Difference Between an Option and Purchase Agreement in Film
When you’re new to filmmaking, you’re likely to face several hurdles along the way. Particularly as they apply to the acquisition of intellectual property rights. If you’re thinking about moving forward with a decision to seek the right to use intellectual property. Such as a book to produce your film. But you’re now facing documents including an option or a purchase agreement you might be confused. What’s the difference between an option and purchase agreement in film?
What is an Option Agreement in Film?
An option agreement in film represents the initiation of a deal. Between a screenwriter or author of written literary work and the filmmaker. The option agreement provides the filmmaker with the option to purchase the rights to a written work. So that they can later produce a film.
Option agreements are often executed between book authors, screenplay writers, or other copyright holders. Providing the filmmaker with a period of time upon which they may choose to execute their right to purchase film rights to the work.
What is a Purchase Agreement in Film?
The purchase agreement in film represents the next step in the process of acquiring the rights to produce a film based on a copyrighted work such as a screenplay or a book.
The filmmaker acquires the option right first. And later purchases the rights to the work so that they can legally produce a film based on the written work itself.
Unlike the option agreement which does not give the filmmaker any actual right to produce the work. The purchase agreement does provide the filmmaker rights to the work.
Thus, the purchase agreement acts as the final decision between the author and the filmmaker. Allowing the filmmaker full rights to produce the film based on a book. Or some other written work that was originally copyrighted by the author.
Navigating the Option and Purchase Agreement in Film
As you’re entering into an agreement with the copyright holder of a written work it’s important to know how your rights work and what each of these important documents means.
The difference between an option and purchase agreement in film is primarily based on the fact that the option agreement only gives the filmmaker basic rights to explore the idea of producing a film on the written work.
And does not actually provide the filmmaker the right to move forward unless or until they finalize their purchase agreement with the author.
In Summation
Another way that the option and purchase agreement in film are different is that the option agreement generally provides a set period of time upon which the filmmaker may choose to execute their purchase rights acquiring rights to the work.
Likewise, the purchase agreement provides the right for the filmmaker to produce the film based on the written work, generally with fewer limitations or time constraints.
The purchase agreement is executed usually in exchange for 1-3% of the production price being paid to the copyright holder. Making it substantially more expensive than the option price, too.
