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<b><i>Commentary: </b></i>Inequity Is Seen In Film-Rights Reversion Process

By Donald C. Farber
May 31, 2006

I have a lot of trouble accepting something that makes no sense simply because an attorney trying to make a point in a deal says: 'It's always done that way,' or 'Everyone does it like this.' Attorneys preparing a film contract often use this 'irrational' rationale. I am referring to the reversion clause in a contract to acquire rights in a basic work, such as a novel for a film.

The attorney for the film company acquiring the rights may try to convince you that the percentage of the net profits that will go along with the fee payment for the rights in the work are indeed valuable, while both of you know that, in most instances, net profits on a film are really 'pie in the sky.' Turn the argument about the value of net profits around, and the film attorney may try to convince you that the likelihood of net profits is so remote that it shouldn't even be considered part of the consideration so that if the seller of the rights in the book never has the chance to receive net profits, he or she has lost nothing.

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