Resources / Contract Guides

A Guide to Film Contracts: The Producer’s Journey

We open with our heroic film producer, contemplating the peace and tranquillity of her office. Then comes the call - her next film. She knows the road will be long and arduous, through the towering paperwork, the gloomy spreadsheets, the menacing financiers – but she cannot refuse the quest. And she has a map of the route she must travel to reach opening night.

1. The Fellowship
Who is going to make and deliver the film with you? If you have a co-production partner, then before anything else is done, the terms of your Co-Production Agreement need to be clear. How are decisions made? Unanimity is best, but do you need a circuit breaker if you can’t agree? How will the duties and obligations be shared between you? What fees will each party receive out of the budget, what profit share, what credits?

If you are considering granting copyright shares to your production partners, consider whether this is really necessary, or whether they will be satisfied with a share of the budget and profit. If you are a new producer who is asking an established production company to come on board, then you may need to accept a loss of ownership and control if they are going to take on the final responsibility for completing and delivering the film.

It is common practice to establish a Special Purpose Vehicle (SPV) as a wholly owned subsidiary of the production company to make the film, claim the offset, then return the rights in the film to the parent company who has deals with distributors, broadcasters etc.

2. The Rights
Chain-of-Title is the central legal issue in film making. Like title to land, investors need to be reassured that you own the rights that underpin the film you are making. I am commonly asked to provide my opinion as a solicitor that the chain-of-title is complete and effective.

In preparing a Solicitor’s Opinion, I start from the original concept – whether it is a book, play or your own idea – and make sure that we can show the rights effectively passing from person to person up to the final production company.

You need to be very careful, especially at the early stages, that third party involvement in the development of a script does not give rise to a copyright claim that needs be resolved later. The more people involved, the great the potential for problems to arise. So any agreement relating to brainstorming sessions or draft scripts needs to have a clear assignment of rights.

Option and Purchase agreements are relevant where you are basing your film on a pre-existing book, play or other work. This is a two-part agreement. Under the Option you pay a relatively small fee to buy time, where the owner agrees not to grant rights to anyone else while you try to raise the budget. At any time while the option is on foot, you can buy the rights under the terms which have been pre-agreed in the Purchase Agreement for a price which typically consists of a percentage of the budget, and a share of net profits.

For biographies and documentaries, a Principal Participant Release or Access Agreement may be needed. Here the subject grants access to their home and/or workplaces, allows you to record them, may provide and grant rights in photos, footage and other material they own, and may agree to deal with you exclusively. A crucial point, and common stumbling block, is that the subject must accept that you have the final right to determine the final form and content of the film. They must trust you to tell their story accurately and honestly.

3. The Gold
Finance – the producer’s eternal struggle - and usually the major part of legal work on a film.

We start with Development Agreements, typically from Screen Australia or a state funding body, occasionally from a broadcaster. They provide funding for a draft script or other development material, in return for a small copyright interest and right to invest further if the film proceeds. It is crucial to have clear provisions for rights to revert back to you on reasonable terms if they do not wish to continue their involvement.

Now comes the creative part, where the producer must assemble the budget. In some cases Grant Funding will be available, with minimal strings attached. But otherwise you will need to sell either equity (a share of the copyright) in the film to investors through a Production Investment Agreement, or rights in the film for a licence fee to broadcasters and other uses through a Pre-Sale or Licence Agreement, or the right to sell rights in the film to distributors or sales agents through a Distribution Agreement, in return for a minimum guarantee / distribution advance.

Post-production houses and other contractors may agree to accept a share of the film in place of payment. And as a last resort, you might even use your own money!

There are many, many ways to put all the pieces together in financing a film, however it is important to ensure that all the deals are consistent with each together, that the rights in each agreement match the price paid, and that you have not sold the same right twice.

Be aware that with each additional financier involved, the complexity and costs of the overall arrangement can increase exponentially - even more so when they require other players to come on board: Completion Guarantors (insurers who guarantee to investors that a film will be delivered or their investment returned); Cashflow Lenders (who advance the Producer Offset or other elements of the budget that the producer needs earlier to fund production); E&O Insurers (who insure against copyright and defamation claims); and Disbursement Agents (who collect and distribute revenue to investors).

4. Action
From a legal perspective, the actual making of the film is usually the simplest part of the process. We have already done the hard work - acquiring rights and securing finance. Even so, there are a myriad of agreements you will need to deal with during production.

Cast Agreements are often the standard form agreements negotiated by the MEAA. Similar standard agreements are available for Crew Agreements but it is common for crew to negotiate their own terms. In both cases you need to be aware of the laws relating to employees vs independent contractors, the conditions that may be imposed under the Broadcasting and Recorded Entertainment Award and the situations in which you might be required to pay superannuation. For documentaries simple Participant Release may also be required for interviewees and other people featured in the film.

Producers and key creatives such as Directors and Writers will have their own forms of agreements, which may be in the forms published by the relevant guild, but more often in a form drafted by the production company.

Music Synchronisation Agreements will cover your use of music. Start the process early so you can licence the best range of music to fit your budget, and remember that you need to licence both Publishing and Master rights. With a lower budget, Production Music is another option. You might commission someone under a Composer Agreement to compose and produce music specifically for your film. For more details see my seminar paper Clearing and Commissioning Music for Film and TV.

Other Rights Clearance agreements will be required if you are incorporating archival footage, or featuring artworks, in your film. There are exceptions for Fair Dealing, and Incidental Use under the Copyright Act, but it can be problematic to rely on these, especially when you are delivering your film to broadcasters and distributors who expect full clearances.

Location Agreements may be required, and can be particularly important where a certain location is to be relied upon. Fees, access rights, remediation costs and restrictions can all be relevant here.

You’ll require a range of Insurance Policies both as a matter of prudence, and additionally as a requirement of investors and financiers. You’ll discuss these requirements with your insurance brokers. In reviewing production agreements, particularly location agreements, it is important to ensure that you do not agree to extend indemnities and similar provisions to the point where you are not covered by your insurance policy.

5. The End
Unless there are some loose ends to be tidied up, most of the legal work should be completed well before the film is delivered. Just remember to invite me to the premiere!