Okay, so you’ve written a screenplay and are shopping it around town. What now? Well, if your work generates interest from a studio or producer, you may soon be handed one of several agreements to review. Understanding the key differences and commonalities between each one will be essential to protecting your work, accomplishing your goals, managing expectations and avoiding pitfalls. Let’s first look at each one so you’re clear on what they entail and under what circumstances they might appear.

Option/Shopping Agreement

An option is most often used by a producer who doesn’t currently have the means to get your picture made, but believes in the work and wants a chance to shop or package it. The option period is the length of time you agree to give that producer to purchase the script outright, during which time she has the exclusive right to attach talent, secure distribution, raise financing and/or engage in other measures that result in a greenlight. If the producer fails to purchase the script by the end of the option window and you choose not to renew, all rights revert back to you. The producer’s rights during this window are exclusive because she doesn’t want you suddenly selling to someone else after she’s spent months (or years) working on it, often at considerable expense, which could risk legal issues with third parties whom she’s already attached. However, she should pay you a fee for this exclusivity. A shopping agreement, on the other hand, is like a “free option,” where you give a producer the right to shop or package the project without paying you, which lets you retain the right to have others separately shop or package it also.

Purchase Agreement

When a producer is ready to buy your script outright, she will present you with a purchase agreement. This might come during the option period when she has raised enough money to make the picture, or can at least pay a fair price for the script if she doesn’t yet have full financing. However, a producer might skip the option phase altogether, especially if she has the financing and is ready to go. Once this agreement is executed and you’re paid, your screenplay is now hers and she can do what she likes with it. That means, short of a production guarantee, she can choose not to make the picture as well. This agreement could be governed by the WGA if the producer is a signatory to that guild’s collective bargaining agreement, meaning she’s agreed only to buy scripts subject to the WGA’s rates and terms. Purchase deals are most common with spec scripts – that is, a screenplay you wrote “speculatively,” without any prior knowledge of whether it would sell.

Writer-For-Hire Agreement

Most often, your spec script is used as a sample for producers seeking a writer to execute a vision they already have, whether that be an optioned book, a treatment, or simply a pitch idea that exists only in the ether. If the producer feels you’re the right person for the job, she’ll present you with a writer-for-hire agreement, which engages you to create something wholly new and original for her that she will own and control in exchange for paying you a fee. Like a purchase agreement, this might or might not be governed by guild rules and minimums. This is also sometimes known as an assignment agreement.

Key Clauses

While each of these agreements are different, there are standard terms that carry across all three, and you’ll want to make sure they’re present. First, ensure the compensation clause clearly outlines not only what you’ll get paid, but when. Also be clear exactly what credit you’ll receive, not just on the picture itself, but in all paid advertising. “Written by” is typically reserved for writers who wrote the entire story and script, while “Screenplay by” is generally applied to writers who didn’t come up with the story and are simply hired to write the script. Every agreement should also express the term, whether that be six months, six years, or even perpetuity (as is the case for a purchase). For an option, how long does the producer have to exclusively shop it? (One year is pretty standard.) For the assignment, how long do you have to write it? Lastly, safeguard yourself with a) a clause that details exactly what each parties’ rights and obligations are during the term; b) an indemnification clause that holds you legally harmless from any act committed by the producer; and c) an arbitration clause for any deal where potential damages are greater than your state’s small claims court maximum, as arbitration is a much cheaper way to resolve disputes than are lawsuits.

Now that you have a basic understanding of these agreements, let me offer a prescient piece of advice: Always have a lawyer review them before you sign. Yes, there’s a fee, but it can save you a lot of heartache down the road. It’s much cheaper to have a lawyer review an existing agreement than to draft one from scratch, and there are lots of small firms in Hollywood that will negotiate a reasonable flat rate for the work. Knowing the legal is handled properly will give you the peace of mind to focus on what you do best: writing stories for the screen.

BIO: Mark Heidelberger co-founded Beverly Hills-based Treasure Entertainment in 2000, serving as a film executive, producer and literary manager until 2011 before going freelance. Film and TV credits include Harsh Times, Comfort, Ninja Apocalypse, The Basement, Take the Night, Pray for Rain, Hallmark Channel’s You’ve Got a Friend and the just-released Last Night on Earth. Often times, he performs ghostwriting services on screenplays in addition to his producing duties. He is a member of the Producers Guild of America. He holds a BA in Film Studies from UCSB and an MFA in Producing from UCLA’s School of Theater, Film, and Television.