A share purchase agreement (SPA) is an agreement that defines the terms of sale and purchase of shares of a company. The duration of a purchase agreement is generally shorter than an option agreement – 6 to 12 months, compared to 12 to 18 months under an option agreement – since the producer essentially benefits from a free option to purchase the investigation period. If the purchase agreement is exclusive – the purchase contracts may be exclusive and not exclusive – the owner has even more incentive to keep the date short so that the purchase rights are not tied to a single manufacturer. A purchase agreement or “producer purchase agreement” allows a producer or author to purchase a film or television project exclusively for financial organizations such as studios, networks and production companies for a specified period of time. On the other hand, in a purchase agreement, the author reserves the exclusive right to accept or disapprove. That means they could sell it to someone else. The producer can make a solid offer to the author, but the author can veto it because he does not like the company, because they support themselves for an unrealistic amount of money or simply because they no longer like the producer. However, a purchase agreement may be more advantageous for an owner if the property gains heat and generates interest after being purchased. In the absence of a pre-negotiated purchase price related to the property, as in the case of an option contract, an owner is free, as part of a purchase agreement, to negotiate a purchase price directly with the buyer and take advantage of the upward trend, including possible bidding wars. But the opposite also applies. For example, a screenwriter could enter into a purchase agreement for a well-written screenplay with commercial potential, but a film with a similar premise will be released shortly after and become a cash register bomb. Film and television trends are hesitant, the script can suddenly become dead in the water, without interested buyers re-breeding because of the risk of the same failure.
The owner would be missing all the revenue he would otherwise have received if he had entered into an option contract. “Purchase agreements” (sometimes referred to as “manufacturer input agreements”) are increasingly being used as an alternative to option agreements. They are often seen as convenient substitutes, as they generally require less time and cost to negotiate. Although purchase agreements are akin to functional option agreements, authors and producers should not be fooled by the idea that they are equivalent in all aspects. One of the essential functions of a contract is to spread the risk among the parties. Purchase and option agreements inherently involve different risk configurations and their adequacy depends on the interests of the parties, the equipment sought and other circumstances of the transaction. Whether the agreement should be structured in the form of a purchase agreement or option must be carefully considered in light of some of the factors described below. And the duration of the contract could end, and they could sell it without you! If you make one of these agreements, you will always receive them in writing. Oral agreements are beautiful, but they really do not have legal status. If you opt for the duration of the contract and compensation, it will be useful to get things on paper.