In the indie film world, all too often people jump into projects with excitement and forget that they are involving themselves in a business venture. I have seen many people make mistakes with contracts and just want to share some things about basic contract law to help out those of you who have little experience with it. The film business is just that, a business.
What is a contract?
Many people think that a contract has to be written by a lawyer and formally announce itself as a contract. This is not the case. The most basic elements that form a contract are very simple. An offer and an acceptance. In English and English based law (US law is English based) there is a further element called consideration which I will discuss a little later.
So if you ask some one to work on your film, and they say yes, you have a binding contract. It is that simple. If you then ask someone else to do the job, you are in breach of contract. Again very simple. Something to think about when you are enthusiastic about a candidate but have not yet considered all candidates.
Why have formal contracts?
The reason for formal contracts is to clarify the terms of the contract so that everyone has the same understanding of what is expected. If you have a simple offer and acceptance, than you might think there are no terms of the contract but there are. The terms are what are called implied terms. Any area that is not specifically laid out in the contract is ruled by implied terms.
What are implied terms?
Implied terms come from the norms of any given industry. They are essentially derived from the common practice of the industry in question. So for instance if you ask someone to work on your film and they do, there is an implied term that they are legally obligated to sign a release form, giving you the rights to the film.
As long as you are not in breach of contract, they are legally obligated to do this. Another example is that if someone works for you for no fee or a very small fee, you are obligated to give them a copy of their footage so they can use it to promote their work.
Are oral contracts binding?
Yes, they are more difficult to prove but are just as legally binding as any other contract with the exception of oral contracts over the sale of real estate. All other oral contracts are equal to written ones. It is also worth noting that emails back and forth qualify as a written contract and certainly help to serve as proof of an oral one.
What is an offer?
Basically when you ask someone to do something.
What is an acceptance?
Acceptance can be an explicit answer to an offer or can come in the form of performance of the contract. So if I hand you a script, ask you to be a line producer, and you do a script breakdown, you have accepted my offer by performance.
What is consideration?
This sounds more complicated than it is. Consideration came about because English legal systems abolished the action of ‘breach of promise’ which was used in times past to enforce unilateral obligations. Contracts have to benefit both parties, consideration is simply the benefit that each party gets from the contract.
If I ask you to be my DP, lets say for no fee, you get material for your showreel and exposure for your business. I get the photography you produce. We both benefit, this element of the contract is satisfied.
The one area you may run into problems with this element is when you ask a member of the public to do something like answer questions on camera. There may be an argument that they derive no benefit. To avoid that, simply put the words ‘in exchange for $1 and other valuable consideration which I hereby acknowledge the receipt of’ in your contract and there will be no doubt.
You don’t even have to hand over the dollar. It can be theoretical, but when dealing with the public, it is a good idea to carry around some dollars in case someone wants the dollar so you won’t have to lose out on getting a signed release, which is a form of contract by the way.
What is a breach?
A breach of contract is when on party fails or refuses to hold up their part of the contract. In our earlier example, I asked someone to line produce and they accepted by performance. Because we did not cover the fee in the terms of our contract, industry practice would be to pay the line producer her normal fee. If I do not, I am in breech of contract.
While most people in the indie film industry will not go to court over such issues, one thing to consider is that when you breach a contract, the other party is then no longer obligated to fulfil their part of the contract. So would I just find another line producer to start over? I could but that still leaves the question of the release form.
Once someone has put work into the making of your film, they become part owner in that film until which time they sign a release giving you their share of the rights to the film. Unless you have releases from each and everyone person has worked on your film, you do not own it and no distributor or festival will touch it. If you pass it off as something that you do own and then a festival or distributor later finds out about it, you have probably effectively ended your career.
If you refuse to pay someone and therefore are in breach of contract, they are under no obligation to sign that release. So if you want to own your film and you don’t want them to work on your project anymore. Best to pay them what you promised them and get the release. Then move on and pay someone else to start over.
People Skills. What do People Skills have to do with contract law?
Contract breaches happen all the time in every kind of business. I have had line producers send out short emails rather than call sheets, DPs substitute a hastily scribbled shot list for storyboards, people ask to postpone no fee work at the last minute because of a paying gig and various other things that yes, legally speaking are breach of contract.
But business relationships are more important than law. If you are a fair person and get the job done to the best of your ability, no one will care when you breach a contract, I certainly won’t. But when you ask people to work on a film, and then fail to pay money that is promised, refuse to hand over footage, and various other unfair actions that lack basic decency in your business dealings, you might expect people to react in order to protect their rights.
What is the common sense answer to contracts law for those not legally trained?
Basic fairness is a start. Legal rules come about to protect fairness in business dealings. Don’t ask someone to do something that you don’t want them to do, don’t offer money that you are not prepared to pay, and when you do have to go back on an obligation, do it politely and with humility and I think you will find that if you do technically find yourself in breach of contract, no one will care.
