New York lawyer John J. Tormey III advises producers to be
skeptical with contracts – even those from the big studios
– when it comes to getting your fair share of the returns.
Just because a US or other film studio or distributor forwards
you its "standard form", does not mean that you should
sign it. Many studio forms still used today are hackneyed, and
have been adopted in whole or in part from form books or other
studios’ boilerplate. A number of studio forms read as if
they were written in haste - just like Nigel Tufnel scrawled an
18-inch Stonehenge monument on a napkin in Rob Reiner’s This
Is Spinal Tap.
It stands to reason that you and your legal counsel should
carefully review all forms forwarded to you and your company for
signature, prior to ever signing them. Through negotiation, you
should interpose more precise language where appropriate. To
leave an ambiguity in a contract is merely to leave a potential
bad problem for a later day - particularly in the context of an
option, acquisition or distribution agreement, wherein hundreds
of thousands (if not millions) of dollars might be at stake.
One seemingly indefatigable type of ambiguity that arises in
film contracts, is in the context of what I call a
Consider the following:
1. Clause #1: "Distributor shall use best efforts to
market and publicize the Picture in the Territory".
2. Clause #2: "The Picture shall be produced and edited
using only first-class facilities and equipment for sound
recording, film processing, scoring, dubbing, and all other
activities relating to the film".
Do not use either clause yourself, and don’t agree to
them as written! Both clauses set performance obligations that
are, at best, ambiguous. Reasonable minds can differ as to what
"best efforts" really means, or what the two parties
intended "best efforts" to mean at the time (if
anything). Reasonable minds can also differ as to what
constitutes a "first-class" facility. If the clauses
were ever scrutinized in under the hot lights of litigation, the
clauses might well be stricken as void for vagueness,
unenforceable and judicially read right out of the contract
Consider Clause #1, the "best efforts" clause. How
would the Producer really go about enforcing that clause as
against a US Distributor, as a practical matter? The answer is,
the Producer wouldn’t, at end of day. If there ever were a
dispute between the Producer and Distributor over money and/or
the P&A expenditure, for example, this "best
efforts" clause would turn into the Achilles Heel of the
- Producer: "You breached the
‘best efforts’ clause!"
- Distributor: "No! I tried! I
tried! I really did!"
- You get the idea.
Why leave a Distributor that kind of contractual "escape
hatch"? After making a huge investment in a motion picture -
say, for example, a film with a production budget only half of
the magnitude of Titanic, Air Force One or Tomorrow Never Dies - there would be absolutely no reason
for the Producer to put that investment at risk by agreeing to a
vague or lukewarm Distributor P&A commitment. And the
equities would be on the Producer’s side in this negotiation
- the Producer would be entitled to know in advance how his or
her investment would be protected by the Distributor’s
In the context of a performance clause - such as the
all-important obligation to market and publicize a picture - it
is incumbent upon you to be very specific about what is required.
In other words, write out a "laundry list" of each of
the discrete things that you want the Distributor to do:
"You will spend ‘x’ U.S. dollars on advertising
for the Picture during the following time period: A - B.
"You will hire the X PR firm in New York, New York, and
you will cause no less than ‘Y’ U.S. dollars to be
expended for publicity for the Picture during the following time
period: M - O.
As they say in the States, "if you don’t ask, you
don’t get". Make the Distributor expressly sign on to a
very specific list of tasks, monitor the Distributor’s
progress thereafter, and hold the Distributor to the specific
contractual standard that you were smart enough to "carve
in" in the first instance.
Consider Clause #2, the "first class facilities and
equipment" clause. Note that, unlike Clause #1, this is a
promise made by Producer to Distributor - and not a promise made
by Distributor to Producer.
- So, you might ask, "the
shoe’s on the other foot, isn’t it?"
- "‘First class’ is as
vague and undefined a contractual standard as "best
efforts", isn’t it?"
- "So there won’t be any
harm in my signing onto that clause, will there, because
I will be able to wiggle out of it if I ever had to,
- Wrong. The fact is, a contractual
ambiguity in a performance clause is a bad thing in
either case - whether in the context of a Distributor
obligation to Producer; or even in the context of a
Producer obligation to Distributor.
The concept of film "delivery" finds the Producer
required to hand over documents to the Distributor, as well as
physical materials such as the film itself. Typically, the
Distributor will hold some monies back, and not pay them until
"delivery is complete". As you might therefore guess,
film "delivery" is oft-contested and even litigated. It
is incumbent upon you the Producer to prevent the Distributor
from drumming up a pretextual "failed delivery" as an
excuse for non-payment. "First-class facilities and
equipment" could easily become the Achilles Heel of the
litigation-tested contract. The Distributor could simply take the
position that the delivered materials were not created at a
The simple solution is to take five minutes and list out the
production and post-production facilities intended to be used.
Make the Distributor explicitly agree to the list of facilities
in the body of the contract. That is what the contract is for,
anyway - when used correctly, a contract is really a
dispute-avoidance tool. Also note that a contractual ambiguity
could hurt you, regardless of whether it’s embedded in one
of your performance obligations, or even in one of theirs! The
moral: list all performance obligations. Break them down into
discrete and understandable tasks.
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John J. Tormey III is a New York
entertainment lawyer, also admitted to practice in California and
Washington, D.C. After leaving his post in 1996 as Senior Counsel
to Disney-owned Miramax Films, in favor of his own law practice,
he now represents companies and artists alike. His self-imposed
mandate is to bring affordable legal services to those that need
such services; including business start-ups, production counsel
work, talent agreements, s*cript and project placements, and
option, acquisition and distribution agreements.
Air Force One
Tomorrow Never Dies