Let`s start with the short form option. This small document usually states, in clear and simple terms, that the author has granted an option to the optional part. There is probably no length of the option or any financial conditions. Instead, it is said that the terms of the option are described in more detail in the underlying agreement. THE PURCHASE PRICE. Purchase prices for literary real estate can reach a few thousand dollars and can reach several million dollars, based on the perceived market value of the property. Within the studio system, the purchase price is largely based on the author`s previous quotes, taking into account an increase when the author`s previous project was produced and the studio was critically or financially successful. Joe Eszterhas` quote is over $3 million. Much of the confusion associated with the use of the option results from the fact that a purchase price is negotiated, but it is not paid during the performance of the contract and there is no obligation to pay the purchase price, unless the option is actually exercised. What is usually exchanged when entering into an option contract is a small fraction of the negotiated purchase price. However, many agreements are not subject to WGA`s terms and conditions.
A general rule, considered an accepted practice of the entertainment industry, is that all literary rights to be acquired to make a film should be between 2% and 5% of the film`s budget. In many cases, LPO`s is in negotiations to imagine that the purchase price is within this percentage of the film`s budget. The budget is generally defined as the actual final production budget of the film, net of interest, financing costs, final borrowing costs and overheads. At least the projected budget of the film serves as an effective starting point for determining the purchase price. LIMITATION OF REMEDIES. As studios and producers will eventually invest millions of dollars in the project`s production costs, they traditionally require authors to limit the remedies they could have in the event of a violation of the LPO by the producer or studio. The studios never want to be in the “Amistad” situation, where millions of dollars have already been spent on print and ads a few days before the film`s release, where a complaint is being negotiated, which could lead to liability for cinema deductions. At the time of the press release, an equally unasurementing situation jeopardized the publication of the home video of “The Devil`s Advocate”. As a result, an author is almost always asked to accept that the only remedy the perpetrator may have in the event of an offence is the right to claim damages. The author is generally required to waive any right of omission or equity as well as the right to cancel or terminate the LPO.
While these waivers appear harsh and unfair to the author, it is virtually impossible in the United States to obtain funding for a film project from banks and other credit institutions if the LPO does not waive these important remedies. . . .
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