A Brief Introduction About the Production Services Agreement
The production company has the expertise, staff, knowledge, and other creative resources required to produce a film or television program. The financier specifies the requirements of the project, and the production company has to ensure that the project is delivered according to the expectations of the financer. When a producer and financier decide to collaborate for a project, they enter into a production services agreement.
A detailed statement specifying the script or screenplay required will be included in the agreement, as well as all the services to be performed by the production company. These are the production services required under the agreement. There will be a schedule of payment with regard to the payment of fees to the production company. It will be the duty of the production company to ensure that the project is completed on time to avoid any time or cost overruns.
The rights relating to the production of the films and the screenplay are controlled by the financier and transferred to the production company when they are entrusted with the project. Once the project is complete, the rights will be transferred back to the financier by the production company.
Who Takes the Production Services Agreement? – People Involved
There are two parties to this agreement, the financier and the production company. The financier is responsible for funding the project. The production company takes care of the crew, the cast, payroll, and all other aspects required to execute the screenplay.
Purpose of the Production Services Agreement – Why Do You Need It?
These agreements are commonly used in the entertainment industry. Films or television programs require a financier and the production company. In order to produce any commercial program, the financier and the production company must come to an understanding regarding the terms and conditions.
The production company is given the project which needs to be completed within a particular deadline, and as per the specifications laid down by the financier. The production company also needs to adhere to the budget laid down by the financier, and the financier will not be responsible for any time or cost overruns due to lapses on the part of the production company.
If you are hiring a production company for producing a video, a video production services agreement template can be used as a reference. The performance yardstick for such agreements would be the creative value generated by the production company.
Contents of the Production Services Agreement – Inclusions
A standard agreement for production services would include the following:
- The effective date of the agreement.
- The names of the parties to the contract, the financier, and the production company.
- The statement of work, including the details of the project.
- The nature of the project, whether it is a film or a television program.
- The rights and obligations of the financier and the production house.
- The insurance required to cover any risks associated with the production.
- The consideration for the contract, including the details of the cash flow schedule.
- The conditions under which the contract can be terminated.
How to Draft the Production Services Agreement?
Points to Consider While Preparing the Agreement
While drafting a production services agreement, a production services agreement template can be used as a point of reference.
The following points need to be considered:
- The agreement should be entered in good faith, and no party should be coerced into signing the contract.
- The consideration payable under the contract and the payment schedule.
- The terms of the contract should be fair to both parties.
- A confidentiality clause should be included to ensure that no information is shared with a third party.
- The procedure for dispute resolution should be clearly mentioned in the dispute resolution clause, including the sharing of costs like attorney fees and whether arbitration or litigation would be used.
- If the production company or the financier wants to terminate the contract prematurely, then a termination clause should be included.
While drafting the master service agreement or statement of work, the financier should share the agreement with the production house with an offer. The production house should study the requirements of the project and make a counteroffer. The agreement should be signed after that.
Benefits & Drawbacks of the Production Services Agreement
The benefits of a production services agreement are:
- The rights of both the financier and the production house are protected. The financier will benefit from the completion of the project at the required quality and within the given time frame. The production house is assured of payment as per the payment schedule.
- Any delays in production have to be borne by the production house, and the financier will not compensate them for any overruns in time and cost.
The drawbacks of a production services agreement are:
- The financier will have to bear the losses due to the time and cost wastage on account of the inefficiency of the production house.
- No party will have access to legal recourse in the absence of a legal agreement.
[ Also Read: Producer Agreement ]
What Happens in Case of Violation?
If either party violates any clause in the production services agreement, the first step would be trying to settle the matter amicably. If that fails, then the injured party can send a legal notice, and eventually, take legal action.
The remedies available to both parties would be monetary damages(1), rescission, restitution, reformation, and specific performance. Monetary damages would include loss of profits suffered by either party. If fraud is involved, either the contract is canceled under rescission or a fresh contract drafted under reformation. If the contract is at an advanced stage, the contract has to be completed under specific performance.
A production services agreement should clearly lay down the rights and responsibilities of both parties, and the agreement should incorporate all the required clauses to protect the rights of the financier and the production company. The agreement should be read carefully before being signed by both parties.