What to Look for in a Screenplay Legal Agreement

“It kind of depends on what type of deal we’re looking at,” Sean said. “So, the main two that you will likely see are a straight purchase agreement, where someone is offering you X-amount of dollars and now we, the production company, own it, versus an option purchase deal.”

“So, let’s talk about the option first,” Sean began.

“It’s where a production company says, “Ok, we’re going to give you a limited amount of money upfront, let’s say $1,000 upfront. And with that $1,000, that locks us in exclusively to the screenplay, where we don’t own it, you, the writer, own it, but we, the production company, have the exclusive right to later on purchase it during a term – like typically, 18 or 24 months – to purchase it down the road for a set amount of money,” Sean said.

“So, for a production company, it gives them a bit of flexibility to take that screenplay out to market and potentially get attachments on it without having to purchase the screenplay outright, which would be a lot more money upfront,” Sean said.

“The important things to consider are: What is my option fee? What are they paying for that exclusivity? How long is the term of that option? You know, 18 to 24 months is relatively standard, and then they’ll also potentially ask for an extension option period, you know, another 18 or 24 months for another payment,” Sean said.

“The purchase price, you know, obviously it’s the most important one, the amount of fixed compensation that you as the screenwriter is going to receive to transfer the rights and the copyright on that screenplay from you to them.”

“Credits are also important,” Sean said. “Most of the time though, if you’re a WGA or not WGA, you try to get them to agree that they will abide by what the WGA credit determination rules would apply to that screenplay, so, whether it’s “written by,” “created by,” or if there’s a writing team, how those credits are going to be specifically allocated.

… Then there are credit bonuses, wherein, if they acquire your screenplay, and then they bring on other writers, you might get a little amount of money, but if they don’t bring on any other writers and you are the sole writer on this screenplay as it goes into production, you get an additional amount of money.”

“If you’re getting some kind of contingent compensation, so whether that’s net profits as backend, whether it’s a setup bonus, where the production company – if they set it up with a major studio – you get an additional amount of money; a production bonus, if they actually go into production you get an additional amount of money; potential box office bonuses are sometimes asked for, where you get an additional amount each time it hits a certain box office threshold.

So those are all contingent-type structures that you might see. It might not be all of them; it might be one or two, or it might be four or five; it really depends on how well you negotiate the deal or how well your lawyer negotiates the deal.”

“Another major one is, what kind of rights are they acquiring in and to the screenplay? Are they getting all the rights to it, wherein they can make derivative productions like a TV series off of your feature film, they can make subsequent sequels and prequels off of that screenplay, and how close are you to those subsequent derivative productions? Are you asking for a first opportunity to be able to write those subsequent derivative productions?

Are you asking for passive payments, which are – I might not be able to write that because I might become a much higher caliber writer over the course of four or five years where I’m busy, and I can’t write it – you built this world with your screenplay, and it’s done well enough that they’re able to, let’s say, make a sequel, so you should ask for what they call passive payments. Even though I’m not writing it, I should be entitled to a certain amount of money because you’re taking my world and making a sequel, prequel, TV series based off of that.

Are you reserving any rights to your screenplay? It really depends on what your screenplay is based on. If you wrote a book and then wrote a screenplay off of that book, you might want to reserve all of your print publishing rights so that you can continue to publish your book uninhibited by this contract.

You might want the ability to write sequels to that book whenever you want. Some writers really want to retain podcast rights. They might want to flesh it out further into a podcast. Those are some typical reserve rights that you might see in a screenplay writing purchase agreement.”