Understanding Deferred Payment (Entertainment Law): A Comprehensive Guide
Definition & Meaning
Deferred payment in entertainment law refers to an agreement where payment for services rendered by individuals involved in film production"such as actors, directors, and writers"is postponed to a later date. This arrangement allows production companies to manage their cash flow by reducing upfront costs. The deferred payments are typically made from the revenue generated once the film is released and begins to earn income. If the film does not reach completion or fails to perform at the box office, the deferred payments may not be made.
Legal Use & context
Deferred payment agreements are commonly used in the entertainment industry. They are particularly relevant in contracts between production companies and creative personnel. This term is primarily applicable in civil law contexts, where contractual obligations are enforced. Users can manage these agreements through legal templates provided by services like US Legal Forms, which offer resources for drafting and understanding contracts.
Real-world examples
Here are a couple of examples of abatement:
Example 1: A film production company hires a director and agrees to pay them $100,000, with $50,000 paid upfront and the remaining $50,000 deferred until the film earns a specified amount at the box office.
Example 2: An actor agrees to a deferred payment arrangement where they will receive their full salary after the film's release, contingent on the film's financial success (hypothetical example).