Shopping Agreement Vs Option Agreement
Unlike option agreements, purchase agreements can be either exclusive for a manufacturer or non-exclusive. This allows screenwriters to maximize their chances of making money for your film script without being tied to a single film producer. It is necessary to include in these agreements a non-circumvention clause so that several parties with the same project cannot get closer to the same sources of funding and the same talents. One of the advantages of option agreements is that they are more comprehensive. These include the option price, details of the exercise (purchase) price, payment terms and renovation. They may also contain details about the separation of rights, spinoff/sequel rights, merchandising rights, writer credits, and the number of projects that need to be offered to them. These terms (even the purchase price) are usually negotiated in purchase contracts when the financing is finalized. Unlike an option agreement, the commercial agreement does not confer exclusive rights to copyright and is only a contract for services. Therefore, it can be legally oral or written. Due to this fact, some producers and authors are tempted to enter into an oral shopping contract to keep things “friendly” and simple between them and avoid attorney fees.
This is almost always a mistake. The weakness of an oral agreement has never been better expressed than in Samuel Goldwyn`s famous statement: “An oral contract is not worth the paper on which it is written.” As friendships become cold and memories can fail, the shopping contract should always be written and signed by both parties. A producer always wants, like any businessman, to get the most boom for his money. Purchase agreements or free options are usually preferable on their side; However, this is not always possible with respect to rights to major projects. Fees for movies will be higher than for television, which is between 25,000 and 50,000 $US. When the project becomes a series, payment is usually made per episode (Lucky You). Option fees are usually charged to the purchase price. However, extension fees are generally not. The duration of purchase contracts is generally shorter between 6 and 8 months. They also give the producer the opportunity to renew it, but they give the screenwriter the right to terminate the contract after the first term.
The producer usually does not pay money as part of a purchase contract. The producer`s promise to use her good faith efforts to obtain an offer for a development contract is usually the only and sufficient consideration for the grant of the right to purchase by the author. This element of the trade agreement of course benefits the producer, who does not have to spend his limited development funds as in the case of an option contract. This is not so good for the author, both because he would normally receive money under an option agreement (and must receive money if the producer is a signatory to the Writer`s Guild of America Basic Agreement) and because the producer probably does not have “skin at stake” as part of the trade agreement and may not be very invested in the project. As a rule, the sales contract is negotiated in parallel with the option contract. Budgets are producers` worst nightmare. If producers think a project has potential, they need to be sure of the cost of the project, including the cost of the option and the purchase of history rights. The last thing producers want when they make a film is to have big unforeseen costs that increase expenses and exceed their budgets. .