Hollywood Companies Looking To Invoke Contract Terminations From Early August
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The writers’ strike is headed toward the 90-day mark, putting heavy pressure on studios and production companies. These studios, while unnamed, are looking to cancel some of the contract deals pending with the writers as soon as the first of August. Variety got an inside look at the direction companies are leaning towards. With SAG-AFTRA striking as well, studios may take the contractual force majeure route.
A contractual force majeure is a common clause for a contract, and it’s common for a good reason. This clause frees an entity from the contract in the event of a specified event with no penalties. Oftentimes the event will be considered an “act of God” in the entertainment business; this can cover any event outside of the control of either party including strikes and labor prevention, and can be temporary or permanent depending on the scenario and specific contract. According to Variety, agencies haven’t been notified of the August 1st deadline, but they have been notified of previous deal suspensions.
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Image Source: The New Yorker
This isn’t a situation the studios can be selective about, and wiping out every deal is a questionable decision lest they risk losing potential staff to burned bridges following the strike. WGA negotiations committee co-chair David Goodman said, “They have a legal problem unless you’re gonna force majeure all the deals.” The situation is a careful balancing act, as the age of streaming platforms sees a heavier content production demand than during previous strikes.
With the proposed deadline around the corner, the wait will not be very long. The deals will mostly center around television according to the insiders. These deals generally cover a writer’s overhead pay and project funding, making the studio favored for distribution in return. If the deadline hits and action is taken, these deals will be terminated.
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Source(s): Variety, Legal Dictionary
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