Frequently Asked Questions: Contracts

Answers from Mark Litwak, Attorney At Law



DISCLAIMER: The information provided here is intended to provide general information and does not constitute legal advice. You should not act or rely on such information without seeking the advice of an attorney and receiving counsel based on your particular facts and circumstances. Many of the legal principles mentioned might be subject to exceptions and qualifications, which are not necessarily noted in the answers. Furthermore, laws are subject to change and vary by jurisdiction.



Question: Are contracts signed in the United States valid in other countries?



Answer: They may be valid but difficult to enforce against the party that is a foreign company or individual, especially if the defendant's assets are abroad. Parties that sign an agreement made under U.S. law are obliged to abide by the terms of that agreement. However, American courts cannot directly enforce their judgments in other lands. The United States has entered into international treaties that may permit a plaintiff with an American award to ask a foreign government to enforce it, but the process of doing so may be expensive and time-consuming.



When a plaintiff wins an award in an American court against a local defendant, the court can direct the sheriff to seize the assets of the defendant if the defendant does not voluntarily pay an award.



Question: About six years ago, I wrote and directed a short film and the contract I signed stipulated that any future work based on said material would have to be produced by the producer I originally signed with. Likewise, said producer cannot proceed with any project unless I am writer/director. To make a long story short, we're basically married. Looking back, I now realize it was a foolish deal to sign. Is there anything I can do to get out of this agreement or am I basically stuck with it?



Answer: Try to negotiate a settlement. If there is a termination provision in the contract exercise it. If there are any conditions the other party may not have met, they may be in default and you may be able to rescind the agreement. Try to work it out.



Question: Can you suggest an appropriate form for obtaining licenses, permissions, and approvals from talent and crew who have contributed to making a film or video production?



Answer: You may want to read my book: Contracts in the Film and Television Industry, 2nd Edition, published by Silman-James Press. It has a variety of form contracts with explanations. Be careful about using forms if you don't understand their terms.



Question: An on-air talent has an existing contract that was negotiated by their agent. They have one year left on the contract with their agent and three years left on their contract with a production company as talent. If the talent renegotiates his own contract with the production company, does he owe his current agent 10% on the new contract, or only 10% on the previous contract?



Answer: You need to examine the terms of your agency agreement and also to determine whether this is an agent who is franchised by one of the guilds. Most talent agreements provide that even if the talent negotiates a deal directly, the deal is commissionable by the agent as long as the agency agreement remains in force. Whether or not the agent is entitled to a commission on any renewals of an existing contract is another question, which requires review of the agreement with your agent.



Question: I am negotiating with multimedia designers to produce several versions of an interactive CD-ROM for use in initial test marketing. Is a broadly drafted non-compete clause in the designers' contracts sufficient to protect my product from falling into competitors' hands, or should I secure rights not only to the tangible artwork and computer coding but to all concepts and developmental strategies as well? If the latter, how exclusive should my company's rights be versus those of the designers?



Answer: It's difficult to answer your question on the basis of the facts you've supplied. On non-compete clauses, they are only binding on parties who signed them, not necessarily other potential competitors. If you want to prevent the information from being shared with anyone else, you need a confidentiality agreement. Non-compete clauses are not always enforceable. In California they usually are not enforceable, as a matter of public policy. Other states, such as New York, will enforce such clauses. Even where they are enforceable, they may need to be reasonable in scope.



Question: I am about to embark on the first page of a rewrite of another author's material. It will be collaboration. I will be doing the bulk of the writing. We are currently hammering out an agreement but can you please explain what I need to make it a viable, legal document? Do I need to sign with a notary, or self register mail it to myself, or is our simply signing and dating it sufficient for legal purposes?



Answer: A binding contract requires an offer, acceptance, and some consideration, which is usually money or something of value that is changing hands, but could be mutual promises. Notarizing the documents simply ensures that the person who is signing it is the person they say they are. Mailing a script to yourself is proof that on a certain date you mailed the script to yourself, as evidenced by the postmark. This is not great evidence, by the way—you would be better off registering the script with the Copyright Office. Contracts do not always have to be in writing but it is almost always advisable to have your agreement in writing so that you can prove the terms. For a contract to be enforceable, it should be clear and leave no uncertainty or ambiguity as to any of the material (i.e. important) terms.



Question: Will contracts negotiated for regular broadcast TV also apply to interactive TV or closed-circuit (non-broadcast) TV?



Answer: Whether contracts for regular broadcasting would encompass interactive TV or

closed-circuit TV would depend upon the terms of the contract. The language used is critical. If the language confers a broad grant of rights then it may include these media. Otherwise, it may not.



Question: Can I find anywhere on the Internet the printed text of the State of California law applicable to agreements entered into and to be fully performed therein as per the last paragraph of the Release Form that agents require you to sign before they will read your script? If I can find this, do you know the HTTP address? Thank you.



Answer: If this is the clause I think it is, it merely states that California law applies to the interpretation of the contract you are signing. Parties to a contract can, to some extent, determine which state's law applies. Suppose you had a New York writer enter into a contract with a California company. If there were a dispute, there would be a question as to whether California law applied or New York law applied. If parties agree beforehand which state's law applies, the courts will enforce this decision assuming there is some nexus with the state chosen.



Question: I've been asked to co-write 13 one-hour episodes for an internationally syndicated TV show (yet to be sold—but they have money to produce them). It is non-union, work for hire, no residuals. I think I might be able to get a few points, whatever that means. Because I am co-writing, I'll get $10,000 per episode. Any suggestions? Do I need an attorney? Are there any sample contracts for such things in your book or other places? Thanks.



Answer: If someone is willing to pay you $10,000 per episode, you certainly should consider having an attorney to spend a few hours to go over the contract with you. Each point is one percent of net profits. Depending upon how net profits are defined, it may amount to a great deal, or nothing. There are a number of different sample contracts in my book, Contracts for the Film & Television Industry,2nd Ed., published by Silman-James Press. None of those contracts, however, are specifically designed for your particular situation although many of the provisions in the writer employment contract are relevant.



Question: Can you either post a sample "deal memo" for optioning a work or refer a website that would have that information? I'm interested in optioning some material and want to get the legal verbiage correct. Thanks for your time and advice.



Answer: It can be dangerous to use someone else's deal memo if you do not understand the terms. Borrowing someone else's contract is like going into a pharmacy and asking a pharmacist for a blue pill because the last time you were sick, that's what worked. There is no such thing as a standard contract, although there are boilerplate clauses that can be borrowed from one agreement to another, if the use is appropriate. When you hire a lawyer, what you are paying for is his/her expertise to select a form appropriate for you and then customize it to your needs. Rarely do lawyers draft an entire contract from a blank piece of paper. Before you use a contract, you should make sure you understand the terms and how it should be modified to meet your needs. In my book, Dealmaking in the Film & Television Industry, 2nd Ed., (Silman-James Press), there are some sample contracts and explanations as to what all the legalese means. It can be obtained at most bookstores.



Question: I think I may need your services. I am currently signed to an independent label on a work for hire 5-album contract. Because the contract was signed in California, I am entitled to a work for hire salary of $6,000.00 per year. This is my understanding. However, the label refuses to pay me this, stating that they have no intentions of paying their artists that fee as it would break them and they have put a clause in every contract since me about their plan to withhold that. (But it's not in mine, they just assumed I would be naive as to the law and wouldn't even know it was something I was entitled to) I have been signed to them for 4 years and would like to find out what I can do to facilitate gaining these earnings.



Answer: If you have a contract that guarantees you a minimum fee of $6,000 per year, it is no defense that the other party does not want to live up to its obligation to pay you. It is irrelevant what they have done with their artists.



Question: My writing partner and I have recently submitted several scripts of a television series we created to a high power entertainment producer. Before this submission, we talked with a local producer and friend about a possibility of him doing this show. We have only discussed the "what ifs" about selling it, there is nothing in writing. We have been asking for something in writing to lock this guy in, but he has just blown us off. So when we told him that someone else was interested in the show, he wrote up a confidentiality agreement for us because we were working. The confidentiality agreement that he created was between him and the other person, our names were nowhere on it. We own the copyright and the scripts, however he believes that he does. If we get offered a deal from this Hollywood producer can this other producer take legal action claiming that we have to involve him because we had talked to him about doing the project? Also, what constitutes a verbal implied agreement in this case? Is it possible that we entered one without knowing it?



Answer: All contracts can be enforceable, and in some circumstances contracts can be implied from the behavior of the parties. Most states have legislation called a Statute of Frauds, which requires that certain contracts be in writing. For instance, contracts that involve large sums of money, or require performance over more than one year, are often required to be in writing. A contract to transfer exclusive copyright interest needs to be in writing. Non-exclusive rights under a copyright can be transferred orally. Whether or not the producer you spoke to has any rights in your projects depends upon what was said and agreed upon by the parties.



Question: I'm a Pepperdine University business student and I am beginning research for my business law term paper. My topic is "The Deal Memo - A Sufficient Memorandum for an Enforceable Contract?" Since this is my first foray into this type of research, I would greatly appreciate any pointers you could provide on (1) any past or current cases involving the enforceability of a deal memo; (2) how common is their use as a prelude to the contract; (3) are they generally as enforceable as a "real" contract? Thanks in advance for your help and for this website, it is a valuable resource for this community.



Answer: A Deal memo is simply a short contract. The shorter the contract, the less specifics, thus more room for ambiguity. If the essential terms of a contract are not stated, the contract may be unenforceable. If a judge cannot determine all the important terms that the parties have agreed to, the court may simply refuse to enforce the contract. It makes no difference whether a contract is characterized as a deal memo, contract, or agreement. The use of deal memos is quite common in the movie business. Sometimes they are followed by long-form agreements. Other times they are not. They are enforceable as a real contract because in most instances, they are real contracts. However, both parties are less protected because a short-form deal memo often leaves many issues unaddressed. Thus, if there is a dispute, there may not be any language in the contract that addresses the respective rights and obligations of the party in regard to that issue. I always recommend using a long-form agreement to avoid any disputes in the future.



Question: Could you define "modified adjusted gross" as it applies to back-end participation? We're assigning rights to a design we did and bargaining for backend on ancillary uses. Also, I have a verbal agreement with a writer to use his material and his voice for a demo reel that I designed, directed and produced at my cost. The project is now being courted by a TV network—should I get my deal ironed out with the writer now or wait until we have a bona fide offer? Verbally, we agreed to a 60-40 split (me having 60) but I don't know of what?



Answer: "Modified Adjusted Gross" means whatever the parties decide it should mean. There is no standard definition within the industry. In fact, many profit definitions that are labeled as "Modified Adjusted Gross," upon examination appear to be more akin to a net profit definition. As far as your agreement with the writer, you would be well advised to document this agreement in writing before preceding any further.



Question: Should I sign a screenplay Purchase Agreement at the same time I sign an Option Agreement? The indie producer wants a 6-month free option. As an un-produced writer, what leverage do I have?



Answer: Usually the way these deals are structured is that there is an option contract that runs two or three pages, and attached to it as an exhibit is a purchase agreement that automatically kicks in if the option is exercised. If the option is not exercised, then all the purchaser's rights expire. Whether you should give an indie producer a free six-month option depends upon your assessment of whether or not this producer has the ability to get your screenplay into production, and whether you have other opportunities that you would have to forego if you grant the option.Any source