Pay or Play Contract

A Brief Introduction About the Pay or Play Contract

What Is a Pay or Play Contract?

A pay or play agreement is usually found in the entertainment industry where one party is willing to perform, and the other party is agreeable to pay for this performance. The client who is hiring the performer may not demand the performance.

The pay or play definition says it is a commitment by the producer to pay for the artist’s services even if later on, they are not required. So, whether or not the production takes place or if the artist is not required to perform, the artist will be paid the agreed fee. However, this clause is not applicable when the artist has some disability, or there is a breach of contract.

This provision protects the interest of the artist as well as the producer. The producer may terminate the services of the artist without assigning any reason; however, the agreed compensation must be paid to the artist.

Who Takes the Pay or Play Contract – People Involved

Pay to play contract is common in the entertainment industry, and the parties to this contract are the artist who would like to offer his or her professional services and the production company who would like to offer a professional fee to the artist for rendering these services. The producer who is hiring the artist has to pay the artist whether the artist performs or not.

Purpose of the Pay or Play Contract – Why Do You Need It

In a pay or play agreement, the producer has to pay the artist even if the services of the artist are not eventually availed of. Whatever the agreed fee, it has to be paid to the artist also though the performance does not take place or was excluded.

This clause does not apply to specific circumstances like any disability suffered by the artist, an event which cannot be controlled known as an ‘Act of God’ or violation of the agreement by the artist. The artist in these circumstances will not be paid by the producer.

This contract benefits the producer as well as they can terminate the services of the artist without facing any legal action claiming loss of opportunity. There is an incentive for the producer to use the artist as he or she will have to be paid anyway. This clause is applicable even if an actor is replaced by another actor. As this clause has specific financial implications for the producer, they won’t go for the pay or play agreement unless the film has been approved for production and the main characters decided on a pay or play basis.

Without pay for play contract, the artist will have no incentive to work as the producer may replace him or her at the last minute and not pay anything. The producer will have a difficult time getting an artist without this contract.

Contents of the Pay or Play Contract – Inclusions

The contract should ensure that all the required clauses be entered in the agreement so that the interests of both parties to the agreement are protected.

The contents of the contract should be as under:

The parties to the contract: Names of the producer and the actor along with their communication details
The effective date of the agreement
Name of the project: The name of the film being produced
Role of the artist
Services: The services that the artist will be providing for the producer including the exclusive period clause, the pre-production services, post-production services, and promotional films and trailers
Compensation: This will be subject to the ‘No obligation to proceed’ and the ‘contingencies’ clause. The artist would be entitled to fixed compensation, contingent compensation, and the pay or play clause
Transportation and additional benefits: Depending on the distance of the artist’s residential address, there will be reimbursement of expenses
Credits: The actor will be given credit about the screen, paid ads, general
Rights: The ownership of all ideas, themes, stories created by the actor shall become the property of the producer[9
Alteration right: The artist gives the producer the right any material provided by him or her
Rental right: As a percentage of the fixed compensation or were stated the contingent compensation
Merchandising: The artist will be paid a pro-rata share of profits where the actor’s name is used in audio cassettes, booklets or other merchandise
No obligation to proceed: The producer is not obligated to use the services of the actor or the materials provided. The producer will pay the actor according to the pay or play clause
Contingencies: The services of the actor can be suspended without notice when the actor is unable to provide the required services due to illness or incapacity

How to Draft the Pay or Play Contract

A pay or play contract template may be used while preparing an agreement that could be modified to suit a particular case.

Here are the points which should be considered while drafting the agreement:

Eligibility to participate: All the parties must be competent to contract, mentally fit and not under the influence of alcohol or drugs
Consideration for the contract: The payment is made by the producer to the artist including the fixed and variable component and share of rental rights
Terms of the contract: The contract must not be in favor of one party, and there should be no material information suppressed
Confidentiality clause: No party to the contract should disclose any material information to a third party regarding the details of the project
Dispute resolution clause: The process for resolution of disputes including whether arbitration or litigation will be opted for, the responsibility for payment of legal fees, the legal jurisdiction where the dispute will be resolved
Termination of a contract clause: The tenure of the contract between the actor and the producer should be mentioned, including any provisions for premature termination
Place for signatures: The last page should be reserved for signatures as this signifies that both parties to the contract have accepted all the terms and conditions

Negotiation Strategy

In a pay or play contract, the producer should share the contract with the artist to get his or her opinion regarding the terms and conditions of the contract. The artist should go through the contract and negotiate the terms like payment and percentage of distribution. If both parties agree to these terms, then they should sign the contract.

Benefits & Drawbacks of the Pay or Play Contract

The benefits of the pay or play contract are as under:

Protection of interests of both parties: The interest of both the producer and the artist are protected by this contract. The producer will not pay the artist if there is a breach of contract by the artist. The artist knows that he or she will receive payment from the producer
Payment guarantee: The pay or play section ensures that the artist gets payment irrespective of whether the actor performs or not
Termination of contract: The producer can terminate the contract with the actor without assigning any reason
Copyright benefits: The producer will enjoy the Copyright benefits to all materials contributed by the actor to the project

Here are the drawbacks of the pay or play contract are as follows:

Payment uncertainty: The producer can sign the actor for a part and decide not to pay since there is no clause barring them from doing so. This means that the income of the actor will be uncertain
No incentive to work: The actor will not have any incentive to work as the contract can be suddenly terminated without reason
Difficulty getting talent: The producer will have difficulty getting any talented actor or actress to work as they will have no work assurance

What Happens in Case of Violation of Pay or Play Contract?

Both parties to the contract should try to resolve the matter amicably between themselves. If that is not possible, the injured party will send a notice to the party violating the contract. If that does not work, then legal remedies should be sought.

The remedies for violation of the pay and play contract are as under:

Money damages: In case of total breach of contract, there has to be compensation for financial losses suffered, including lost profits. If there is a partial breach, in that case, the producer will charge the actor the fee paid to replace the actor
Restitution: This is usually resorted to when the artist is not competent to contract. The producer has to be returned any property or money to restore him or her to the original position before signing of the contract
Rescission: This remedy is applicable when the contract was entered into by fraud or undue influence. The parties to the contract are relieved of their contractual obligations
Reformation: When the court finds that the contract is tilted in favor of one party, then reformation of the contract is suggested. A fresh contract is drawn up by the court
Specific performance: In this case, no monetary compensation is demanded by the injured party. The party which has violated the contract has to fulfill his or her obligations

[Also Read: Actor Contract]

A pay or play contract usually applies to the entertainment industry. According to this contract, the producer has to pay the artist they have hired even if the artist has not been part of the project and has not performed. This benefits not only the artist but also the producer. The producer has the right to terminate the contract with the artist without providing any explanation.

The contract should contain all the legal clauses relevant to protect the interests of the parties to the contract. There should be a non-disclosure clause whereby neither party to the contract should share any confidential data with a third party and cause losses to either party.

The termination of a contract clause gives the producer the right to terminate the services of an artist without any notice. This will help the producer keep a check on his or her costs. Both parties to the contract should read the terms and conditions of the agreement before accepting them.