Odds & Sods in Contracting – Karen Soich Law, LLB, LLM

ODDS AND SODS IN CONTRACTING

In the course of working in the film and television industry a practitioner will invariably have to deal with a variety of contracts – regardless of whether they are talent, crew, staff or simply “hopefuls”. Over the past 20 years I have been practising in this area I still find there is frequent confusion as to the meaning and use of certain words or phrases. So I thought it helpful to give a “potted” explanation of some of the more common ones.

Contractor v Employer – There is a very distinct difference between the status of contractor versus that of an employee. Contractor: If you are a contractor your contract can be terminated at any time so long as the company gives you the notice period set out in the contract. You are responsible for your own ACC payments and tax and are not entitled to holiday pay or leave. Employee: If you are an employee matters aren’t so simple. Regard must be had to the good faith obligations of the Employment Relations Act imported into every agreement for the provision of services as an employee, ie there are requirements as to oral and written warnings, time to improve, right to representation or a support person in meetings, opportunity to address any issues of concern raised etc before your employment can be terminated. Your ACC and tax are taken care of by the company and you have certain statutory entitlements as to holiday, parental and sick leave. Note to self: When you are reading through the agreement provided to you be sure and check at the outset what the contractual relationship is – contractor or employee.

Author v Owner - Under the Copyright Act the author of a work is the individual responsible for creating it, however there are exceptions, ie if a person creates a work in the course of their employment (as opposed to under a contract for services) the employer is the first owner. Similarly if the work is made pursuant to a commissioning arrangement / agreement. The knarly bit here is that, as currently drafted the Act provides that the person / company commissioning the work only has to agree to pay and the copyright vests in him / her / it.

Moral Rights – In short, moral rights are the right to be identified as the author of a work and the right to prevent someone from treating that work in a derogatory manner. Only an individual may hold moral rights; not a company. So if the agreement at hand is with a company providing the services of an individual, the company cannot waive the individual’s moral rights – this needs to be done by side letter from the individual confirming his / her agreement to the terms that the company has entered into and an acknowledgment of part or full waiver of these moral rights.

Consideration v Inducement – For an agreement to be legally binding there are three necessary components – offer, acceptance and consideration. Consideration:The “consideration” can be as small as a peppercorn – the courts will not look into whether it is “good enough” consideration but whether the parties have agreed upon and named the consideration that they are happy with. Often you will see the phrase In consideration of the payment of $1.00 (receipt of which is acknowledged) and other good and valuable consideration. This creates the necessary consideration to form a binding agreement. Inducement: Sometimes though there is no consideration in the form of money or benefit changing hands and in this situation words along the following lines can be used, As an inducement for you to film, photograph and/or record me, I grant to you…etc. By using the words as an inducement the producer sets up the proposition that, because of the conduct of the participant, the producer has changed its position in reliance on that conduct and thus is entitled to hold the individual to it.

Licence v Assign – These two words mean entirely different things yet so often people use them interchangeably. A licence gives a third party the right to do certain designated acts in relation to a work and may be limited as to use, time and territory. An assignment is the sale of the rights in the work to a third party. Once the sale has taken place the creator no longer has an interest in or ownership of the work. The difference is critical.

Gross v Net – Often in American agreements reference is made to a share of Gross Receipts, However here, almost invariably, agreements refer to a share of Producers Net Profit or Net Receipts. This is because the producer can only pay a percentage of what he/she/it actually receives after all the deductions inherent in the distribution and exploitation of a film or programme. If a producer was required to pay a percentage of Gross Receipts the producer could end up having to pay the relevant percentage to a third party regardless of whether the money trail finally trickled its way down to him/her/it.

At the end of the day, if you are uncertain about what any word or clause means, never be afraid to ask. It’s better to know upfront what you are getting into, rather than kicking yourself down the track when you suddenly realise you don’t have the rights you thought you had.