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If Someone Writes an Agreement on a Cocktail Napkin, and I Sign It, Do We Have a Contract?
At some point in your writing career you may be offered some sort of agreement (or, as it's known in legal circles, contract) for your writing services. Very few Americans (fewer than 30 percent) know that a valid contract can be oral (as in, not in writing).
You may be laboring under the delusion that you do not have a "real" or valid contract unless it is in writing. The individual who "hired" you to perform writing services may be laboring under the delusion that she does not have to pay you because she does not have a "written" contract with you. Both delusions would be wrong. As stated previously, most of those involved in the entertainment industry don't know when they have a contract or valid agreement. Such was the situation in connection with the lawsuit entitled Main Line Pictures v. Basinger. As a few of you may remember, Main Line Pictures thought that through a series of conversations, meetings, and letters, they had reached an agreement with Kim Basinger to star in the proposed project Boxing Helena. Based on this alleged agreement, Main Line was able to obtain investors in the proposed film.
By contrast, Kim Basinger and her advisers did not believe that a series of conversations, meetings, and letters constituted an agreement. Basinger and her associates made their feeling known. Main Line lost its investors and sued Kim Basinger. Ultimately, the jury found that an agreement had been reached between Basinger and Main Line Pictures. The jury slapped Basinger with a rather large verdict (running to the millions). On appeal, theverdict was reversed, due to a mistake in the jury instructions. (To all attorneys or persons who worked on or followed any aspect of this case, I offer my sincere apologies for my simplistic review of this action.)
Hollywood's reaction was rather interesting. After the verdict was delivered, several actors and actresses quietly decided to do those projects they had previously been "considering."
In the hopes of keeping many of you from experiencing the agony of not knowing when you may or may not have a contract, I present you with an overview of some of the basic concepts concerning contracts.
Short answer: Because most people are too afraid to read them. The majority of people, throughout life, have been presented with a series of agreements with many pages of fine print attached. Since few bother to read the multiple pages of unintelligible fine print, most become intimidated by signing an agreement they have not read.
The classic definition of a contract is "a legally enforceable agreement between two or more parties consisting of reciprocal promises." What does this mean?
Example 1: Anxious Emerging Writer is offered $1,000 to rewrite a screenplay within six weeks by Savvy Producer.
This is a valid contract because the subject matter is legally enforceable (a contract to write a screenplay) between two or more parties (Anxious Emerging Writer and Savvy Producer), which consists of reciprocal promises (Savvy Producer will pay $1,000 to Anxious Emerging Writer [Promise 1] if Anxious Emerging Writer will rewrite a screenplay in six weeks [Reciprocal Promise]). Does it have to be written down to be a valid agreement? No.
That being said, the next question should be: "What is not a valid contract?"
Example 2: Very mad, recently dumped ex-girlfriend offers to sell ex-boyfriend into white slavery for $1.00.
Now this, on the other hand, would not be considered a valid contract because the subject matter of the contract (selling an ex-boyfriend into white slavery), although desirable, is not legal. Thus, a "legally enforceable agreement" could not occur.
Along with the above-stated "classic definition," let me simply state that contracts deal with situations in the future. Contracts provide the standards of behavior for events that have not yet occurred but may occur in the future.
As a matter of fact, most contracts do not'repeat: do not'have to be in writing to be valid. This is a great area of misunderstanding for most people. Why do most people put their contracts in writing? It is much easier to show the original intentions of parties when everything is written down. That is, it's much easier for all parties concerned to show what the parties intended in the beginning when all parties are happy than when things fall apart and the parties communicate through attorneys. As stated by one gifted attorney, "A written contract governs the divorce."
A written contract also tends to prevent misunderstandings between parties about the terms of their agreements. Needless to say, for those of you with litigation on the brain (as in: how much can I win if I sue or get sued for this?), a contract that is in writing presents much better evidence if one should go to court.
Example 3: Anxious Emerging (A.E.) Screenwriter believes that he has been offered $1,000 to rewrite a screenplay in six weeks for Savvy Producer. Savvy Producer believes that he offered Anxious Emerging Screenwriter $1,000 to rewrite his screenplay but is sure that he told A.E. Screenwriter that the $1,000 would come from the net profits (as in, the net profits available from the movie once the movie has been made and released). (Note: A.E. Screenwriter will never see a dime.)
Why do you want to write down agreements? So that you don't find yourself in situations like Example 3. Could this agreement be enforceable if it were not written? Absolutely. However, all parties would spend a tremendous amount of time trying to prove what the original agreement stated.
Some contracts must be in writing to be enforceable. By enforceable we mean that a court of law will not enforce the specific type of contract unless the contract is written. Most of these contracts'referred to by an area of the law known as the Statute of Frauds'have nothing to do with the entertainment industry. That is why one commonly hears that all business in the entertainment industry is done with a handshake. (Although a great deal of business takes place within the entertainment industry before a contract is finished, there is always some type of document, whether it is a letter or a memo, that memorializes the deal.) There are, however, some notable exceptions of contracts which must be in writing to be valid that do pertain to the entertainment industry.
For better or for worse, the following represents the general group of contracts that must be written to be enforceable. The contracts have been divided into those that clearly apply to the entertainment industry and those that are listed for general knowledge, known as the Statute of Frauds.
Contracts Within the Entertainment Industry That Must Be in Writing to Be Enforceable
As stated in the chapter on copyright, the "author" of a creative work is the owner of the copyright in the work. In the United States the "work-for-hire" rules find that the employer is considered the "author" of the work if the work is created within the employment context; thus the employer owns the copyright in the work if the employee creates the work within the scope of his employment. An exception exists, however, if the work is created in a context where the employee is an independent contractor. In this situation a written agreement (there is a connection to this chapter somewhere) must exist between the parties to consider the creative work a "work-for-hire," or the independent contractor/employee will be considered the owner of the copyright in the work. For example, if Julie hired Larry to write a screenplay based on an idea that Larry pitched to Julie, and Julie and Larry did not sign a written agreement that stated the screenplay was a "work-for-hire," Larry would be the "author" of the work and the owner of the copyright in the work because the screenplay was not created in a "work-for-hire" situation.
However, the work-for-hire laws'specifically the ones that apply to independent contractor situations in which the parties must agree that the work is a work-for-hire'do not apply in most countries outside of the United States. In other countries the "author" in the independent contractor situation is always the creator of the work, so that the individual who creates the work will always be the owner of the copyright in the work. In these countries, for another party to become the owner of the copyright, the creator of the work must give the other party a written contract for the copyright in the work, known as "an assignment."
Assignments Another contract that must be in writing is an assignment of copyright. An assignment is a transfer of copyright ownership in a work. The assignment can relate to the entire work or specific aspects of it. For example, the assignment of copyright can be limited by geographical region (the state of Washington only), time (for no longer than twenty years), or specific rights of the work (reproduction rights only). As a practical matter, most written work done within the entertainment industry in independent contractor or employment situations is done with a written agreement that designates the work as a "work-for-hire." But certain work, including interactive or multimedia software, that is created independently may not be a "work-for-hire." For a party other than the creator of the work to obtain copyright of the work, it would have to be done through a written agreement.
For an assignment to be valid, it must be in writing and signed by the owner of the rights conveyed or the owner's authorized agent.
Licenses Let's say that you write the most brilliant novel of your generation. A well-known movie producer wants the exclusive right to create a movie from your book and to distribute the movie. Publishers flock to you. You choose one special publisher who will have the exclusive right to publish the work in the United States, and one producer who has a dark vision that is similar to your own. Can you give each of these exclusive rights away?
As stated in the chapter on copyright, a license is the copyright owner's grant of permission to use a copyrighted work in a manner that belongs to the copyright owner. A copyright license can be exclusive (belonging to one person or entity) or non-exclusive (belonging to many). If the license belongs to one'you have granted an exclusive license'then it is considered a transfer of copyright ownership. An exclusive license is not valid unless it is in writing and signed by the copyright owner.
As stated previously, the items below represent a general area of the contract law that does not have an obvious application to the entertainment industry. These items set forth basic contracts that generally should be in writing, but each area has exceptions.
We all know what real property is. It is a home, land, a valley, farm land. By contrast, real property is not "personal property," which is a car, a book, a couch, and so forth. A contract for the sale of real property generally must be in writing to be "enforceable," but there are a million exceptions to this rule. One exception: If you made a payment on a piece of real property and the payment was accepted by the individuals from whom you were buying the property, a court would generally find that you had entered into a contract.
The law makes a distinction between goods and services. "Goods" or "a good" is generally a product that has been manufactured. Services do not produce a product. For instance, a lawyer performs services that produce nothing and generally destroy or inhibit the creation of anything. Doctors perform services. Dentists perform services. When a writer is hired for a writing assignment, the writer performs "writing services."
If you buy a manufactured good for more than $500, most state laws require that the transaction be acknowledged by some written document. However, among the numerous exceptions to this rule would be if the goods were specially made or manufactured.
What is this, you say? Let's say that you are very, very lucky and because you have written a terrific spec episodic work, you get hired as a staff writer for the hottest show on television. Due to your brilliant wit and "fresh voice," the producers of the show would like you to sign a contract for the next three television seasons. Since this contract would keep you tied up for three years and cannot be performed within one year (you can't perform the work of three seasons in one year because the show wants you around for three designated years), this is a contract that must be in writing.