Q: Assuming a producer, verbally only, at the time of the shoot, promised a co-producer a percentage of the film’s profits, does the co-producer have any legal rights to demand anything, since there is nothing in writing to prove it?
A: “An oral contract isn’t worth the paper it’s written on.” Goldwyn was absolutely right but also very wrong. There are few contracts that must be in writing to be enforceable. We have a beautiful blog on this, but there’s always more to say. So let’s say more.
Some examples of contracts that must be in writing to be enforceable are contacts to transfer real property, exclusive transfers of copyright, and employment agreements for more than one year. But most contracts don’t have to be in writing. An oral agreement to pay a co-producer a percentage of the film’s profits is just as solid as if it were signed, notarized, and smudged with a greedy thumbprint on each page.
What Goldwyn was getting at is that it’s hard to prove there actually is an oral contract, or even if there is supposed to be an oral contract, it’s hard to prove or determine what the terms are supposed to be. Of course, there are many cases where oral agreements are as crystal clear as written agreements. And many written agreements are as unclear as a sweaty handshake deal between an inebriated agent and a high executive at an AA meeting.
So if an oral deal was made to pay the co-producer a percentage of film’s profits, then the co-producer certainly has a legal right to demand it. Assuming the producer remembers making the oral deal and doesn’t deny it (a hugely unrealistic assumption), then not only does the co-producer have the right to demand it, he has the right to be paid it. As a matter of policy, of course, producers deny everything (including the existence of this policy). This might be in the producers’ guild charter, but I’m not sure. In fact, because of this policy, Goldwyn denied he actually said: “An oral contract isn’t worth the paper it’s written on.” He did say it. Producers come in all varieties — short, bold, divorced, loud, neurotic, hairy-chested, hairy-backed, hairy-necked. But like fat-free butter, square triangles, and perpetuum mobile, most honest producers dwell in the world of imagination.
Even assuming, as your question does, that the existence of the oral agreement is not in question, the co-producer will still have to jump over other hurdles. For example, are the terms of the oral deal sufficiently clear to actually have an agreement? You can’t have an agreement the terms of which are completely ambiguous. And of course, what profits? We’re adults; let’s not kid ourselves.
Most people in L.A. don’t think words mean anything. You can say anything to anyone — let them prove it! With few exceptions, oral agreements are as solid as contracts written in stone, although proving them is as easy as if they were sky-written.
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.