Be careful to accept these options immediately, especially for a low option price. A non-pedigree producer may not be able to obtain the necessary financing for the film. They don`t want to get stuck with them if they can`t produce your movie. An option contract is a long-established legal structure in which a seller agrees to sell the property at a price (the “purchase price”) to be paid within a specified period (the “option period”) when the buyer finds that the purchase is in his or her interest. The seller thus grants the buyer the exclusive right to acquire the property during the expected period. In return, the seller pays a smaller “option price.” A purchase agreement usually contains a clause that protects the manufacturer from a situation in which the contract expires while the manufacturer is in the middle of negotiations with a potential buyer, which results in an agreement on the property with the owner, but does not benefit the builder because of the expiry of the agreement. Such a clause would automatically extend the duration of a period during which the builder is in valid negotiation with a potential buyer. The owner may insist on a cap for this extended period, so that it is not overly extended. At the end of the option period and extensions, the producer must either abandon the project or acquire the rights to history. In the event of an exercise, the rights to creative work are then transferred by a sales contract. The long road to putting a piece of intellectual property (IP) on the screen often begins from a legal point of view with the safeguarding of the rights to develop and manufacture the material. Traditionally, the holder of a script, format or other IP object and a manufacturer enter into an option agreement under which the manufacturer pays an initial option fee for the exclusive right to acquire the property within a specified time frame.
This window is intended to allow the manufacturer to launch the project. So we`ll report on these agreements today and see how you can use them to get a valuable ipe on your site before hiring producers or studios. Some producers will offer an author a share of the film`s “net profits” instead of a fixed purchase price. A percentage of profits seem tempting, but net profits in the film industry will still be below zero. A better option, if you can get it, would be a percentage of “gross margin” between 2-5%. Everything is project specific and negotiable, so you can see that a percentage of gross profits is linked to an early purchase price. As noted above, the sale agreement generally provides that the author retains 100% of the ownership of all property rights, unless he enters into a development contract with a buyer. Despite this property, a rare but serious trap may arise for the writer, if the producer is allowed to add or subtract material during the lifetime.
Such changes may simply consist of giving a few notes, proposing some concepts or making minor adjustments. Nevertheless, I have witnessed evil situations where a bitter producer, dissatisfied that the author did not extend his purchase period or accept a proposed agreement, then claimed that the minor changes it made to the property turned the property into a “common work” in the United States.