Nowadays, film and television investment is favored by many investors, but unlike other commercial investments, investors can only share box office revenues with producers after the release of film and television works. In the meantime, the producer shall perform the main contractual obligations such as the production, shooting, distribution and release of the film and television work within a reasonable period of time, and truthfully disclose to investors the cast and crew of the film and television project, the filming progress, the release time, the expected income and other information. Previously, the Songjiang District People's Court heard a film and television contract dispute case, and due to the producer's passive performance of the contract, the final judgment was made to terminate the contract and the producer returned the investment money and corresponding interest. A few days ago, the Shanghai No. 1 Intermediate People's Court rejected the producer's appeal and upheld the original judgment.
The production of investment films has not been completed for a long time
In March 2019, Mr. Hu saw an investment advertisement for Movie Y on Guangdong Zhujiang TV, so he contacted the customer service staff through the QR code in the advertisement. The customer service staff sent him the link to the Y movie filing and informed him that the movie was starred by a well-known actor. Mr. Hu was very interested in this and contacted Mr. Wang, the project leader of the film. Mr. Wang informed the producer of the film Y, the expected income and other information, such as "conservative profit is 2~5 times", "this film is currently being filmed, it will be completed soon, and it will soon enter the post-production and publicity stage", "it is expected that the summer file will be released simultaneously in major theaters across the country", etc.
As a result, Mr. Hu signed an investment contract for Project Y with the producer, paid an investment of 600,000 yuan, and subscribed for 0.125% of the film's investment share. However, the production of the movie Y has not been completed for a long time, the release date has not been determined, and the leading actor is not a well-known actor as stated by the producer. Therefore, at the end of 2022, Mr. Hu sued the District Court, demanding that the investment contract of Project Y be terminated, and that the investment money be returned and the interest loss paid.
In this regard, the producer, a Shanghai Film and Television Culture Media Co., Ltd., argued that the contract was still in the process of performance, and there was no contract agreement or statutory termination, and the film involved in the case was real after filing. In addition, the filming permit has been extended until February 19, 2023, which is still valid. The investment contract signed by the two parties did not stipulate the release time of the film, and the film involved in the case is currently in the rectification stage of remaking foreign content that cannot be filmed due to the epidemic through special effects, the actual box office revenue has not yet been determined, and there is no situation where the purpose of the contract cannot be realized, so it is not agreed to terminate the contract and refund the investment money.
The producer has the obligation to actively perform the contract
After trial, the district court held that a contract established in accordance with law is legally binding on the parties, and the parties should perform their obligations in accordance with the agreement. Although the parties did not expressly stipulate the performance period of the contract in the disputed contract, the defendant was obliged to complete the filming of the film involved in the case within a reasonable period of time and release it in a timely manner.
"On the grounds that the epidemic affected the filming, the defendant argued that there was a valid reason for the failure of film Y to be released. In addition, the first producer has decided to replace the originally planned overseas reshoot with post-production special effects, saying that the film is still in the process of special effects creation. However, the defendant failed to provide evidence to prove the filming progress and post-production progress of the film involved in the case, which shows that the producer failed to actively perform its contractual obligations. Mao Shuilong, a judge of the Commercial Division of the District Court, said that investors can exercise the statutory right of rescission to terminate the contract, and claim the return of the investment money and the payment of corresponding interest losses.
The judge reminded that in film and television investment, many small and medium-sized investors lack risk prevention awareness, and lack the necessary process of prudent verification driven by high investment returns. When the two parties enter into a contract, they need to clearly agree on the time node, main creative information, release time and region, investment share, income distribution, risk bearing, liability for breach of contract, etc., in different aspects of film and television production, so as to avoid disputes and disputes arising from unclear agreements.
In addition, when promoting the project, the producer should truthfully disclose to investors the cast and crew of the film and television project, the filming progress, the release time, the expected income and other information, so that investors can fully understand the project situation and make reasonable investment decisions. The content of the film and television investment contract should be standardized, accurate and complete, and the situation of the film and television project, the investment period, the rights and obligations of both parties, and the distribution of income should be clarified, so as to avoid litigation disputes caused by incomplete elements of the contract.
Text: Chen Feiqian
Photo: Courtesy of the District Court
Editor: Shen Lina