Our free guide, Anatomy of a Contract, provides negotiating advice, encourages artists to enter into written agreements and determine when to seek a lawyer, and explains the benefits of using mediation to resolve art-related disputes. An option agreement is a contractual agreement in which a producer acquires the right to purchase a script from a writer or other owner. Unlike the rights purchase agreement, which is a lump sum purchase of a property, an option contract is not in fact the acquisition of the right to use the scenario. Instead, the producer acquires the “exclusive right to sell” at a later date, when the producer secures the financing. Option agreements are generally used to “freeze” a property, allowing the producer more time for more research and exploration of other means related to the production of the film. Options are generally cheaper than rights sales contracts, such as writers are often happy to get a few thousand dollars for their work. Included in Selected Film Production Toolkits – Our Film Investor Contract contains explanations and sample clauses that must protect the producer and investor. Important sections and examples of texts are included in our structure and are generally aimed at active investors, not passive investors. Options are often used in Hollywood and it is much cheaper to choose a scenario than to buy it from the beginning. An option agreement is particularly useful when a manufacturer is unsure if its financing is going through. It`s actually a way to secure your bets if the financing doesn`t go as planned. In such a case, if you buy the rights directly to the property, you might be forced to buy a script that cannot be made in a profitable movie.
On the other hand, with an option agreement, even if you don`t secure the funding, you can simply drop the option and “reduce your losses” Our PPM film model is designed (and prescribed by law) for filmmakers who want it: finally, before signing an agreement, think about what might go wrong or make the execution of your commitments difficult or expensive. Sign the contract only if you think you can meet your obligations. One way to avoid litigation (or to resolve a problem before reaching the belligerent point without return) is to agree in advance to resolve disputes. As a general rule, that is what happens in the contract.