Clauses in Film Contracts Actors tend to overlook (& Regret Later)

Actors often focus too much on their craft (which is inherently a good thing) but tend to neglect the fine print in their contracts. This is the biggest career (but also financial) setback. While your agents are too busy focused on securing work, you - the actor - overlook the right to compensation over projects you don’t end up participating in. That’s where the Pay-or-Play agreement comes into play (and gets real handy).

This essential clause guarantees an actor’s right to compensation even if they are replaced, drop out or the project gets cancelled. Without this clause, you risk financial loss despite your initial commitment. Pay-or-Play agreements allow actors to specify timelines for payment along with valid reasons for termination in order to protect themselves. When I pursued my LLM, the most notable industry example we explored relating to issues with this deal was Kim Basinger’s financial losses in Boxing Helena which to this day continues to serve its role as a cautionary tale for actors working without pay-or-play clauses.

Kim Basinger’s financial losses - See Main Line Pictures Inc. v. Basinger (1994) - allegedly took place due to an oral agreement (legally binding in California - Civil Section Code 1622!) rather than a written contract. She was taken to court by the producers of Main Line Pictures for breach of contract following her withdrawal from the project. The court ruled against her and awarded the studio over $8M in damages. This a great case study example that underscores the importance of written agreements along with Pay-or-Play clauses in order for actors to avoid similar disputes in the future.

I want to address a few clauses - along with terminology - that actors need to be more cautious over and pay attention to in their contracts. Let’s start off with Termination Clauses.

Studios often include vague termination clauses, most commonly using terms such as ‘creative differences’ or ‘reputational harm’ as a means to end an actor’s contract. These terms are quite vague in nature and therefore do not specify clear terms for termination, leaving actors prone to exploitation along with feelings of disempowerment. You want to ensure that your contract specifies clear terms for termination, including the need for ‘Cause-Based’ reasons. This will protect you from arbitrary dismissal and provides clarity on what your rights are as an actor.

I’d like to address these vague terms, whether that be ‘creative differences’ or ‘reputational harm’. As a starting point, these terms lack precise definitions, which allows studios to terminate contracts arbitrarily without specific justification. Studios can then exploit actors by claiming subjective issues, such as ‘bad chemistry’ or vague concerns about an actor’s reputation to avoid paying fees.

I’m now going to remind you of the wonderful Entertainment Lawyer Richard Marks who provided a role through his witness testimony at the Depp v. Heard (2022) trial in Virginia. When asked to address reputational harm - within the context of defamation - he referred to industry impressions and highlighted five media outlets that industry players pay attention to and take into account in their assessment of an actor’s reputation in Hollywood - Variety, Deadline, The Hollywood Reporter, The New York Times and the Washington Post (where Heard published her Op-Ed, contributing to Depp’s reputational harm). If you’re an established actor with a great PR team who can get featured on these media outlets frequently in a positive rather than infamous manner, you can more or less work your way around the vague term ‘reputational harm’ and avoid its studio-driven misuse.

But let’s go back to legal basics as a means to circumvent these vague terms in contracts as reasons for unfair termination:

The first thing you want to do is demand Clear Language. Define specifics, measurable standards for termination, such as legal misconduct instead of ‘reputational damage’. This would also require an Approval Process; you want to require disputes to go through mediation before any potential termination. Demand a Pay-or-Play clause where applicable, given that this protects payment regardless of termination claims (or you deciding to eventually drop out of the project). But also - Notice Periods! You want to ensure adequate notice before any termination is enforced by the studio executives as this will give you time to respond or address concerns. Lastly, I would also advise actors to opt for Cause-Based Termination. By specifying grounds, such as breach of contract or illegal activity, the legal terminology outlined in your contract is more defined, therefore limits arbitrary dismissals due to the absence of vague terminology.

Another way to address ‘reputational harm’ is through the use of Moral Clauses. Studios use termination contracts to address ‘bad press’ or actions deemed harmful to their reputation. As an actor, you want to push for specific definitions of what constitutes ‘reputational damage’ to prevent studios from abusing their power through vague terms within such clauses. The last thing an actor needs is to be left vulnerable to exploitation due to broad or subjective interpretations.

I want to move onto Exclusivity Clauses. These can restrict actors from working on other projects during the term of the contract. While this may sound reasonable at first, you still want to clarify timelines and limitations to avoid any potential career stagnation. Negotiate carve-outs for non-competing projects to maintain creative momentum. Unless of course.. the payments are generous and worth your while. Talk to your agents and managers. Good agreements make good friends.. and you want a good team of people who can help you evaluate your financial interests and goals in the long run.

Given advancements in streaming when it comes to the digitalisation of the film and television industry, we must address royalties and residuals. You want to negotiate clear terms for backend profits, royalties and residuals. Many actors miss out on ongoing income due to poorly defined participation clauses.

This is a common issue that also falls into Merchandising, which relates to your Image Rights and how they are used. You’re probably fairly familiar with the Image/Name/Voice/Likeness Clause in your contract. But you’ve also probably overlooked the ‘in-perpetuity’ term within Perpetuity agreements. These are the most dangerous as you financially benefit for a short period of time - when it comes equal revenue-sharing profits from marketing and merchandising use relating to your image (think Marvel contracts when it comes to merchandise). Perpetuity clauses grant a party (production company) indefinite rights with no expiration date. ‘In-perpetuity’ = Forever. These clauses are controversial in nature as they severely limit the rights and opportunities of actors. Creators lose control over their work (e.g. payments relating to the use of their image rights) due to unlimited ownership, asymmetric power becomes relevant due to unfair bargaining power, lack of flexibility due to outdated terms (perpetuity clauses lock creators into agreements that don’t account changing industry standards, inflation or shifts in value over time) along with the inability to renegotiate - as without expiration, creators lose the opportunity to revisit contracts when their work increases in value or when their marketability in the industry improves.

In terms of streaming, traditional television reruns paid actors their royalties, however streaming platforms tend to offer flat fees instead of ongoing income. You want to push for performance bonuses tied to viewership along with audit rights to ensure transparency in royalty payments. If you want to look into a recent case addressing the unfair nature of streaming profits, check out Scarlett Johansson’s lawsuit against Disney for Black Widow.

As AI technology advances itself across the entertainment industry, studios may attempt to replicate actors’ voices or faces digitally. This would fall into the category of Voice/Image/Likeness rights but perhaps also an additional clause relating to AI and Copyright. It’s good to be aware of these potential changes and advancements, so demand consent clauses for any digital alterations and restrict usage to specific timelines to avoid exploitation.

The key takeaway is the following - never sign a contract without consulting an entertainment lawyer or contract negotiator, demand written contracts (given that verbal agreements leave room for disputes), negotiate on licensing rights to retain control over your voice, image and likeness, push for pay-or-play clauses to secure guaranteed compensation, monitor royalties to track payments and audit studio payments (SAG-AFTRA has tools available for this if you’re a SAG member) and most importantly - stay informed! Knowledge of legal terms ensures long-term career stability and protection. By paying attention - or being made aware - of these clauses, actors can safeguard their careers, finances and reputation while navigating the complexities of this industry. If you can follow through these things, my work here is done.