Screenwriting Blog
Posted on by Courtney Meznarich

What to Look for in a Screenplay Legal Agreement

Screenplay legal agreement deal points include but are not limited to:

  • Length of option

  • Price of option

  • Option extension possibilities

  • Script credits and credit bonuses

  • Setup bonuses

  • Production bonuses

  • Box office bonuses

  • Rights & reserved rights

  • Subsequent derivative productions

Writing a screenplay is challenging enough. But when it comes time to sell that screenplay? You have to know even more, and it has nothing to do with writing.

Suppose you’ve made it to the point in your writing career where someone is trying to option or purchase your script. In that case, you’re probably feeling overwhelmed at the idea of negotiating a contract, determining how much your script is worth, and trying to balance your excitement for the sale and your caution about handing off all your hard work. Do you know what to look for in a screenplay legal agreement?

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Luckily, there are people like Sean Pope. Sean is an attorney at Ramo Law in Beverly Hills, and his practice centers on helping creatives and producers get what they want and deserve out of legal agreements.

“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.”

In this blog, learn the difference between screenplay options and purchase agreements, plus Sean will explain other deal points you might find in a screenplay agreement. And if those deal points aren’t there? Well, you may want to ask for them.

Option Agreement for a Screenplay

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

What is a Screenplay Option?

If someone tells you they want to option your screenplay, they basically want to give you some money to agree that you won’t sell the screenplay to anyone else for a certain amount of time.

“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.

Why would someone want to option your screenplay? Time.

An option agreement allows them time to see if there’s any interest in the script on the open market; do actors want to be part of this? Is there a director that’s excited about it? Is there a market for this story?

“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.

Option Terms

In an option agreement, you’ll want to detail terms for length of time, fee, and any deal points noted in the Purchase Agreement section below.

“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.

Purchase Agreement for a Screenplay

If the option comes to a close and a producer or studio decides to purchase your screenplay (congrats!), it’s time to start thinking ahead.

What situations may arise in the future after you hand off your script? Will you want to do rewrites, sequels, prequels, or spinoffs, and will you even have the right to work on those projects?

These are all deal points that you need to work into your screenplay purchase agreement.

Purchase Price

“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 & Credit Bonuses

“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.”

Contingent Compensation

“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.”

Screenplay Rights

“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.”

Summary

In the case of both an option agreement and a screenplay purchase agreement, it’s best to hire an attorney rather than rely on online templates or the producer or production company’s lawyers. You want someone to be on your side, help negotiate a fee that you’re worth, and look out for your best interests. It may cost more initially, but it pays off big time in the end to have your legal representation.

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Make sure each of the deal points mentioned above exists in your screenplay legal agreement if they’re important to you; try to think ahead. You never know how big your screenplay could become and how much money you might be leaving on the table if you sign away all your screenplay rights at the offset.

Let’s make a deal,

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