Option and Purchase Agreement -Underlying Rights

An Option and Purchase Agreement for underlying rights  is an agreement to acquire all or some rights in a literary property such as a novel or a play. Producers typically use it to obtain movie rights to literary works. Purchasers, (e.g., producers) will want owners, (e.g., writers), to warrant that they own all the rights they are selling, free and clear of any other obligations (encumbrances). Sellers should disclose their copyright registration number so that Purchasers can check the copyright records and review the chain of title to ensure they obtain all the rights they desire. Each agreement should define the extent of the rights being sold. Sometimes the entire copyright is sold. Other times limited rights, on either an exclusive or non-exclusive basis, are licensed. If movie rights are sold, the Purchaser typically will have the right to adapt the work into a motion picture and release it in ancillary markets such as home video. The Purchaser may also obtain sequel and remake rights, although an additional payment may be due if and when these rights are exploited. The Purchaser is routinely granted the right to excerpt up to 7,500 words from the book for advertising and promotion purposes.

Writers may want to reserve certain rights. A writer who allows adaptation of his novel into film might want to retain publication rights, stage rights, radio rights and the right to use his characters in a new novel (a sequel book). The latter right should be distinguished from sequel motion picture rights which allow the producer to use the characters in sequel motion pictures.