Q&A: Do All Contracts Have to Be in Writing?

Q: Do all contracts have to be in writing?

A: I like you. No messing around, no background, just a short, straight-shootin’ question. Well, I’ve got a short, but not so straight-shootin’ answer: Not necessarily.

In fact, the majority of contracts that you deal with in your daily life are not in writing. Most are not even oral. Let’s say you rush to your local, mom-and-pop bookstore (e.g., Border’s or Barnes & Noble) to pick up the latest book in the Twilight series. You slide your money across the counter and rush out of the store, teen abstinence drama in hand, skipping with glee. A week later, when you’re only on page 68, an employee of Border’s shows up at your door and rips the book out of your hands. “We didn’t have a written contract so our transaction is invalid” she tells you, with bespectacled smugness. Can they do this?! Of course not. When you paid your money and they let you walk out of the store with your shiny new book, what you had entered into was a binding “implied” contract. It was implied that your payment allowed you to own the book; there was no need for you to enter into an express written or oral agreement.

Similarly, oral contracts are binding with a few specific exceptions. Let’s say your slick, high rolling producer friend asks you to direct Troll 3: Bridges of Nilbog County, the somber and philosophical sequel to the masterpiece known as Troll 2. You know this is a no-miss project that will catapult your career with Spielberg-like trajectory. You both agree that he will pay you DGA minimum plus 25% on the start of principal photography (which starts next Tuesday). You shake on it. Then you show up next Tuesday but Darren Aronofsky is sitting in the director’s chair, doing for washed-up trolls what he last did for washed-up wrestlers. Are you out of luck? Nope. You and your slick producer friend entered into a binding oral agreement that specified the movie, the start date, and the compensation.

There are, however, certain contracts that must be in writing. While many of these do not apply to the entertainment industry (for example, real estate contracts), there is one critical type of entertainment contract that must be in writing: the exclusive transfer of the rights to a copyrighted piece of work (which is basically any original work that you create). Therefore, if you’re granting an exclusive license to a distributor to distribute your feature film on DVD, unless that contract is in writing, the distributor may not be able to enforce the exclusivity aspect of the agreement. Similarly, if you’re acquiring someone’s script and you pay the agreed-upon price, all the rights in that script will not transfer to you unless you have a written document indicating as much. If you don’t have it in writing, you may only be acquiring a non-exclusive license to use the property. In other words, that writer could go right out and find someone else to whom to license it on a non-exclusive basis.

What to learn from this: (a) Troll 2 is a must-see; (b) The Wrestler is a must-see; (c) most contracts do NOT necessarily have to be in writing to be valid; and (d) despite that fact, if you’re ever attempting to acquire rights in a property or to obtain an exclusive license to use such property, you must have a written agreement or else you’ll only be obtaining a non-exclusive license, which in the entertainment business, doesn’t get you bupkis. How’s that for straight-shootin’? (Pretty weak, I know.)

This blog was originally published as part of Legal Ease, Film Independent’s weekly column on legal matters pertaining to the entertainment industry. To see other LEGAL EASE columns please click here.

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