Freedom of contract: fact and fiction

Freedom of contract is seen as a corner stone of much of modern business and is often a key argument against regulation. But sometimes contractual freedom is a fiction and to defend it is to perpetuate injustice.

Audiovisual authors face this fiction every time they negotiate a contract. European copyright law grants authors the exclusive rights to their intellectual creations. In theory, they hold all the cards if someone wants to make their film. However, in such a competitive and uncertain market where rights’ transfer contracts are signed long before financing and production is confirmed, the reality is that most screenwriters and directors have very little negotiating power beyond the amount of work they will commit to do to get the film made.

In short, their contractual freedom is as fictional as Mary Poppins.

More insidious is the disappointing reality that even authors who are able to negotiate good contracts are generally unable to enforce them as to do so (through the courts or otherwise) could mean the end of their career. It’s a risk that many are unwilling to take and the reason why the big cases of authors taking their producers to court are generally from those towards the end of their careers or with a big enough reputation to keep working regardless. A first-time film-maker with a surprise hit stands no chance.

A legislative solution does exist and the European Copyright Directive proposal is the perfect place for it.

A collectively enforced unwaivable right to remuneration in no way diminishes contractual freedom. It creates a minimum threshold for remuneration to be considered equitable. Successful directors will be able to negotiate more money at the point of contract. A new director starting out who has a surprise success will be rewarded for that success through the remuneration right. This does not give authors an advantage over their contractual partners – if there is no success, there is no reward. The risk is shared.

When contractual freedom is a fiction due to the imbalances in negotiating power then it cannot be allowed to continue. The European Parliament has the power to do so and the Culture and Industry committees can show the way on 11th July when they vote their opinions on the Copyright Directive.