Understanding a screenplay option agreement

What is a screenplay option agreement (also known as an "option/purchase agreement")? In a nutshell, it’s an agreement in which a writer of a screenplay agrees that, during a specified period of time, a producer has the exclusive ability to buy the right to produce the screenplay. Usually that period of time is between six months and a year.

The producer doesn’t have to buy the right to produce the screenplay within that time frame, and indeed may not be able to, because the producer may have to raise funds to buy the film rights from the writer and might not succeed in doing that during the option period. And whether the producer wants to buy the right to produce the script will also depend on market factors – for instance, if heartwarming animated Disney Pixar films are in vogue at the moment, but the script covered by the option agreement happens to be a slasher film, maybe the producer will think it’s not the right time to produce the movie. That’s why it’s called an option – because the producer can choose, during the option period, whether the producer wants to make a movie using the script.

That’s a high-level explanation, but in the law, the devil is always in the details, and those devilish details are what we’re going to get into in this video.

00:00 Introduction
02:08 The option period
02:39 The purpose of an option agreement
03:22 Why an option is usually exclusive
03:57 Extending the option period
04:24 The option price
04:53 How do you compute the option price?
05:31 The purchase price
06:18 What rights are being purchased?
06:54 Other issues the agreement needs to cover

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Disclaimer: This channel includes only general information on commonly encountered legal issues, and does not provide legal advice. The law is a personal matter, and no general information like the kind provided on this channel can fit every circumstance. Therefore, if you need legal advice regarding a specific issue, you should consult a licensed attorney in your area.