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Clause & Effect

By Stan Soocher
August 25, 2003

Parties who buy rights to produce films often sell those rights to third parties. Such assignments raise the issue of whether the third-party buyer must meet the contractual obligations that the original rights buyer owed the original rights seller.

California Civ. Code Sec. 1589 states: 'A voluntary acceptance of the benefit of a transaction is equivalent to a consent to all the obligations arising from it, so far as the facts are known, or ought to be known, to the person accepting.'

In a recent dispute, Prelude Pictures had optioned the rights from Ib Melchior to make a film based on the TV series 'Lost in Space.' Under the agreement, 'if the Picture gets made in association with Prelude, Prelude [grants to Melchior] ' the right to receive seventy-five thousand dollars ($75,000) as a production bonus payable out of the budget of the Picture ' and two percent (2%) of Prelude's gross receipts, if any, from the Picture (it being understood that such gross receipts are not the gross profits or receipts of the Picture or the distributor's gross but are Prelude's gross receipts from the Picture, including, without limitations, receipts from videocassettes, laserdiscs and other visual reproductions of the Picture.'

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