Option agreements are a crucial part of the screenwriting business. They give producers exclusive rights to buy your script for a set time, usually 6-18 months. This temporary control comes with a fee, typically 10-15% of the full purchase price.

Purchase agreements transfer all rights to the producer or studio. They cover payment, credit, and any rights you keep. Reversion clauses can return rights to you if the project stalls, while turnaround lets studios sell to other companies.

Option Agreements

Understanding Option Agreements and Rights

• Option Agreement grants exclusive right to purchase screenplay within specified timeframe
• Rights encompass all media adaptations (film, television, streaming platforms)
• Screenwriter retains copyright ownership during option period
• Producer gains temporary control over screenplay's potential development
• Option fee typically ranges from 10-15% of agreed-upon purchase price

Terms and Extensions of Option Agreements

• Term usually lasts 6-18 months, depending on project scope and producer's needs
• Extension clause allows producer to lengthen option period for additional fee
• Extension fees often match or exceed initial option payment
• Multiple extensions may be negotiated, but rarely exceed three total option periods
• Longer terms benefit producers, while shorter terms favor screenwriters

Purchase Price and Negotiations

• Purchase Price represents full amount paid to acquire screenplay rights
• Negotiated upfront and included in option agreement
• Often calculated as percentage of film's projected budget (1-3% for new writers)
• Can include bonuses for script sales, production greenlight, or box office performance
• Purchase price may be paid in installments (signing, first day of principal photography, release)

Purchase Agreements

Key Components of Purchase Agreements

• Purchase Agreement transfers all rights from screenwriter to producer or studio
• Includes detailed description of rights being sold (remake, sequel, merchandise)
• Specifies compensation structure, including upfront payment and potential bonuses
• Outlines credit requirements for screenwriter on finished product
• Addresses any reserved rights retained by screenwriter (publication, stage adaptation)

Reversion and Turnaround Processes

• Reversion clause returns rights to screenwriter if project doesn't move forward
• Typically triggered after specified time period (18-36 months) without production
• Turnaround allows studio to sell project to another company if development stalls
• Turnaround price includes all costs incurred during development plus interest
• Screenwriter may negotiate right to find new buyer during turnaround process

Chain of Title and Legal Considerations

• Chain of Title documents ownership history of screenplay rights
• Crucial for producers to establish clear legal ownership before production
• Includes option agreements, purchase agreements, and any rights transfers
• Protects against potential copyright infringement claims or ownership disputes
• May require additional documentation for adaptations (book rights, life rights)

Compensation

Credit and Recognition in the Industry

• Credit determines screenwriter's recognition on finished product
• Writers Guild of America (WGA) governs credit determination process
• "Written by" credit reserved for single author who wrote entire script
• "Screenplay by" credit used when multiple writers contributed substantially
• Credits impact future job opportunities and industry reputation
• Arbitration process resolves credit disputes between multiple contributors

Residuals and Long-term Compensation

• Residuals provide ongoing payments for reuse of written material
• Calculated based on initial compensation and distribution medium
• Television residuals often higher due to reruns and syndication
• Streaming platforms have unique residual structures based on subscriber numbers
• Foreign distribution and home video sales generate additional residual payments
• WGA negotiates residual rates collectively for union members
• Non-WGA writers may negotiate residuals individually, often at lower rates