This article is written by Sudiksha Rawlani, pursuing a Certificate Course in Introduction to Legal Drafting: Contracts, Petitions, Opinions & Articles from LawSikho.
Table of Contents
Introduction
Have you ever wondered why a movie which is only an hour or two long or your favourite Netflix show’s new season takes so long to get released? This is because there is tremendous effort being contributed by hundreds of people behind that movie or that one episode you waited so long for. It is a long road to bringing a piece of intellectual property to the screen. However, the initial step of developing something for entertainment is acquisition of script rights and one may entitle himself to the acquisition of script rights by entering into a script acquisition agreement.
A Script Acquisition Agreement, as the name suggests is nothing but an agreement for sale of a script. It is basically a writer saying goodbye to his piece of art. The development of a motion picture be it a movie, a television series, a short film or a video game, requires acquisition of a screenplay or an already existing property such as a novel, book, short story, article, blog or idea on which your screenplay will be based. A movie or a TV producer buys the script written by a writer by paying the purchase price of the script and by entering into a script acquisition agreement.
When is a script acquisition agreement entered into?
A Script Acquisition Agreement is entered into between a producer and an author, when a potential film producer such as a movie studio, a production company or an individual, wishes to purchase exclusive rights of a source material such as a book, play or a screenplay. Not only is it entered when a producer wants to make a film but also when a producer wishes to make a TV series, video game, short film and many more.
Essential clauses
It is very important for any contract to be straightforward and easy to understand. A badly drafted agreement results in misunderstandings and wastage of a lot of time in understanding the intention of the other party. Are you a newbie literary agent but are clueless about which clauses should be present in a script acquisition agreement so as to free it from loopholes? or are you a writer selling your script or a producer purchasing a script and want to be extra sure whether or not all the important clauses have been inserted in your script acquisition agreement?
This article will guide you so that you don’t miss out on any important clauses while drafting or entering into a script acquisition agreement.
Purchase price
An author does not sell his work without getting paid for it.
Therefore, in order to actually get access to the exclusive right of the script, the producer has to pay the ‘purchase price’. It is one of the most essential clauses of a script acquisition agreement. One may say that the purchase price is the element of consideration of this contract.
Contingent compensation
Contingent compensation can possibly take the shape of box office bonuses, net profit participation, extra payments to the author if the book achieves “bestseller” status on one chart or another, etc.
Grant of rights
“Grant of Rights” is the core clause of the entire script acquisition agreement. It literally states the rights that are granted to the producer. This clause can be highly negotiated. These rights can include either a right to make a single audio visual production or multiple production, whether or not the producer is entitled to make sequels/remakes, if the producer can create merchandise based on the movie or publish the movie’s screenplay as a stand alone work, and many more.
Representation and warranties
A producer needs to be assured whether the intellectual property i.e. here, the script actually belongs to the writer who is party to the agreement or not. The representation and warranties clause protects the producer from third party claims and can bound the author to provide a valid chain of title. It is also important for the producer to make sure he acquires all the rights necessary for a motion picture to be produced.
Credit
Credit refers to the billing or attribution that the scriptwriter gets for his or her part of the in writing the script, if a motion picture is made. The credit can be given in multiple forms, for example on screen credits like “Based on the book [insert name of the book] written by [insert name of the author] or in promotional materials. In rare exceptions, an author may also ask for a credit right which includes the author’s name in the title of the motion picture (for example: Chetan Bhagat’s Two States).
Reserved rights
It can be helpful to include a clause which clearly states the rights that have been retained by the author. This clause allows the owner to reserve certain rights which cannot be exploited by the purchaser. These reserved rights could include live stage rights, radio rights, print publication, author-written sequel rights, virtual reality, interactive media, etc.
Turnaround or reversion
If the producer encounters serious problems with the scripts or is unable to put together the right cast or director for his motion picture, he may decide to not proceed with the production. A Turnaround clause gives the owner an opportunity to reacquire his property in case the producer spends more money than that which he committed to on development, production or pre-production but later decided to abandon the project. A turnaround clause may also allow the producer to obtain full or partial reimbursement of his development/ production.
Consultation and approval rights
Consultation and approval rights include the right to be consulted or to get a certain degree of control over the creative aspects of the motion picture. Most authors do not receive any consultation and approval rights, until of course they are highly reputed and successful authors. However, it never hurts to try and ask for a right to be consulted or approve of things like the title, the screenplay, the casting, etc.
Subsequent productions
In a Script Acquisition agreement, the author needs to spell out what sorts of payments, if any he wants to be entitled to with respect to subsequent productions which can include sequels, remakes, TV series, etc.
Errors and Omissions (E&O) Insurance
An errors and omissions Insurance protects the production company from liability should they cause any monetary damage or financial loss to another party due to negligence. Let’s say for example, the purchaser screws up and uses Mercedes in that big crash scene that you wrote about in the script. This puts an impression in the minds of the public that Mercedes’s brakes and accelerators kill people. This causes financial harm to Mercedes and they sue the producer. You definitely don’t want to be held liable for this mess. Hence, it is essential that you, as a writer, get your name added to the producer’s E&O Insurance.
Set up and box office bonus
As a script writer, you are entitled to set up as well as box office bonuses. You may claim a Set Up bonus as an additional fee if the producer enters into an agreement for the development or production of your script with an independent production company, television network or any other distribution or production entity. You may claim a box office bonus if the box office gross surpasses the budget of the film.
Payment schedule
Yet another important clause that one must incorporate in their script acquisition agreement is Payment schedule. Many unethical producers do not feel the need to pay script writers in a timely manner. However, as professionals, writers are entitled to timely payments. It is advisable that you clearly state the time period in which payments need to be made, along with the currency and method of payment.
Strategies to adopt when negotiating such agreement
Negotiating a script acquisition agreement is a must, as only after negotiation, the owner of the script and the purchaser of the script are clear about the expectations of the other and this can ensure a way out satisfactory to both the parties. A writer should not hesitate about negotiating his terms for the acquisition of his script, as he is the one who parts away with his property. While negotiating the agreement, few strategies to be considered by both the parties are enumerated herein below:
Purchase price – Purchase price has multiple forms: it could simply be a flat amount which is pre-agreed by the parties or it could be determined by reference to a formula which takes into account the budget of the motion picture. The writers of the script often prefer the purchase price being determined by reference to a formula. This is because a producer making 5 lakh movies on a book is a very different proposition than a producer making 5 crore movies on a book. In contrast to this, the producer always wants to place some restriction, the size of purchase price they will need to pay. Therefore, it is often practiced and also advised that the purchase price be determined by a percentage of the budget of the film (say, somewhere between 1-4%) subject to a floor and ceiling on the amount. This way, the producer knows that he won’t have to pay more than Rs. X and the writer gets ensured that he won’t receive less than Rs. Y.
Passive payments – If your script goes to production, gets distribution and gets enough success to warrant a sequel then the author can get additional payments for sequels or remakes. For this to happen, it is important for the author to negotiate the ‘passive payments’ clause well. If the Author negotiates well, there are possibilities he could get paid for the sequel even if he passes on writing it.
Rights reserved – It is important that the producer gives careful consideration to the extent of the reserved rights granted to the writer. While negotiating the ‘Reserved rights’ clause, the producer may attempt to obtain provisions for a right of first negotiation, which gives the producer an opportunity to make the first deal with the owner for the acquisition of the reserved rights and a right of last refusal, which enables the producer to acquire any of the reserved rights upon the same terms as offered by a third party to the owner.
Conclusion
It is important for both, the buyer as well as the seller of the script to enter into a well drafted script acquisition agreement. Both the parties of the agreement should be made clear and well aware of the intentions and wants of the other party. It is also essential that the agreement be highly negotiated so that the author gets paid the right amount for his property and the producer does not get exploited or subjected to any third party claims.
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