On Wednesday, film producer Neil Moritz filed suit against Universal Studios for breach of oral contract and promissory fraud. Moritz was the lead producer on all eight Fast and Furious films. The dispute centers on his involvement with the forthcoming franchise spinoff Hobbs and Shaw, scheduled for release next August.
In his complaint, Moritz alleges that he and Universal had reached an oral agreement in Spring 2017 whereby Moritz receives “$2 million in fixed compensation applicable against a 6% first dollar gross participation” for his work on Hobbs and Shaw. In other words, he would be paid an advance of $2 million upfront and an additional 6% of the studio’s cut of the film’s gross revenue, as defined by a specific formula. This alleged agreement mirrors the terms of the written producer agreement for Moritz’s work on the eighth, ninth, and tenth installments of the main Fast and Furious franchise.
After working on the film for over a year, Moritz alleges that Universal approached him to renegotiate the terms of his oral agreement. Their proposed modifications included switching from a “first dollar” to “participation pool” structure, meaning that Moritz would only receive his percentage after the movie broke even. When negotiations over the proposed modifications broke down, Universal removed Moritz from the project, claiming that they were under no obligation to compensate him at all for his work on the film. Moritz is asking the court to enforce the oral agreement and award him monetary damages.
While frowned upon in most business law contexts, “soft contracts” like the oral agreement between Moritz and Universal are widespread in Hollywood. Often, a written contract will be signed only after filming begins, with preproduction work of the kind performed by Moritz controlled only by an oral agreement. USC law professor Jonathan Barnett theorizes that this anomalous business practice is due to specific characteristics of the film industry, such as reputational pressure to abide by an agreement and a high risk of holding up a project through formal contract drafting. While soft contracts may have some expediency benefits, they are also more likely to give rise to acrimonious disputes like the one between Moritz and Universal.
Alex Van Dyke is an Entertainment Highlight Contributor for the Harvard Journal of Sports and Entertainment Law and a current first year student at Harvard Law School (Class of 2021).
Image: “Leave Reality At The Door | Fast And Furious 7 Movie Review” by BagoGames is licensed under CC BY 2.0
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