Production Contract: A Beginner’s Guide!

When anyone speaks about a Production Contract/Agreement, it can be meant in the context of several scenarios. Production means “the process of or management involved in making a film, play, or recording, etc.”. This is sometimes confused in context with production of products/goods, which is again, a production contract, but more so referred to as a Manufacturing contract.

As the definition of Production in our context is concerned, it’s commonly entered into in case of production of a song/music video, film/web-series and/or drama/play. Most of the clauses in these scenarios remain standard, with a few additions that will be covered below, or tune in for more articles. Going forward, we will be covering this Agreement in a mix of scenarios.

The responsibility of a Producer is more than it is portrayed on the outside. This has been recognized by The Copyright Act, 1957 too, which defines a ‘producer’ as ‘in relation to a cinematograph film or sound recording, means a person who takes the initiative and responsibility for making the work’. So, it is clear that the Producer is not only investing the money into a project, but has to hand hold the project at all instances to make sure that the project is released without any hassles and to the full satisfaction.

In today’s time when the contents are generated in various formats, the possibilities of application of this agreement are endless. In the larger scheme of things, it can be applied to the production of films, web-series, songs, music albums, reels, podcasts, audiobooks, advertisements, etc. There are production houses which are producing content across platforms, whether offline or online, and the stakes are higher than before, with virality and monetary collections becoming the ultimate goal.

Therefore, when it comes to setting out the terms and conditions of a Production Agreement, things are not that simple anymore. A Producer must negotiate on points such as ownership, consideration, timeline, key responsibilities of the artist/personnel, royalties, profit sharing, etc. It is important to decide who holds the creative decision, and what creative freedom lies with the artist involved in the project. The best practices are the ones wherein a detailed agreement is set out with such clear terms, so as to avoid any discrepancy in the relation between the parties, as they are the most essential pieces of a project.

Also, in the best case scenarios, the parties build a long-standing relationship, wherein a Production house would sign the writer/musician/director exclusively for 2-3 films or 2-3 songs/albums, etc. With so many responsibilities and conditions at stake, it is essential that the clauses in a production agreement are well negotiated, and state the liabilities of the parties.

Therefore, in order to keep the best interests of both parties, let’s take a look at specific clauses that need to be negotiated and how. Here are 15 important clauses to keep in mind when drafting a producer agreement:

• Scope of work:
• This clause should clearly outline what is the objective of the project that the parties are working towards achieving. State the type of the project and its title, duration and release date (if available).
• Additionally, it is always better to mention the timelines and the deadlines for steps to be completed, namely Deliverables.
  • A Lyricist:
    • Will write the first scratch in the first 10 days from signing of the contract,
    • the revised draft within 25-30 days from signing,
    • and the final cut within 1 month from the signing.
  • A Music composer:
    • will share their composition within 1-3 months from the date of signing,
    • the Producer will choose within 15 days from the date of receiving;
    • Music Production (includes studio recording, recording of instruments, mixing mastering, etc.) will commence once the Producer confirms the songs to go forward with.
  • A director:
    • The first schedule along with location scouting, etc. will commence from the date of signing, and must end within 6 months from the date of signing;
    • The cast, crew, and teams will be discussed with the Producer and will be ready within 2 months from the date of signing;

It is important to note that these timelines are subject to negotiations and understanding the length of the project. All timelines, starting from press release of commencing the project to releasing the project are dependent on this. Just imagine the scenario with Brahmastra which took more than 5 years to complete, and after its release, the schedule for the second and the third installment has been delayed due to discussions with the producers.

• The Producermust discuss at length the details of the tasks and any additional responsibilities that the other party has to take up during the Term of the Agreement. This must include the pre-production and post-production activities that the Producer wishes the other party to take up, for eg: creatives, composing, ideation, location scouting, casting, etc.

In case of entering into contracts with artists, actors, or any personnel for that matter, it should ideally include promotions, attending conferences, posting on social media, etc. This particular clause can be entered into Deliverables or in the representations and warranties clause.

• Compensation/Fees/Consideration: Clearly state the remuneration that the producer has agreed to pay to the other party for the project. Commonly, the remuneration is either paid as a fixed cost, fixed+variable, or revenue share. There must be a statement in regards to any profit sharing that may be owed to the artist/writer or creator.

Tip: Profit sharing is mostly included in the deals where the artist/writer associating with the Producer is a crowd-puller or has several hits to their name. This is a clause which is highly negotiated when A list actors are approached for the film.

Once the remuneration has been included, it is of utmost importance to mention the clear schedule of payments along with specific dates. The payments can be released on a monthly/quarterly/annual basis, or at different stages of production. Also state if there are any signing bonuses which are payable, exclusive of the actual remuneration. Lastly, the Producer must mention the out-of-pocket expenses or miscellaneous expenses that they are willing to cover during the term of the project.

• Ownership: If there were ever a clause that could make or break a deal, this would be it.
  • The parties must specify who owns the Intellectual Property Rights to the work produced, including any master recordings, videos, lyrics, music or other works (as defined under the Copyright Act, 1957).
  • If there are dialogues, Trade Marks, taglines or any other identifiable element that is created during the production, then who would own them? In 99% of the cases, the producer owns such Intellectual Properties/IP, however, many writers take a reduction in their remuneration to own a share in the IP, which can bring them additional income in the future if there are derivative works or adaptations of their works.
  • Additionally, it is logical to clarify that the creator/author of the Intellectual Properties shall give proper No-objection Certificates, assignment agreements, the chain of documents, etc. to the Producer, as and when the owner will be filing an application to register the work, title or has to prove their ownership.
  • By default the Producer shall have all the rights in the Work(s) created and can assign the rights in such works by way of license or assignment. The Producer can further license the rights in the Works for creation of derivative works, publishing, synchronization, distribution, remakes, translations, etc.
  • This must also include the terms of such assignment/license which are namely exclusive/non-exclusive, commercial/non-commercial, transferable/non-transferable, and in case of any license being provided, then the same must include the Term (Duration) for such license.

For eg: The owner of a song enters into a contract with the Producer of a film, and the Producer wishes to use that song in the film. In such a case, if the owner of the song does not wish to license the song for perpetuity, she/he can license the song for a period of 3 years. In other cases, the use of the song can be restricted to a platform. The song can be used in the Film for theatrical release, but not to be used on OTT Platform.

TIP: The license of such rights in the license that are agreed in Production Contracts, are generally for 3 or 5 years. But, there is no standard term, and the same is dependent on the personnel involved in the project. Please Consult a Media Lawyer in case of entering into such a contract.

• Term: The Agreement must contain the tenure of the services/scope of work to be rendered. This is the total term that the Producer requires the other party to provide its services. In case there is a possibility that the term could be extended, then such a possibility must be mentioned in the contract at the time of signing. Another aspect to cover is if a series or content is made in parts, then the production schedule and the post-production activities, including promotions, must be covered in the duration of the Term.
• Termination: It is important to include a termination clause that outlines the conditions under which the agreement can be terminated, including any notice requirements. A clause for termination in case of material breach is a must. If the deadlines are not met, then the Producer can terminate the Agreement, with the addition of a penalty or refund from the party hired. Next, it must include the ‘Consequences of Termination’, the process to be followed in relation to the return of creatives, materials, outstanding payments, etc. Additionally, any outstanding payments till the date of termination can be paid or returned on a pro-rata basis.
• Confidentiality: The parties to the contract not only share insights on the projects but there are multiple discussions and information that is shared. The present clause must cover and ensure that the information passed on to the other party is kept confidential at all times. The following are the exceptions to this clause:
  • Parties can agree on a duration, post expiry of the contract, until which the information will be confidential;
  • In case any party is required to depose, or provide any document in respect of the deal with the Government, Courts, local authorities or any other authorized department.
• Indemnification: By incorporating this clause, the author/artist/creator agrees that they could be held liable for any unfavourable effects resulting from their choices or inactions. It acts as a safeguard for the producer’s rights and interests, ensuring that the artist is held accountable for any harm brought about by their actions. This provision acts as an all-inclusive statement that covers a variety of potential liabilities and duties and clearly states when one party is liable to pay damages to the other party.
• Insurance: The producer should carry adequate insurance coverage to protect the actors, and production team, against any liability or damages that may arise from the project. In cases of accidents, scrapping of the project, medical issues or any production-related issues, the cast and crew, as the case may be, are insured and receive timely compensation in such situations.
• Credits: The producer’s agreement should specify how the other party will be credited for their work. Negotiate if the credits will be mentioned on the title credits or the end credits. Also, make it clear if the credits will be shared with any 
• Promotion: This clause should outline the producer’s responsibilities for promoting the project, including any marketing or advertising activities, and how the artist will promote the work through their public channels.
• Non-compete: The producer agreement should include a non-compete clause that prohibits the artist from working on similar projects during the term of the agreement, and giving the agreed time to the producer for the project.
• Governing Law & Dispute Resolution: The producer agreement should specify the laws that govern the agreement, including any jurisdiction or venue requirements. The dispute resolution clause should outline the process for resolving any disputes that may arise under the agreement, including mediation or arbitration.
• Force majeure: It should include a force majeure clause that outlines the parties’ responsibilities in the event of an unforeseeable event that affects the project, including the refund procedure in case of such events.
• Amendments: The producer agreement should include provisions for amending the agreement, including any notice requirements and the process for obtaining consent from the parties involved.

In conclusion, a well-drafted producer agreement can help ensure that the project runs smoothly and that all parties involved understand their rights and responsibilities.Lastly, what is a post on legal information without a disclaimer? Here it is: Always remember that such advice is generic in nature, and always consult a lawyer for your specific requirements.

Disclaimer: This article is for information purposes only. You are advised to consult a legal professional for drafting such crucial documents for your business.  

This article has been written by KP Srivaramakrishnan on behalf of Team YLCC. For any other queries, reach out to us at: queries.ylcc@gmail.com