So who ever said you can’t get something for nothing? Like so many other appealing facets of ‘Tinsel Town,’ many artists, talent agents and studio exec’s might tell you that sometimes, you can in fact get something for nothing… or at least, for a lot less than one might think.
An industry standard and ever-important term in many entertainment contracts is that of the “Pay or Play” provision. By definition, a Pay or Play clause means that the person being hired (typically, an actor or director – we’ll call them the “artist”) is guaranteed payment regardless of whether or not they actually work.
To validate this definition, several courts having analyzed these clauses have also found that, once an artist becomes “pay or play,” compensation is generally required even if the project is abandoned or the artist’s services are terminated (unless, of course, the artist is in material default). So, essentially, the artist could be compensated for having done nothing or, a lot less than originally bargained for (although the artist might argue that, pursuant to the terms of their agreement, such is exactly what was bargained for).
But, what of the infamous Hollywood deal bound by a handshake? Both parties obviously know the universally accepted definition of “Pay or Play,” so even a verbal agreement should be free from issue when it comes to payment, right? WRONG!
Whether verbal or written, additional terms that are vitally important for discussion and agreement are those relating to when the “pay or play” rights can and will be triggered.
Take this example: A studio is in negotiations with an artist to secure her services for an upcoming television mini-series. After the parties agree on all deal points, including the amount of the artist’s fixed compensation, the studio’s concession that the artist be “pay or play” and, the artist’s approval rights over a male co-star, the artist approves three actors but none of them are available. With the date of principal photography fast approaching, the studio casts a co-star that the artist disapproves. Consequently, the artist withdraws from the project and demands full payment of her fixed compensation because she was “pay or play.” What happens?
Some would argue that the artist is entitled to her fixed compensation – plain and simple! They would contend that the artist did not default on the terms of the contract and would have performed in the mini-series but for the fact that the studio did not adhere to her right of preapproval for the co-star. Opponents would alternatively argue that the artist is not entitled to be paid because her “pay or play” provision was never triggered. This argument would be based on the premise that the purpose of “pay or play” is to give the artist security that she will be paid whether or not the studio elects to utilize her services, not whether or not the artist chooses to perform.
The point here is that this contract term needs to be carefully and thoroughly defined. Aside from the ambiguities that can stem from even the written word, keep in mind that some dealmakers actually perceive some advantage in negotiating vague terms. They realize it’s a gamble of course; but they find strategically sufficient reasons to take the risk when they can get away with it.
Therefore, while “pay or play” may be as commonly a recognized term in the industry as any Hollywood lingo, this contract provision can present traps for the unsuspecting dealmaker that may come at a great cost!