TERMS & CONDITIONS

INTRODUCTION

The commercial production industry, as a service-sector business, provides talent and time to its clientele. The success of the individual companies and the industry as a whole can be measured by the effectiveness achieved in selling talent and time to the advertising agencies.

The environment in which the industry operates is dynamic, cyclical, volatile and evolutionary. In order for the companies to operate on a sound and consistent footing within this environment, the production industry has developed a set of guidelines, which attempts to standardize procedures on billings, cancellation and postponement, and contingency days. The most important component in production is clear and specific communication between the production, editorial, post production companies and the contracting agency/client.

These guidelines should achieve the objective of:

1. Ensuring a quality product for clients
2. Ensuring a fair market price for the work undertaken
3. Ensuring and improving responsible business practices and procedures for both the company and the client
4. Ensuring the communications lines remain open at all times between the company and the client
 

BILLING & PAYMENT PROCEDURES

It is recognized that this is a labour intensive industry and accordingly prompt payment to the production, editorial and post production company for services rendered is essential.

Title of ownership of a commercial does not transfer until full payment is made according to payment guidelines. Each production, editorial or postproduction company may adopt a payment policy requiring full payment for the commercial prior to its broadcast use. Such a policy is consistent with good faith business practices and is also consistent with provisions used in Great Britain by the Advertising Film and Videotape Producers Association, The Institute of Practitioners in Advertising, and the Incorporated Society of British Advertisers.

As the following are guidelines only, any unusual circumstances requiring other payment arrangements than those listed below may be negotiated at quote stage.

 

PRODUCTION

The "75-25" Plan

The "75-25" plan is applicable in instances of firm bid contracts whose requirements are production through film or videotape dailies, and where editorial and post production is contracted separately by the agency.

Payment Procedures

1. First Payment: 75% of the contract price. The first payment is due upon signing of the contract, but not later than twenty-four hours prior to the commencement of the first filming/shoot day. Since job confirmation is almost always a verbal order, first payment is due whether or not the Production Company is in receipt of a written contract, purchase order or letter of agreement. (This provision serves to reaffirm the fact that a verbal order to commence production signifies that all proper agency and advertiser authorizations have been obtained, and that the Production Company is to begin expending time and money on the confirmed job.)

2. Second Payment: 25% of the contract price. This amount is due and payable upon approval of film or videotape dailies, but not later than the airing of the commercial or 30 days from the date of the final invoice.

In all cases where there are contracting client approved overages from the contract price, invoices will follow within thirty days of the final contract billing, and are payable within thirty days of the date of invoice.

 

EDITORIAL & POST PRODUCTION

The "50 –50" Plan

The "50 – 50" plan is applicable on a post production contract to a post production company separately from the production house contract.
First payment: 50% of the contract price is due and payable upon the commencement of production.
Final payment: 50 % of the contract price is due and payable upon delivery of the commercial, but not later than 30 days from the date of the final invoice.

An award of this project assumes acceptance of the following Terms and Conditions:

AICE Cancellation and Postponement

Upon signing this Agreement, it is understood that Post Production Co/Editorial Company (hereinafter “Editorial Company”) will block out a specific period of time.  The Agency, upon notice and under the terms outlined below may cancel or postpone the job outlined in this Agreement under which circumstances the Editorial Company shall make all reasonable efforts to sell the canceled/postponed time to another Agency/client. 

If the time is resold, then the Agency/client and the Editorial Company shall enter into good faith negotiations to determine the amount owing for the cancellation/postponement, in doing so, consideration will be given to out-of-pocket expenses, discount given to resell the time, and other relevant considerations.

1. If notice of cancellation/postponement is given within one to five business days prior to the scheduled starting date, the agency/client will be liable to Editorial Company for:

a. All out-of-pocket costs.
b. Editorial, Labor/Creative and Assistant fees as indicated in line 5000 of the attached Cost Summary.
c. Full (100%) Mark-up as indicated in line 8000 of the attached Cost Summary.
d. Full (100%) Avid time as indicated in line 1000 of the attached Cost Summary.

2. If notice of cancellation/postponement is given with six to ten business days prior to the scheduled starting date, the agency/client will be liable to Editorial Company for:

a. All out-of-pocket costs.
b. Editorial, Labor/Creative fee as indicated in line 5010 of the attached Cost Summary.
c. Full (100%) Mark-up as indicated in line 8000 of the attached Cost Summary.
d. Half (50%) Avid time as indicated in line 1000 of the attached Cost Summary.

3. If notice of cancellation/postponement is given with more than ten business days prior to the scheduled starting date, the agency/client will be liable to Editorial Company for:

a. All out-of-pocket costs.
b. Editorial, Labor/Creative fees as indicated in line 5010 of the attached Cost Summary.
c. Half (50%) Mark-up as indicated in line 8000 of the attached Cost Summary.

 
Negative Insurance
In the event the agency or advertiser maintains insurance for its benefit covering loss or damage to the original source material (i.e. camera negative, tapes, hard drives discs, etc), the agency shall, without cost to Editorial Company, cause Editorial Company to be named as an additional insured party under such policy or policies. The agency or advertiser shall deliver to the editorial company a certificate of insurance naming Editorial Company as an insured and reflecting such coverage.  Such certificate may be specific to a project or in the form of a blanket certificate covering all projects within a specified time period.  In the event the agency or advertiser does not maintain insurance for loss or damage to the original source material (i.e. camera negative, tapes, hard drives, discs, etc), it is expressly understood that Editorial Company is not responsible for loss or damage of said material.

Editorial Company Indemnity
Agency hereby agrees to indemnify and hold Editorial Company harmless against and from any and all claims, suits, actions, debts, damages, costs, losses, liabilities, obligations, judgments, charges, and expenses (including but not limited to solicitors fees), of any nature whatsoever, suffered or incurred by Editorial Company directly or indirectly, as a result of or in connection with any loss and/or damage or alleged loss and/or damage to the original source materials.

Intermediate Materials
The fundamental engagement of the editorial, design or post production company is to create, assemble and deliver one or more finished commercials, spots or other media to the agency or client. The agency or client buys only the finished media, not any intermediate data or materials that may be generated and used by the editorial, design or post production company to create the finished media.

Accordingly, at the conclusion of the engagement, the agency or client is entitled to possession of all of the original elements delivered to the editorial, design or post production company by the production company or other third parties on behalf of the agency or client and to a master recording or master data file of the finished media.

All intermediate materials created by the editor, artist or designer, including but not limited to transcodes, project files, selects bins, rough cut bins, versions bins, audio bins, graphics bins and all other metadata files created by the editor, artist or designer, constitute the exclusive property of the editorial, design or post production company. The agency or client is not entitled to possession of these intermediate materials and acquires no rights with respect thereto.

 

COMPUTER GRAPHICS & ANIMATION

The "50-25-25" Plan

The "50-25-25" plan is applicable on a post production contract to a post production company separately from the production house contract and where computer graphics or animation are incorporated.

Payment Procedures

1. First Payment: 50% of the contract price is due and payable upon the commencement of production. 

2. Second Payment: 25% of the contract price is due and payable upon reaching a mutually agreed stage of animation/post production/etc., or other approval dates based on the production schedule, but not later than 30 days from the date of the invoice 3. Final Payment: 25% of the contract price is due and payable upon delivery of the commercial, but not later than 30 days from the date of the final invoice.
The 100% Plan

The 100% plan is applicable on an editorial or post production contract whose production schedule spans less than one week. In such cases, one single invoice may be issued, and is due and payable upon delivery of the commercial, but not later than 30 days from the date of the invoice (or not later that the airing of the commercial.)

In all cases where there are contracting client approved overages from the contract price, invoices will follow within thirty days of the final contract billing and are payable within 30 days of the date of the invoice.

 

GUIDELINES FOR POSTPONEMENT & CANCELLATION PROCEDURES

The basis for this CPAT Guideline is to define and set a value for the production, editorial and post production company's primary commodity, which is the time and services of its personnel along with equipment and facilities provided by the company. At the same time, CPAT recognizes that cancellations and/or postponements may occur for a variety of reasons, and its member companies are mindful that accommodating the needs of the advertiser and its agency contribute to a healthy environment for the industry.

When the company receives a firm commitment from the contracting client on a job and blocks out a specific period of time dedicated to that job; no further efforts are made to sell that time. If the job is postponed or cancelled within the time frames of the Guideline, it would be highly unlikely in the ordinary course of business to resell this time. Time of its creative personnel and equipment are the primary source of income for the company.

CPAT members acknowledge that jobs are postponed or cancelled from time to time at the request of an advertiser or its agency for reasons which are contingent on such factors other than weather conditions, or key personnel injury, or illness. (See Contingency Day). A change in focus of an advertising campaign for example may result in a postponement or cancellation. A postponement is defined as a temporary stoppage of production by request, within a period of one to twenty working days from the first scheduled shoot day, with the clear intention to restart at a later date. However, if the first shoot day is postponed in excess of twenty working days it should be deemed a cancellation by default, and re-quoted, with consideration to the recovery of start up costs. While costs described below represent the maximum exposures for the agency, clear communication of contractual agreements that may affect cancellation or postponement costs is essential. Such contracts could include but are not limited to key creative and crew personnel, studio or location facilities, special props and wardrobe design, and special equipment rentals.
CPAT members acknowledge that the company is obliged to make all reasonable efforts to re-book the postponed or cancelled time with another client. If the company successfully re-books the time, then the director's or editor's cost and/or markup would be an area for discussion and negotiation.

 

CANCELLATION - PRODUCTION DIRECTED BY AGENCY OR CLIENT

If notice of cancellation is given ONE TO TEN WORKING DAYS prior to the commencement of the shoot, the contracting client will be liable to the Production Company for:

a) All out-of-pocket costs.
b) Full director's and producer's fee as bid.
c) DOP fees as contractedd. Full production fee on the job as bid.


If notice of cancellation is given ELEVEN TO FIFTEEN WORKING DAYS prior to the commencement of the shoot, the contracting client will be liable to the Production Company for:

a) All out-of-pocket costs.
b) Not less than 50% of the director's and producer's fee as bid.
c) DOP fees as contractedd) Not less than 50% of the production fee on the job as bid.
 

If notice of cancellation is given BETWEEN FIFTEEN AND TWENTY WORKING DAYS prior to the commencement of the shoot, the contracting client will be liable to the Production Company for:

a) All out-of-pocket costs.
b) Not less than 25% of the director's and producer's fee as bid.
c) DOP fees as contractedd) Not less than 25% of the production fee on the job as bid.
 

If notice of cancellation is given MORE THAN TWENTY WORKING DAYS prior to the commencement of the shoot, the contracting client will be liable to the Production Company for:

a) All out-of-pocket costs.
b) Creative fees, if applicable, and as agreed to at the quoting stage.
c) A production fee of not less than 20% of a) and b).
 

Out of pocket costs are start up costs that could include but are not limited to casting, set designs, location scouting, or special prop design and build.
 

PRODUCTION POSTPONEMENT

PRODUCTIONDIRECTED BY AGENCY OR CLIENT AND SUBJECT TO DIRECTOR AVAILABILITY

If notice of postponement is given ONE TO TEN WORKING DAYS prior to the commencement of the shoot, the contracting client will be liable to the Production Company for:

a) All out-of-pocket costs.
b) Full director's and producer's fee as bid.
c) DOP fees as contractedd) A production fee of not less than 20% of costs a) through c). 
 

If notice of postponement is given ELEVEN TO FIFTEEN WORKING DAYS prior to the commencement of the shoot, the contracting client will be liable to the Production Company for:

a) All out-of-pocket costs.
b) Not less than 50% of the director's and producer's fee as bid.
c) DOP fees as contractedd) A production fee of not less than 20% of costs a) through c).
 

If notice of postponement is given MORE THAN FIFTEEN WORKING DAYS prior to the commencement of the shoot, the contracting client will be liable to the Production Company for.

a) All out-of-pocket costs.
b) Not less than 25% of the director's and producer's fee as bid.
c) DOP fees as contractedd) A production fee of not less than 20% of costs a) through c).

If notice of postponement is given MORE THAN TWENTY WORKING DAYS prior to the commencement of the shoot, it should be deemed a CANCELLATION. The conditions of CANCELLATION – MORE THAN TWENTY DAYS will apply.

The job should be re-quoted to reflect any cost savings to the advertising client for the services the Production Company has started and/or completed, providing the specifications have not changed from the original bid. Such areas could include but are not limited to casting, set designs, locations scouting, or special prop design and build.

 

CANCELLATION - EDITORIAL

In each instance, when notice of cancellation is given, every effort will be made by the Editorial Company to re-book the time. If the time is re-booked, there is an obvious area for negotiation on creative fees, off-line facilities and mark-up.

1. If notice of cancellation is given within ONE TO TEN WORKING DAYS prior to the scheduled start date, the contracting client will be liable to the Editorial Company for:

a) All out-of-pocket costs
b) Editorial creative fees as bidc) Full off-line facility as estimatedd) Full mark-up as bid
 

2. If notice of cancellation is given within ELEVEN TO FIFTEEN WORKING DAYS prior to the scheduled start date, the contracting client will be liable to the Editorial Company for:

a) All out-of-pocket costs
b) Not less than 50% of the Editorial creative fees as bid
c) Not less than 50% of the off-line facility as estimatedd) Not less than 50% of the mark-up as bid


3. If notice of cancellation is given BETWEEN FIFTEEN AND TWENTY WORKING DAYS prior to the scheduled start date, the contracting client will be liable to the Editorial Company for:

a) All out-of-pocket costs
b) Editorial creative fees subject to negotiationc) A service charge of 10% of the total bid price

POSTPONEMENT - EDITORIAL

It is understood that postponement means the job will be re-mounted at a later date agreeable to all parties. In each instance, when notice of postponement is given, every effort will be made by the Editorial Company to re-book the time. If the time is re-booked, there is an obvious area for negotiation on creative fees, off-line facilities and mark-up. "Postponement" is hereby defined as a period of time that is less than 30 working days (or 6 weeks) in duration. A postponement period greater than 30 working days (6 weeks) therefore becomes a "cancellation" by default.

1. If notice of an appreciable postponement is given within ONE TO TEN WORKING DAYS prior to the scheduled start date, the contracting client will be liable to the Editorial Company for:

a) All out-of-pocket costs
b) 50% of editorial creative fees as bid
c) 50% of the off-line facility as estimatedd) 50% of the mark-up as bid

CANCELLATION - COMPUTER GRAPHICS AND ANIMATION

DIRECTED BY CLIENT OR AGENCY

As with live action production, if the post production company blocks out a specific period of time to produce a job, no further efforts are made to sell that time. If a job is cancelled, it is the obligation of the Post Production Company to make every effort to re-book that time. If the time is re-booked, there is an obvious area for negotiation on creative fees and/or the production fee.

If notice of cancellation is given more than half way through the production schedule of the job, that is between the award date, or date of purchase order and the final delivery date, the contracting client will be liable to the editorial/post production company for the full cost of the job as bid.
If notice of cancellation is given before the project is halfway through the production schedule of the job from award date the contracting client will be liable to the post production company for:

Not less than 50% of the full cost of the job as bid.

Upon first notice of possible cancellation of a production, it is the obligation of the editorial/post production company to supply the contracting client with an estimate, as accurate as possible, of the potential out-of-pocket costs.

 

POSTPONEMENT - COMPUTER GRAPHICS & ANIMATION

DIRECTED BY CLIENT OR AGENCY

As with live action production, if the post production company blocks out a specific period of time to produce a job, no further efforts are made to sell that time. If a job is postponed, it is the obligation of the Post production Company to make every effort to re-book that time. If the time is re-booked, there is an obvious area for negotiation on creative fees and/or the production fee. It is understood that postponement of project means that the project will be re-mounted at a later date and therefore some of the postponement costs will be saved once the project commences again as the work has already been started and will be filed away until the project is re-mounted provided that the project does not change in nature.
"Postponement" is hereby defined as a period of time that is less than 30 working days (or 6 weeks) in duration. A postponement period greater than 30 working days (6 weeks) therefore becomes a "cancellation" by default.

1. If notice of postponement is given after the project is halfway through the production schedule of the job, the contracting client will be liable to the post production company for:

• Cost of the work produced thus far, as well as:not less than 50% of the remaining cost of the job as bid.

2. If notice of postponement is given before the project is halfway through the production schedule of the job, the contracting client will be liable to the post production company for:

• Cost of the work produced thus far, as well as:not less than 25% of the remaining cost of the job as bid.

Upon first notice of possible postponement of a production, it is the obligation of the editorial/post production company to supply the contracting client with an estimate, as accurate as possible of the expenses that will be the charged upon postponement.

 

CONTINGENCY DAYS

 A contingency day is any day where a scheduled film or tape shooting has been prevented from occurring or completed due to circumstances beyond the control of the Production Company. These circumstances may include, and are not limited to:

Any weather conditions not consistent with the prescribed shooting conditions desired by the Agency, or considered a safety hazard for personnel and equipment.

Any conditions leading up to a shoot day, which affect the viability of the approved location (All locations must have been viable at the time of presentation and approval)

"force majeur" (earthquake, riot, floods, acts of war, etc)· Injury or illness of key advertising agency personnel.

Absence of agency supplied elements (talent, product, colour correct packages etc)

Non-performance of talent or animals


The Production Company will provide the contracting client with a maximum exposure figure (a "not to exceed" figure) as a contingency day cost at the quoting stage. The estimate will represent the maximum costs should the contingency day be called after 1:00 PM prior to the shoot day. This will be a cost per day figure. However, this figure does not include the cost of premiums for crew or suppliers (i.e., should the contingency day fall on statutory holidays or premium days based on consecutive employment.)

A second estimate will be provided prior to the first shooting day. This estimate would reflect the costs to postpone the shoot day up to 1:00 PM the day prior to the scheduled shoot date. The rescheduled shoot day would be the day after the original shoot day(s).
In any contingency situation careful consideration should be given to the availability of key personnel which may include client, agency, director, DP and other key technical crew, and to the triggering effect and financial impact of weather postponements on editorial and postproduction fees and expenses.
The cost of a contingency day called prior to 1:00 PM prior to shoot date shall consist of:

a) All out of pocket costs.

b) A maximum of 50% of the daily director's fee as bid*

c) DOP fees as contractedd) A service charge of no less than 10% of all direct costs.

The cost of a contingency day called after 1:00 PM prior to shoot date shall consist of:

a) All out of pocket costs.

b) A maximum of 100% of the daily director's fee as bid*

c) DOP fees as contractedd) A service charge of no less than 10% of all direct costs.

*There should be a clear understanding during the quoting stage, with the contracting client, of the Production Company's policy on director's fees, in the event of contingency days.

Based on a bad weather forecast, the potential exists for the contracting client to incur costs with the intention of preventing postponement of the scheduled shoot (E.g., additional electricians and grips, additional lighting, trucking and possibly location dressing and personnel). The Production Company will provide an explanation of these costs, which will include a handling fee of not less than 10%, and agreed to by the Agency before being incurred. This could also apply to overtime incurred due to a delayed start or downtime during the day for bad weather.

The Production Company recognizes its obligations to minimize Contingency Day liabilities, and will apply all conventional and accepted industry cancellation privileges.

 

INSURANCE

C.P.A.T believes that the Production Company is in the best position to identify and quantify the risks associated with the production of a live commercial. C.P.A.T's producing members maintain insurance coverage on areas consistent with accepted industry standards. Any unusual aspects or risks should be identified in the quoting process and any additional insurance required may be obtained, or declined, and included in the quote.
Such risks may include, but are not limited to one or more of the following:

Loss or damage to the negative after delivery of dailies and negative has been made. (I.e. extension through complete postproduction - a negative film floater).*

Special props, such as jewelry, furs, antiques, fine arts etc.

Aerial or hazardous photography· Animals & Livestock· Picture vehicles, boats and aircraft

Cast insurance· Weather insurance· Key personnel Life Insurance· Additional agency expenses (i.e. travel costs)

• Listing the Agency as additional insured

* Currently, contracts vary between insuring companies, specifically as they relate to post production and terms of completion. Clearly this should be defined and evaluated at the bidding stage. A negative film, or tape master floater, through post production, if deemed appropriate, can then be obtained by the production company and the premium allocated.