Updated: Mar 4, 2019
Negotiating a contract to sell your screenplay is a tricky path filled with traps for the unaware.
The Writer’s Guild of America (WGA) has a standard contract included in their basic agreement. This contract is not often, however, used for first time spec writers. There are as many contracts for first time writers as there are producers willing to gamble on unknown talent.
Here are three things you should consider when negotiating the sale of your spec script.
The first thing to remember in any contract negotiations is that courts try to give effect and meaning to what the parties actually agreed to within the four corners of the contract. That’s to say, courts will not look outside the contract if the terms of the contract are clear on what the parties obligations and rights are within the text of the contract. To claim, “that’s what it says, but that’s not what I meant” is a losing argument.
Closely related to the four corners principle is the principle of intrinsic versus extrinsic evidence. Intrinsic evidence is evidence of the parties’ intent expressed in the document. Extrinsic evidence is evidence of the parties’ intent from outside the document. A good example of extrinsic evidence is an email from a producer that says something to the effect of “I’ll take care of you on the backend if you’ll agree to the terms of the contract as written.” The key here is to remember that extrinsic evidence can never be used to contradict or modify contract terms that are contrary to specific language in the contract.
Any good contract includes a clause that excludes such extrinsic evidence and specifically states that all evidence contrary to the plain language of the document is void. Courts will not overlook that clause unless you can prove fraud, coercion, or some other bad act by the other party. Claiming you didn’t understand a clause won’t cut it when you get to court. The court’s primary function is to give full force and effect of the terms of the contract. They will only review extrinsic evidence in rare cases.
Who controls and where do they control it?
Jurisdiction and venue are two key provisions of any contract. The simplest way to think about them is this – Jurisdiction gives the court the right to hear a case, and venue is the most convenient place for the case to be heard. Jurisdiction allows the case to be heard in federal court, for example, but venue decides which federal court will hear the case.
Contract terms can – and often do – set venue, but can never grant a court jurisdiction it does not otherwise have. Make sure you understand that. Parties may want a case heard in a federal court, but cannot make a federal court hear a case by the including such terms in a contract. On the other hand, if a court has jurisdiction, the contract may require venue in a specific court.
If a contract ends up in litigation, jurisdiction and venue are critical terms you need to understand. The cost of bringing or defending the lawsuit may be significantly higher if you have to travel to ten-buck-two rather than drive across town. Although many litigants believe there is an advantage to bringing certain types of lawsuits in particular venues, most attorneys believe such advantages are marginal at best in contract cases such as these. (Although studios may want a jury full of people who rely on moviemaking sitting on your jury, it’s difficult to say which side it benefits in an independent production.)
Another critical term of screenwriting contracts is the royalty payouts. Royalties are those payments you get on the backend of a deal once the movie is made. It’s no secret that Hollywood has creative accounting to ensure no movie ever makes money. Therefore, don’t ever accept a contract that pays you based on profit. You’ll never see a dime. Payouts based on gross receipts are just as slippery, and shouldn’t give you a warm, fuzzy feeling that you’ll receive quarterly payments for the next 75 years.
A good rule of thumb is to get as much money as you can upfront for the screenplay. Backend payments are unlikely regardless of how diligent you are in drafting the backend provisions. That’s not to say you shouldn’t negotiate for such payments – indeed you should. Just don’t count on them as an incentive to take less money upfront than you realistically believe your screenplay is worth. Realistically being the key word in that sentence.
Summing it up
The old adage of show business is that it is a “business” is as true today as it was when coined. Contracts are business documents, and courts reviewing these agreements try to give full force and effect to what it appears the parties agreed to by first looking within the four corners of the document. Courts want to give certainty to contract language and will not hesitate to enforce even harsh provisions just because one party thought the terms meant something other than how such language is typically interpreted by courts.
While I negotiated the sale of my screenplay without the assistance of an agent, I would venture to say most first time screenwriters don’t have as much legal background as I do. That’s not to say I would necessarily negotiate my next sale without qualified legal assistance. You are bound to the contract you sign. Make sure you understand how a court will interpret the proposed terms before you sign. If you can’t negotiate acceptable terms, you should consider passing and sending out more queries.
I did, and I ended up with a much better deal than I otherwise would have had I taken the first offer I received.
Michael Selby is guest writer for Script Society. He is an attorney turned screenwriter who has extensive knowledge of the legal aspects of screenwriting. He has recently sold a spec script of his own.