With the breach-of-contract case against John Travolta headed for trial July 14, lawyers are again asking that perennial Hollywood question: “When’s a deal a deal?”
“There is more misunderstanding about this area than any other issue in the entertainment business,” says Bert Fields, who reps Travolta in the litigation over Mandalay’s “The Double.” Adds a prominent studio executive: “This is what I do all day; it’s the most frequent question that comes up.”
Numerous legal dilemmas can arise when a picture is ready to roll and millions of dollars have been spent without signed agreements. In the past few years, there have been a spate of high-profile talent disputes, each pointing up various aspects of this legal gray area.
The Kim Basinger-“Boxing Helena” case focused the spotlight on the so-called handshake deal. The recent Pamela Lee-“Hello, She Lied” trial raised the question of how much authority agents and managers have to cement deals. The “Double” case asks double questions: at what point in time does an unsigned contract become binding, and is there an agreement if most, but not all, demands are met.
The answer to the Big Question is seemingly simple: There is a deal when there’s mutual agreement on the material terms of the contract. In most instances, oral contracts are as valid as written ones. Without a signed contract, however, disputes can arise over terms of the deal or even whether there is a deal at all.
Typically, an oral agreement is made by an actor’s agent or lawyer, which is then followed by a deal memo and reams of paperwork outlining the major points. However, the process rarely culminates in a longform agreement signed by both sides.
Athough the Basinger case was widely characterized as a Hollywood handshake, there was extensive documentation. Patty Glaser, who represented Main Line Pictures, says, “There was a deal memo that wasn’t typed but was sent by our side and supplemented right on the deal memo by the other side. You then had four drafts of longform contract and the last draft, her lawyer admitted, incorporated all of Basinger’s requested changes. The only thing missing was her signature.”
Kirk Pasich, an entertainment litigator, describes this mix of oral and written agreements as the “creeping contract,” explaining that at some point there will be agreement on enough terms for a court to find there is an enforceable contract and supply the missing details.
The suit filed by Mandalay Entertainment and Liteoffer Ltd. claims Travolta breached an oral agreement to star in “The Double” for a salary of $17 million. According to the complaint, Travolta arrived in Paris in late May 1996 for rehearsals and meetings with director Roman Polanski in preparation for the start of filming.
Once there, it’s alleged, Travolta disrupted filming by making several demands, including: that the already approved script be rewritten, that Polanski not be permitted to direct Travolta’s performance, and that the director submit in writing and for Travolta’s approval his “creative vision” of the picture.
Without explanation, Travolta left Paris on June 5, with principal photography to begin June 10. The suit alleges $50 million in damages, including pre-production costs and foreign pre-sales.
Fields disputes the allegations in the complaint, and says, “The parties never reached the point where either side communicated an unconditional acceptance of all the terms offered by the other side. There were always points about which they were in dispute.”
Fields continues, “A contract is formed when one side unconditionally accepts all the terms of an offer from the other side. If the offer contains 30 items, accepting only 29 of those items does not constitute accepting an offer. In a legal sense, there must be a complete offer and acceptance or either side can pull out.”
But one studio executive says that instead of 30, he only needs to close on three points to have a deal: “If I hang up the phone and I close on money, points and credit, I think I’m bound and I have a deal,” he says.
Basinger withdrew from Main Line’s “Boxing Helena” a week before production was to begin. The actress claimed she had never signed a contract and had never agreed to do the part, citing her objections to nudity.
Main Line claimed that while there were still some negotiations over fine points, Basinger had committed to act in the movie. As evidence of an agreement, Main Line offered testimony that Basinger had agreed to a $3 million salary, had written a song for the film and had chosen a costume designer.
In 1993, a Los Angeles Superior Court jury found that Basinger had made a binding agreement and awarded the producer more than $8 million. Hollywood was stunned by Basinger’s testimony that without a written agreement, if she got up the day of filming and didn’t feel like doing the picture, she could walk. On the other hand, most in the industry were amazed at the huge amount of the damages awarded.
(The verdict was reversed on appeal on technical grounds and the parties later settled.)
Just how common is the lack of a signature? Many lawyers say contracts with major stars are never signed. The “Helena” case showed that Basinger had signed contracts on only two of nine movies she made. And one film executive quipped, “I’m still waiting for Patrick Swayze to sign his contract on “Dirty Dancing.’ ”
The unsigned contract is the prerogative only of high-priced talent. Other types of pacts — rights agreements and writers’ agreements, for example — are always signed. One lawyer who represents writers says no studio will take a chance on not having rights properly secured when federal copyright law requires such an agreement in writing. This lawyer also points out that few writers have the same leverage as stars.
If unsigned contracts cause so many headaches, why are they so common?
Some lawyers speculate there just isn’t enough time to get signatures on what Fields refers to as “a telephone book of a contract.”
But several lawyers say the unsigned contract is part of a negotiating strategy by talent lawyers, and its prevalence reflects the incredible leverage of major stars. They point to such powerhouse talent law firms as Armstrong, Hirsch; Bloom, Hergott; and Ziffren, Brittenham as pioneering the practice of not signing the contract. The theory is that if the agreement isn’t signed, the star can use the bargaining chip of “no deal” if disputes arise.
Henry Holmes, Pamela Lee’s lawyer, was one of the few who said there’s no deal for his client until there’s a signed deal memo containing all material terms. Referring to the role of the agent, which was crucial in the Lee case, he also says he asks about the extent of an agent to bind a client.
Lee withdrew from producer Ben Efraim’s “Hello, She Lied” two weeks before filming was to begin, claiming her concerns about nudity and simulated sex had not been addressed. The producer contended these issues were minor and would have been resolved. As evidence Lee had agreed to do the movie, the producer testified she had taken a physical for insurance purposes, agreed to a salary and discussed such issues as hiring her own makeup person.
Los Angeles Superior Court Judge David Horowitz ruled in favor of Lee, finding that the issues of nudity and simulated sex were material and therefore there was no contract. The judge also ruled that Lee’s agent didn’t have the authority to make a binding agreement on her behalf because she had never expressly given him that power.
Many lawyers feel this opinion reverses the ordinary assumption about the power of agents and adds an extra wrinkle to already complex contract negotiations.
In another “we don’t have a deal and I’m walking” case, Whoopi Goldberg requested delays in the start date of “T. Rex,” and a month before production was to begin finally backed out of the independent picture about a female cop who teams up with a dinosaur.
She claimed she w
as interested in the project but never committed to do the movie. The case was settled when Goldberg agreed to do the picture, which went straight to video.
Another star, Woody Harrelson, was sued when he dropped out of MGM’s “Benny and Joon,” a film that was recast and made with Johnny Depp.
Borrowing from another area that involves expensive talent, Holmes, who also represents athletes, points out that “no deal” disputes don’t occur in team sports because the collective bargaining agreements require signed and filed contracts with the players. And in boxing, the Athletic Commission requires a signed and filed agreement between the promoter and the fighter.
But the film business will continue to see unsigned agreements and, if anything, more litigation when powerful actors walk off pictures and producers take them to court.
Says Glaser, “You can still make a deal based on a handshake, but artists need to understand that when they say yes, and the other side relies on that yes, they need to live up to their agreements.”