Contracts 101: ­Pitfalls to Avoid in your Entertainment Deals – Part 1 (Introduction)

(A NATAS speaking engagement personified)

By Andrew J. Contiguglia, Attorney at law

Contracts. For those involved in the entertainment industry, they are what make the deal. For many, they be implied. All that is required for a contract to be formed is an offer, an acceptance of that offer and consideration. To boil it down, all that is necessary is a mutual agreement or mutual inducement to contract, or simply two people who want to do a deal together. Finally, consideration is required. Consideration, in its simplest form, is value exchanged, a promise to exchange value or an exchange of promises. These can be either the exchange of money, the promise to exchange money or a promise that you are going to do something for someone else if they promise to do something back. If you meet those three elements, you have a contract. Keep in mind, if you don’t have those elements, or if you are missing any one of them, you do not have an agreement.

The biggest mistake that people attempting to enter into a contract make is that they may talk about a deal but there won’t be any consideration. Because of the lack of consideration, there is no deal. One party thinks, “We’ve got a deal,” and the other one doesn’t because there wasn’t any exchange of money, or there was no promise of an exchange of money. That’s where people fall into gray areas as to whether there is a deal or not. Producers, talent, media representatives…each is dealing with so many different aspects in contract law. There are deals with directors, deals with screenwriters, deals with equipment personnel and deals with crews.

There are deals with various licensing agreements and with permits. There are financing issues involved in pre and postproduction and distribution. Lastly, there are deals with talent. And also, from a corporate and business standpoint, there are shareholder agreements, investor agreements and various other facets that make a corporation a corporation.

You can deal with a hand shake, you can deal with a pat on the back, you can spit in your hand and shake the other person’s hand; but the problem that we all run into is how to prove this after the fact. To paraphrase a wellknown California judge, “Hey, we’re dealmakers ­not lawyers.” Right? In this industry, we all want to get the deal, but don’t want to have to worry about the details that need to go into an agreement. You want to shake hands and pat backs, all over lunch. You don’t do contracts. You do lunch. That’s what this is about. In this industry we are used to these handshake deals. It’s business built on relationships. You talk with one person, and you get three leads to the next one. You’re constantly pitching what it is that you want to do.

But what happens when that network of people break down? What happens when you build a relationship with someone and it turns out that relationship is not what you expected it would be?

For example, in one instance I did a shareholder agreement for two men ­not in the entertainment industry ­about four years ago. They were two buddies from college who both had their master’s degrees in architecture. One of the gentlemen came to Colorado before the other one and opened up a very successful land architecture firm. The other soon came in from out of state and started working for him, and the two of them were the best friends in the world.

Their kids hung out together; they went on trips together, their families were very close. But what ended up happening was that even though we had done a shareholder agreement with everybody, the relationship eventually eroded. For some reason, once you start getting involved in business with friends, the friendship starts to dissolve. I don’t know why. I think very few people have been successful in being able to nurture the friendship throughout the business relationship. That is a very, very difficult task. So, how do you get past all of this? What do you do when your friendship breaks down and you have nothing definitive in writing, just a pat on the back or a handshake? I’ve come up with some tenets that I think will help people throughout the dealmaking process.


Monday, March 6, 2006, 11:30 AM ­KUSA, Denver, Colorado.

Miller & Steiert, P.C.
1901 W. Littleton Blvd. Littleton, CO 80120
3037982525
andrewc@m-s-lawyers.;
www.m-s-lawyers.
com

(C) Andrew J. Contiguglia, 2006, All Rights Reserved

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