This is the second in a series of three blog posts. Our first post covers basics of an actor contract, and the third post covers the basics of a film distribution agreement.
We often underestimate the time and effort that goes in to pre-production in the film-making process. During this time, producers determine the preliminary budget of the film, and the production and post-production schedule. Producers will hire the key department heads and begin the creative planning process. They will further refine the budget and schedule, obtain shooting permits, scout for and finalise shooting locations, hire crew and artists, secure rentals for props, undertake auditions and rehearsals prior to the start of filming.
The planning undertaken during this period will ensure that all the bits and pieces of the next process – the production process – can be undertaken seamlessly. The most important contract that producers will be entering into at this juncture is the film production agreement. Often, more than one production houses may be financing a film and in which case a co-production agreement is signed between multiple producers.
The primary purpose of the co-production agreement is to agree on the budget of the film, the contribution ratio between the co-producers towards the budget, and the profit share between them. The agreement will also provide for the exercise of creative control over the production. While certain co-producers may only come-in as financiers, others may also be bringing to the table their experience and expertise in the industry. The agreement will therefore have to provide the specific roles and obligations of each producer in respect to the production. In most cases the creative control will remain with the principal producer.
However, production agreements can also be between a client and a producer. This is typical in cases where a film is prepared not for general entertainment, but to serve a specific purpose – e.g. music video, ad films, other non-commercial films, etc. In such a scenario, the client may be required to provide the general content of the film to be produced, while the producer shall be responsible for content development. The agreement will typically provide a significant control over the creative process to the producer, especially where the client may have little to no knowledge of the creative process.
The casting of artists is also typically at the sole discretion of the producer. However, there may be times, say in an ad film wherein the casting is to be determined around the brand ambassador (if any). In which case, the client may be required to provide inputs in respect of casting and ensure the availability of specific persons for the filming stage. In the event the client is not involved with the casting or the filming, then the producers will typically disclaim all liabilities arising out of the failure of the artists to realise the expectation of the client.
Filming sets are secured areas. This is important to safeguard the safety of the artists, many of whom may be well-known celebrities, safety of the props and gear used for filming, and generally to ensure the confidentiality of the end production/ film. The agreement will provide that only those people who have been authorised by the producers will be allowed entry into the set, while the client may have the right to authorise one or more persons from their team, such authorisation shall be enforced at the discretion of the producer. However, the client will retain the right to monitor the shoot and to provide their inputs to the producer.
One of the principal terms of the agreement pertains to the schedule during which the production process is to be completed. This not only includes the actual filming, but also the post-production process. Post-production process can include additional filming, editing, dubbing, sound effects, film colour grading, etc. Since the timelines for each process has to be tightly controlled, the agreement may provide for milestone-based timeframe. For co-producers, as well as for clients, the timelines are important since the release of the film must coincide with external factors – launch of a brand, or a music album, or particular events when. the film is to be shown. The timing of the release of the film will also affect the revenue that they expect to generate from the commercial release of a film – viz. particular holidays or festivals that see higher ticket sales for particular film releases.
However these timelines may be adversely affected by a litany of factors. These may be unavailability of crew or cast members, unavailability of filming locations, non-receipt or delay in receipt of approvals, delay during post-production process including delay caused due to technical failures, etc. Even adverse weather conditions may affect the filming schedule, since availability of optimum lighting conditions play an important part in outdoor filming. While the producers will therefore build in appropriate buffer to compensate for such occurrences, the agreement will also provide that the producers will not be liable for any delays such as the ones mentioned above, which are not within the reasonable control of the producer. The agreement will also typically provide that an extension of the timeline due to changes suggested by the client to the content will also not make the producer liable.
In case the production requires procuring the rights to external content – viz. audio tracks, or video footage, the same may be the responsibility of the client. However, in the event that the producers are required to obtain the same, then the costs for such licenses will be borne by the client. In some cases – as in the case of ad jingles – the client may have the right to the soundtrack, and it will then license the same to the producers for the specific purpose of using the jingle in the production of the film.
The cost for the production, as well as the fee payable to the producers will be borne by the client in the manner as provided in the agreement. The payment may be on an upfront payment basis – wherein the payments are to be paid by the client to the producer prior to the start of the filming, or on a milestone basis. In the case of milestone-based payments, the payment schedule is usually divided into three parts – the first instalment is payable prior to the commencement of the filming, the second instalment is payable after the end of the filming but before the post-production process is started, while the final payment is to be made upon the client’s approval of the final product.
However, it may be noted that the agreement should provide for the distribution of the payables in such manner so as to ensure that the costs incurred during each step of the production process is adequately covered. This is because the production process requires the active participation of several independent specialists and service providers, and in case of a cancellation of the production, the liability to pay them for the portion of services rendered by them remains. For this reason, certain contracts may specify that in case of a cancellation of the project, the producers will be entitled to deduct the costs incurred by them before making the reimbursement to the client.
The finished product may be used by the producers as part of their portfolio, and the agreement will provide them with the license to use the film, or extracts from the film for promotional purposes. This would include their use in showreels, or on website, etc. The agreement will also typically provide that the moral right over the film will belong to the producer, even though the commercial rights in respect to the film will belong to the client. The agreement may provide that the original physical film in respect of the production will remain the property of the producer. However, clients will be entitled to receive appropriate number of physical copies of the film for their use.
At the same time clients must ensure that they have obtained the requisite warranties from the producer that the final product is its original work, and that it does not infringe upon the rights of any third party.
And finally, it must be borne in mind that film production is a creative process and it may often be the case that the aesthetics and sensibilities may vary from one person to another. It is for this reason that the agreement will provide that merely the presence of creative differences between the client and the producer will not entitle the client to terminate the contract or withhold payments to the producer.
For more on the topic, please feel free to reach out to us at contact@ikigailaw.com.
Disclaimer: This article is meant for general informational purpose only and is not a substitute for professional legal advice. This article is based on the laws applicable in India as on the date of publication.
