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Should I sign a screenplay purchase agreement and free option contract at the same time?

By Robert L. Seigel

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Question: An indie producer likes my script and wants me to sign a six month free option. Should I sign a screenplay purchase agreement at the same time? What kind of bargaining power do I have as an unproduced writer?

A writer often enters into the conventional option and purchase agreement in which a producer has a period of time (such as a year) to develop, submit and fund a project with the producer's right to renew the option for a certain period of time (such as another year) with no or minimal payment. Instead, a writer can enter into a shopping agreement with a producer who often has a list of possible funding sources. Under the terms of the shopping agreement, the writer is giving a producer the exclusive right for a shorter period of time (such as three to six months) to fund or set up the project for production. If the shopping period ends and the producer is still negotiating with a party, the producer can have a short (e.g., 30 day) grace period for the deal to close or fall through.

If the producer can set up the project, then the producer and the writer negotiate their own respective terms with a funding source. If one or both of the parties makes unreasonable demands, the deal can fall through so the producer and the writer should agree to consult and negotiate their own deals in good faith. (Producers tend to prefer options since the purchase price is pre-negotiated as a flat fee from the budget or a percentage of the budget with a minimum and a maximum, but the producers often cannot afford to make more than nominal payments as option fees.)

One additional but important point: outside of the shopping agreement, a conventional option and purchase agreement requires the means of establishing the purchase price (which can be in the budget, deferred on occasion and/or a profit participation) as I had mentioned previously. Otherwise, the document is just "an agreement to agree" which defeats the purpose of an option and purchase agreement: to provide a degree of certainty for a writer and a producer when a producer approaches potential funders for a project.

Please also read my previous article about optioning a movie script.

About Robert L. Seigel

Robert L. Seigel ([email protected]) is a NYC entertainment attorney and a partner in the Cowan DeBaets Abrahams & Sheppard LLP law firm which specializes in the representation of clients in the entertainment and media areas.

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.
Screenwriting Article by Robert L. Seigel

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