In the News
October 7, 2005
When is a Deal a Deal? The Handshake vs. the Written Agreement
By Mathew B. Rabin
Which came first: the chicken or the egg? If a tree falls in the forest while no one is around, does it make any sound? Another eternal question, which may be no less esoteric, has been asked once again: when is a deal a deal? Fox Searchlight and Paramount Classics have each taken a stab at answering that question in relation to one new picture: "Thank You for Smoking" by producer David Sacks.
Paramount Classics claims it has a handshake agreement with the agent attached to the film for worldwide distribution rights. The problem lies with Fox Searchlight's subsequent interest in the film: it finalized a deal for the same rights, this time in writing. When Paramount Classics caught wind of the latter deal, it cried foul. Although it didn't reduce the agreement to writing, Paramount Classics suggested in no uncertain terms that it had a verbal agreement in place before Fox Searchlight's contract, and that it was considering legal action against the film's representatives to enforce that agreement.
On one hand we have the old-line, veteran entertainment executive argument: with the frenetic pace of the film festivals and markets, handshake deals are consummated frequently and are integral to the business. If these verbal commitments are not honored, the whole system breaks down, so the thinking goes. On the other hand, we have the "trust no one" position: don't assume anything until you have a written agreement. Which is the better argument?
Of course a written memorialization is almost always preferred. The writing doesn't necessarily have to be lengthy; many high-ticket deals can be laid out in only a few pages. The key is to get all business terms covered adequately, and to have the necessary legal issues addressed. Our practice can assist in structuring, negotiating, drafting and reviewing all agreements that arise in the apparel and entertainment industries. Regardless of the counsel you retain, keep one question in mind: if the other side is hesitant to reduce the terms of the deal to writing, do you truly have a deal?
This article, Copyright 2005 Mathew B. Rabin, A Professional Law Corporation.