Film contracts and agreements protect the rights of your film and are
necessary to avoid miscommunication and risk at every stage from pre-production
Various kinds of contracts development at pre production stage. Agreements need
to be set in place with your production team, cast and crew even from before
principal photography begins. This article is designed to briefly cover the
types and variety of agreements that are most commonly used in an independent
Pre-Production / Contracts DevelopmentPre-production refers to the period of a film before production and shooting
begins when those in charge of getting the film up and running finalize the
rights and the script, get financing in place, put together the cast and crew
and prepare for production. The early stages of pre-production are often called
The development stage can last for many years, as rights are acquired and cast
and crew are slowly assembled. Agreements that are commonly needed during this
period are those for the purchase of rights, the development of the script, and
the hiring of writers to finalize the script.
Rights purchase agreements and screenplay option agreements, writer "work for
hire" or collaboration agreements and co-production agreements are among the
many types of contracts necessary to engage talented individuals to develop a
script for production.
The Production Entity - CompanyIn order to finance a feature film, producers generally form a production
company and sell interests in the business entity. A production company can be
any form of business entity, such as a corporation, a limited partnership (LP)
or a limited liability company (LLC).
Generally LLCs are recommended as production entities. They are the most
flexible in terms of tax treatment and allocation of power among and between
members while still providing the benefits of limited liability for the business
owners. This means that personal assets of individual LLC members will be
protected from the debts of the LLC.
To form an LLC, organizational papers must be filed with the secretary of state
in the state of formation, along with filing fees. In some states, such as New
York, there is also a publication requirement. Members of LLCs can be
individuals or other entities, such as corporations or other LLCs.
The basic agreement necessary for an LLC is called an operating agreement, which
sets forth the rules that govern the LLC and is analogous to a "shareholders'
agreement" for a corporation. The operating agreement must address keys issues
such as management control, the scope of the business of the LLC, the personal
role of the filmmakers and their fees, as well as the role and obligations of
investors and the priority and allocation of return of their investment.
Also, while many people do not like to discuss the dissolution of a business at
the time of formation, the operating agreement should nevertheless address what
would in the event that the LLC needs to be wound up or if new members need to
be added because of death, disability or budget shortfalls.
From the filmmakers' perspective, it is very important that the operating
agreement be drafted to ensure that the filmmaker retains complete control of
the company's management.
As films are highly personal to the filmmaker, the operating agreement should
include a "contingency plan", which as the name implies, should lay out the back
up plan and consequences in the event that the filmmaker, for whatever reason,
cannot complete the project.
We also recommend that the filmmakers' obligations be more specifically set
forth in separate employment agreements, so that the filmmakers become employees
of the LLC and the intellectual property created is owned by the LLC under
traditional "work for hire" principles.
The investor, on the other hand, will try to negotiate so as to protect his
investment and allow for continuity in the event that new creative teams or
members need to be brought in for the benefit of the project. Counsel for the
filmmakers would try to draft the agreement to ensure that their clients
maintain creative control at least through the initial production and
The operating agreement should further include the investor's obligations, such
as when and how their money will become available to the filmmakers. Typically,
these agreements require that the investor's funds be released to the filmmaker
when there is enough money to make "meaningful progress," in a manner this is
defined by the operating agreement.
Remember, the best way to prevent misunderstandings is to have the expectations
of all parties expressly provided for and written down along with contingency
The next question to be considered is the scope of the business of the LLC. For
example, is the film company being created to produce one film or multiple
films? Generally, LLC operating agreements are drafted to allow the LLC to
participate in "any lawful business" but it may offer more protection to small
investors if the LLC is limited to a single film project given the risks of
motion picture investment.
Finally, and perhaps most importantly, are the terms regarding the wrap-up or
"winding down" of the business. As mentioned earlier, many producers do not wish
to discuss the wrapping up of a business at the time of its formation because
they consider it bad luck. However, it is very important to address these issues
before problems actually arise so that producers will know what to do in the
event of dissolution.
The operating agreement may also provide for mandatory repurchase of the
investor's ownership interests at some point in the future. Often this is
triggered by the fact that the production company does not have any financing
for a certain period of time.
An operating agreement is not only necessary for the formation of an LLC, but it
is also an extremely important tool used to address certain issues in writing
before the problems come to fruition in reality. If the operating agreement
provides guidance for what the parties involved should do throughout the
production of a film, it would eliminate the stress and chaos of having to
figure out what to do when problems actually arise-and they almost always do.
The Business Entity - Securities IssuesBecause a production entity is a business and involves selling passive interests
in the business to finance the film, this raises many issues regarding federal
and state disclosure requirements set forth by applicable securities laws.
The producers and promoters of the business are responsible for providing full
disclosure of all the material facts regarding the investment and its risks to
their passive investors.
Material information is any information that a reasonable person would want to
know when deciding whether or not to invest in a film.
It is typical for the producers to hire experienced securities counsel to write
an Offering Plan ("Private Placement Memorandum"), which they then either
register with the proper federal and state authorities or file for an exemption
from registration with those same state and federal authorities.
These Offering Plans must include a description of all material elements of the
film project including bios of all personnel involved, risk factors, budgets and
They must state where all original, underlying agreements relating to the
offering are on file and that they can be examined on request. One major risk
that must be disclosed is the risk of failure to obtain distribution and to
recoup negative costs. For instance, independent films that never obtain
distribution do not recover their expenditures, resulting in a loss for the
Thus, the producer should be sure to be honest from the beginning, as they can
be held criminally liable for knowing misrepresentations of facts. The investors
may be entitled to a full refund of their investment if the producer or any of
his agents or associates hides or misrepresents facts regarding production.
Rights Purchase AgreementA rights purchase agreement is used when a producer desires to purchase a script
or story outright from a writer or other owner.
Generally, these agreements are known as "Assignments of Rights" and often
include the sale of "the sole and exclusive motion picture, television,
photograph record, merchandising and commercial rights and all allied and
ancillary rights, throughout the universe, in perpetuity."
Put simply, a rights purchase agreement provides for the purchase of all rights
associated with a motion picture, not just the rights to purchase the script.
However, these agreements can, and often are, limited to only certain rights and
can exclude others.
Which rights are kept by the writer usually depend on the bargaining power of
the writer and the desires of those purchasing the property.
Rights purchase agreements are the broadest form of purchasing a property from a
writer or other owner. They can be used to purchase anything from a movie script
to a book to a short story and can be tailored to a myriad of purposes.
Life RightsSimilar to a rights purchase agreement is a life rights purchase agreement. If a
producer intends to produce a biography on a person's life, they may purchase
that person's cooperation with a so-called life rights agreement.
These rights can also be purchased from someone who knows the subject well. This
is most commonly used when the subject is deceased.
In that case, the life rights can be purchased from the subject's heirs or other
immediate family who inherited these rights upon the subject's death.
While story rights of certain deceased individuals may be considered "public
domain," particularly if the individuals did not exploit their right of
publicity during their lifetime, there are dangers in producing a "bio pic"
without an actual person's verified story.
Included in these dangers is being sued for slander by the deceased individual's
estate and/or being prosecuted for criminal slander against a deceased
individual in certain jurisdictions.
Clearance of these issues can be critical in obtaining errors & omissions
("E&O") insurance at the time of distribution.
Option AgreementAn option agreement is a contractual agreement in which a producer buys the
right to purchase a screenplay from a writer or other owner. Unlike the Rights
Purchase Agreement, which is a flat out purchase of a property, an option
agreement is not actually the purchase of the right to use the screenplay.
Instead, the producer purchases the "exclusive right to purchase" the screenplay
at a later date, for instance, when the producer secures financing.
Option agreements are usually used to put a property "on hold", allotting the
producer more time to conduct more research and to explore other avenues
relating to the making of the film.
Options are generally less expensive than Rights Purchase Agreements, as writers
are often happy to get a few thousand dollars for their work.
Options are used often in Hollywood and it is far cheaper to option a screenplay
than buy it from the onset. An option agreement is especially useful when a
producer is unsure of whether their financing will come through.
This is basically a way of hedging your bets in case financing does not come
through as anticipated. In such an event, if you purchase the rights to the
property outright, you might be forced to purchase a screenplay which cannot be
made into a profitable motion picture.
With an option agreement, on the other hand, even if you fail to secure
financing, you can simply let the option expire and "cut your losses".
Writer AgreementA writer agreement may be needed in two specific instances. One reason a
producer would use a writer's agreement is when a producer has an idea for a
film (for example, based on a book or a Broadway play) and wants to convert this
idea into a screenplay.
A producer would use a writer's agreement in order to formally engage the
writer's services to adapt his idea (or "property") into a screenplay.
Another reason a writer's agreement would be used is when the producer wants to
engage a screenwriter for a final rewrite of an existing screenplay.
In both scenarios, a writer's agreement is an excellent option to engage a
writer, but producers should use caution when engaging writers belonging to the
Writer's Guild of America.
When drafting writer's agreements for WGA writers, producers should take into
account additional protections that the WGA provide for writers.
Production Agreements.Production refers to the period of movie making when "the magic happens" and
principal photography starts and the movie physically gets made.
Typical agreements needed during this period are engagement agreements for
hiring cast and crew, renting a venue for shooting scenes, and other needs.
Crew - Above the LineThere are two types of crew members.
Above the line crew members are those who control the aesthetics of a movie,
such as the director, producer and cinematographer, just to name a few.
Above the line crew members are generally paid a flat fee, as provided in their
employment agreements. These agreements most likely contain very complex terms
and provisions than those needed for their below the line counterparts due to
the nature and extent of their work on a film.
For example, a director's employment agreement would include compensation for
development and production, depending on when the director was hired. The
agreement might also include a provision to share a part of the profits if the
film does well at the box office.
Moreover, it is not uncommon for above the line crew to receive a daily stipend,
or per diem, to cover their expenses while on-set. The agreement generally also
includes provisions for how above the line crew are credited in a film, which
can sometimes become highly contested.
Also, an agreement of this type might confer the right for directors to hire
other crew members and to decide on the cast.
A director might want to have control over the editing and final cut of the film
and the extent of such control should also be memorialized in the director's
Finally, an agreement with a director might have a "a right of first refusal"
provision that gives the director a right to choose whether to direct any
prequels or sequels of the film before the producers can hire another director.
Like writers, many experienced directors are members of the DGA.
Their agreements would be subject to DGA rules and their Basic Agreement.
An agreement with a producer should also cover the basic terms of employment,
such as a description of the producers' obligations and compensation. The
agreement should cover how the producer will be credited in the film.
Often, it is wise to have an exhaustive list of applicable terms memorialized in
the agreement, rather than risking the possibility of running into problems in
the course of the film production which could be catastrophic, especially at or
near the end of the filmmaking stage.
Crew - Below the Line"Below the Line" crew refers to those crew members who deal with hands-on
aspects of filmmaking, such as lighting and sound technicians and script
Below the line crew members are generally paid hourly, as opposed to the flat
fee above the line crewmembers receive. Therefore, agreements with below the
line crew are often less complex than those of their above the line
Accordingly, a crew deal memo can be used instead of a full contract for below
the line crew members. Deal memos include personal information of the
crewmembers such as their name, address, and emergency contact information and
social security number.
The deal memo also discusses individual crewmember's job title, rate of
compensation and expense reimbursement. The memo also covers what if any credit
a crewmember will receive.
A deal memo is usually only one page long. Deal memos are often a good idea
because they clearly set out all the important information on one page and
copies can be made available to all crewmembers.
Because of its length, a deal memo is easy for reference, which is especially
important in the event a conflict arises.
Cast AgreementsAgreements with the cast will vary depending on the type of cast member. For
example, a SAG (Screen Actor's Guild) actor will have a different contract that
a Non-SAG actor because the requirements for these two cast members might differ
due to the rules and regulations imposed by the guild.
Further, if you plan on hiring minors or extras, you might need a different
agreement for each group. A SAG actor's standard contract includes regular terms
such as compensation.
However, one wrinkle imposed by SAG is that actors under guild protection are
guaranteed a certain amount of compensation (regardless of the actual hours they
work) and in return, the producer of the film gets the exclusive right to use
their likeness in the film.
The producer must also agree to pay all SAG contributions, such as the actors'
health and pension plans. Generally, agreements with SAG actors also provide for
how they will be credited and often include a section addressing the dressing
room and other similar amenities.
Importantly, a SAG contract is explicit about the types of promotion and
publicity services to which the actor must be engaged. Also, a SAG actor will
also often have approval over the types of publicity photos and other materials
the producer can use to promote a film.
Non-SAG cast members can have their agreements memorialized in a cast deal memo,
similar to the deal memo for below the line crewmembers.
A cast deal memo is one page agreement which includes contact information, job
obligation, terms of compensation and other amenities provided to individual
cast member, such as travel and accommodation expenses and reimbursement, if
A cast deal memo for a non-SAG actor will also set forth the type of credit the
actor will receive and whether or not the cast member will be paid for the
subsequent use of their pictures or likeness for future promotion of the film.
Because these actors are not represented by a union like SAG, they enjoy
relatively less protection: non-SAG actors negotiate their employment contract
terms with less bargaining power and legal knowledge than would a SAG actor or
An important clause that is often included in all contracts with any type of
actor, SAG or non-SAG, is a clause stating that the actor's services are unique
and the producer has the right to seek remedies in the form of injunctive relief
if the actor were to breach the contract.
These clauses essentially prevent the actor from acting in another movie project
during the time frame set forth in the her original employment contract.
Generally, New York courts allow these types of agreements so long as they are
reasonable in time and scope.
If you plan on employing minors to work on your film, you must use yet another
type of agreement and the minor's legal guardian must sign on behalf of the
minor. The agreement, usually one-page in length, gives the producer the
exclusive right to use the minors' image and likeness in perpetuity.
Certainly it is possible for child actors to be in SAG and in that case case,
the minors would be covered by not only the terms of the employment agreement
but also the rights and protections set forth under SAG rules. Consequently,
this class of minor SAG actors would require a more complex agreement.
Moreover, it is important to be aware of the rules provided in the specific
state where the film is being made. Some states, for instance California,
require a teacher to be on-set and set a ceiling on the number of hours minors
can work at any given period of time.
It can often be very complicated to use too many extras in a feature film,
although there are times when doing so is essential. Producers generally use a
standard extra agreement which sets forth the rate and credit afforded to the
Extras may also belong to SAG and if so, their employment contracts must include
terms that meet all requirements set forth in the SAG rules.
When actors volunteer on a non-paid basis to be extras in the film, producers
should nonetheless have them sign simple release agreements that allow producers
to use their name and likeness in the film.
The foregoing is a simple discussion of the agreements used when hiring the
cast. Drafting these agreements can often involve complex negotiations because
of individual needs and relevant union rules.
Location Agreements. Locations are a very important part of filmmaking, as most independent films
are not filmed in a studio, but rather are filmed at leased a location.
Location agreements cover how long and for how much a location is leased.
The location agreement also addresses "rain dates", in case filming needs to be
rescheduled or re-shoots are required as a result of unforeseen circumstances.
A location agreement will also often grant a producer the rights to use the film
shot on the location for other film projects. Perhaps the most important clause
in a location agreement is the one that indemnifies the owners of any damages
arising out of the use of the premises for filming and further protects the
owners from tort liabilities that might arise as a result of filming.
In addition, producers generally include a disclaimer in the film location
agreement that all depiction of the location is fictional and such filmography
does not necessarily represent a true reflection of the actual location.
Postproduction refers to the time in the movie production when the shooting is
done and the film is undergoing editing which requires the help of editors and
Common agreements needed during this time period include editor agreements and
Like actors, editors and composers may belong to a guild or union which can
impact the nature and complexity of their agreements. However, the agreements
will typically include the term of employment, the rate of employment and should
also address who will own the finished product.
Editors are usually hired on a "work-for-hire" basis, which enables the producer
to maintain ownership of the edited product. Often, compensation is divided
based on the number of times the film needs to be edited or the number of
compositions that are required to be written by the composer.
It is not uncommon for a film to use many editors at a time and it is therefore
important to split the agreement up in this manner to ensure that the producer
can continue to hire more editors as needed.
It is also critically important for the success of a film to use music and other
sound to create sound effects. It is equally important to use clips of film and
TV to enhance the overall presentation of the movie.
This is a very complex area of filmmaking and unsurprisingly involves even more
types of agreements, clearances, and licenses, such as sync agreements.
Producing an independent feature film is not an easy task and often involves a
lot of negotiation and agreements in all stages of production from
pre-production to production to post-production.