Screenplay Purchase, Option, and Shopping Agreements Explained

There's a handful of agreements you might want to consider once your script has some heat. The most common types of agreements are screenplay purchase, option, and shopping agreements. The type of agreement that's best for you depends entirely on your own interests. Below, I will explain the overarching premise for each agreement to further your understanding of a potential deal you have in the works. 

Screenplay purchase agreements are exactly what they sound like. This type of agreement grants the purchaser complete ownership and interest to the intellectual property, including all of its characters, sequels, prequels, stage plays, ancillary rights, and anything else you can think of. The purchaser is typically a production company, studio, or producer. Compensation-wise, screenplay purchase agreements involve a flat fee, bonus compensation, and contingent compensation. All of these fees vary, depending on the interest in the project. The selling party should also consider negotiating for the first opportunity to write a sequel or prequel and of course, include strong language related to the writer's credit (especially if the writer is new). 

Option and shopping agreements are similar to each other and often confused. An option agreement gives the buyer the exclusive right to purchase intellectual property or specific rights related to the intellectual property at a set price within a specific period of time (the “option period”). The writer is paid to not sell the intellectual property to anyone else during the option period while the potential buyer is trying to further develop the project and secure financing. The purchase price is due no later than the start of principal photography but often occurs sooner. The option agreement will contain language just like a screenplay purchase agreement that dictates what happens when the intellectual property is purchased (ex. compensation, credit, subsequent projects, etc.). If the producer doesn't exercise the option and pay the purchase price, all of the rights will revert back to the writer. 

Shopping agreements grant a producer the right to pitch intellectual property for a specific period of time in hopes of finding backers such as studios, distributors, financiers, and/or networks. The shopping agreement will usually include language that attaches the producer to provide producing services in the event the intellectual property is actually being made into a film or show. The purchase price for the intellectual property and fee for the producer's services are not included in the shopping agreement. Both parties are left to negotiate with the potential buyers themselves. If the writer chooses not to sell the project, then the producer does not get to produce. As such, the writer decides if the project is going to move forward, not the producer. 

As I mentioned above, the best agreement for you depends on your interests and you should consult with my office to figure out the best move. Reach out to my office anytime at (424) 202-4239, send an email to [email protected], or visit the website at to set up your free consultation.

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Pitt Entertainment Law is a law firm representing independent creators (Production Companies, Producers, Writer, Directors, Physical Production Crew, Actors, and Social Media Influencers) across Film, Television, and Social Media.

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