses “Three Important Contracts used in the Film Industry”.

Introduction

From its conception on paper to its exhibition on the multiplex screen, film production is an elaborate process. The process involves a lot of people. Each person is hired to perform a specific task. Therefore, to avoid risk and confusion, it is important that each person is clear about what is expected from him/her. This is why a contract is needed. A contract that clearly defines who owns what, who has rights, to whom the rights will be licensed to, in what way the profits will be distributed etc. 

Contracts in the Film Industry

Film industry functions on a number of agreements:-

1. Film Production Agreements

These agreements are executed during the production phase of the motion picture. Film production agreements are of two kinds: 

(i) Acquisition Agreements

These agreements are executed to acquire artists and other people for the production of the movie. They can be agreements to acquire,

  1. Actors
  2. Directors
  3. Performing Artists
  4. Line Choreographers
  5. Art Directors
  6. Costume Designers
  7. Recording Artists 

(ii) Licensing Agreements

These kind of agreements are for licensing the rights to other parties to display movies. These include granting the following licenses: 

  1. Movie Licenses
  2. Characters Licenses
  3. Music Licences 
  4. Images Licences
  5. License to Merchandise 
  6. License to Remake 

2. Intellectual Property Agreements

These agreements are executed to either acquire or license the Intellectual Property Rights related to the movie. These include, 

  1. Acquiring Intellectual Property Rights to Scripts
  2. Licensing the Intellectual Property Rights to Distributors

3. Distribution Agreements

These agreements are executed during the post production phase. These include,

  1. Film Distribution
  2. Foreign Distribution
  3. Film Distribution on TV
  4. Film Distribution on the Internet
  5. Exhibition Agreement in Cinema 

Production Agreement

A Production Agreement is a type of Service Agreement. In this agreement, a producer enters into a contract with his/her client to produce a media project. The media project can be a motion picture, video, documentary etc. 

Executed Between: The agreement can be executed between,

  1. An individual and a company, or
  2. Two companies.

Terms of the Agreement: These can include specifications such as,

  1. What kind of movie will be produced, and
  2. What kind of camera will be used for shooting, and
  3. Time period of the Shoot, and 
  4. Payment methods. 

Example: “A”, a movie producer enters into a contract with with “B” a client to produce a full length motion picture. 

The agreement will contain the following clauses:  

DESCRIPTION OF THE PROJECT:  This clause describes the project. The project can be described as a full length motion picture, a documentary, a video etc. 

Sample Clause: The project is a full length motion picture, titled “The Court”. It is an inspiring story of a lawyer and a lawsuit that changed the course of her life. 

SPECIFICATIONS: It states the specifications like,

  1. The camera with which movie is shot, and 
  2. The format in which the movie will be produced. 

Sample Clause: The project will be shot with RED One Camera will be produced in color in Blue Ray DVD Format. 

TIME PERIOD: It states the time period within which the project should be completed. 

Sample Clause: The on-location shooting shall be completed within 40 days and will require travel to Goa and Mumbai. 

BUDGET: It states the total budget of the movie production. 

Sample Clause: The total budget of the project is 25 Lakh Rupees excluding Producer’s compensation. Producer shall have full authority to apportioning the budget. 

COMPENSATION: It details the compensation to be paid to the producer and also how the producer will receive his compensation. 

Sample Clause: The producer will be paid 10 lakh rupees in accordance with Schedule A. 

Schedule A

Milestone/ Event

Compensation (in Rupees)

Submission of First Script

1,00,000

Submission of Final Script

2,00,000

Production

3,00,000

First Video Draft

1,00,000

Final Video Draft

2,00,000

Blue Ray DVDs Delivered

1,00,000

Actor Contract

Acquiring actors is the most important part of the movie production process. When an actor is hired, he/she signs a contract for formalizing the terms. 

Executed Between: The contract is executed between,

  1. The actor and the producer, or
  2. The actor and the production company. 

Terms of the Agreement: The agreement contains the following terms, such as, 

  1. The schedules of the shoot, 
  2. No. of working days,
  3. No. of hours the actor has to put in a day, 
  4. Term of the agreement, 
  5. What all is required from the actor, 
  6. How the actor will be paid, 
  7. Whether the contract is exclusive or not. 

Example: “Z”, an actor is hired to work in a full length motion picture by a production house, “Pixalate”. 

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The agreement will contain the following clauses: 

EMPLOYMENT TERM: It states how long the shooting will take place.  

Sample Clause: “Z” shall be employed for a term of 6 months from the date of the Agreement. 

WORK HOURS AND DAYS: It states how many days the actor will work and how many hours will he be required to put in. 

Sample Clause: “Z” will have to work for 6 days, from Monday to Saturday. Sundays will be non-working days. The working day will start from 9:00 am and will end till 7:00 pm. 

COMPENSATION: The contract will state the actor’s compensation. There are a number of ways of compensating actors. These can be:

  1. Flat-Rate for the Job;
  2. Pay per-hour;
  3. Per-Scene; or 
  4. Percentage of Profits.

Sample Clause: “Z” will get paid 1000 Rupees per-hour for the job. 

EXCLUSIVITY: It states whether the actor is hired exclusively or he can accept other employment during the term of the agreement. 

Sample Clause: “Z” is hired on an exclusive basis. He cannot accept any employment during the term of the contract.

SAMPLE AGREEMENT 

CONTRACT FOR ACQUIRING ACTOR

 

Actor’s Name:                                                                    Name of the Production House

Address:                                                                               Address of the Production House

Effective Date: _______________________

Actor,

By Signing this Contract For Acquiring Actor that you will take the part of [Name of the Film]. This is the working title of the movie and the final name of the film may change at later stages. As you know, this is a high budget production. If there is anything about this letter that you do not understand or you wish us to clarify, please do not hesitate to contact us.

  1. You agree to be available to work during the filming period (“the Shoot”) from _________ to  ____________ .   
  2. You agree to travel to the following locations for the Shoot _______________________________________________.
  3. You agree to give over any rights you may have in the finished film to name of production company or producer. This will allow us to distribute the film in any and every way we can.
  4. You will be paid 1000 Rupees per hour. The fee is payable within 28 days after the performance was given.
  5. We will aim to ensure that working days are not longer than 10 hours.
  6. We will do our best to ensure your health, safety and welfare during the Shoot.
  7. We will coordinate with your agent about your travel arrangements, to and from the Shoot and either provide transport or pay travel expenses which we need to agree in advance.
  8. We will provide you with a DVD of the finished film within 3 months of the completion of all post production.

Actor’s Signature                                                         Signature of the Authorised Person

Distribution Agreement

After the shooting is complete, the next step in the film production process is promotion and marketing. To promote and market the movie, a distribution agreement is executed.

Executed Between: The owner of rights in a movie i.e. the producer and the person who will be granted the rights i.e. the distributor, for marketing.

Terms of the Agreement: The agreement will contain the following clauses,

  1. Rights granted to the Distributor, 
  2. Licensed Territory,
  3. Distributor Fee, 
  4. Discretion of the Distributor. 

Example: “Pixalate”, a production house has retained the services of “Chillis Entertainment.inc”, a distributor, for marketing and production of their movie “The Court”.

The agreement will contain the following clauses: 

GRANTED RIGHTS: This clause states all the rights that will be granted to the distributor. It also states whether the right is exclusive or not. These rights can be,

  1. Theatrical Rights
  2. Non-Theatrical Rights
  3. Video Rights
  4. CVD Rights
  5. DVD Rights
  6. Pay Television Rights
  7. Web Streaming Rights

Sample Clause: “Pixalate” will grant the exclusive rights to “Chillis Entertainment”. These rights include, 

  1. Web Streaming Rights on Netflix, Amazon Prime, and 
  2. Theatrical Rights, and 
  3. Exhibition Rights, and 
  4. DVD Rights. 

LICENSED TERRITORY: It states the territory of licence, whether the license is limited to certain a certain country.

Sample Clause: “Chillis Entertainment” shall have a worldwide license to the movie.

DISTRIBUTOR FEE: The clause states how much the distributor will be paid for the services. 

Sample Clause: The Distribution Fee shall be an amount equal to: 

  1. 35% with respect to all forms of Web Streaming rights on Netflix and Amazon Prime;
  2. 25% with respect to all forms of theatrical rights; 
  3. 35% with respect to all forms of exhibition rights;
  4. 35% with respect to  DVD rights.

DISTRIBUTION AND MARKETING: It states the discretion of the distributor in marketing the movie.

Sample Clause: Distributor shall have complete discretion and control as to the time, manner and terms of distribution, exhibition, licensing, exploitation, advertising and marketing of the movie, which includes without limitation any decision to make the movie available for video-on-demand exhibition day and date with the theatrical release of the movie; provided, however, that Distributor shall consult with Production House with respect to the marketing strategy for the initial theatrical release of the movie, it being understood and agreed that Distributor’s decisions shall be controlling with respect to all such matters.


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