Guarantee (filmmaking)

In filmmaking, a guarantee, or informally a "pay-or-play" contract, is a term in a contract of an actor, director, or other participant that guarantees remuneration if the participant is released from the contract without being responsible.

Many stars insist on an arrangement in their contract because of the major time commitment that agreeing to appear in a film can mean. For example, Kurt Russell's decision to appear in the film Soldier, for which he was paid $15 million, had a commitment of 18 months, when he was not able to appear in another film. If the film had been canceled or if he had been replaced without being responsible, Russell would have been paid $15 million or a large part of that amount in compensation for clearing his schedule.

Studios are reluctant to agree to guarantees but accept them as part of the deal for signing major talent. They also have the advantage of enabling a studio to remove a participant under such a contract, with few legal complications.^[1]

Sports

Elements of guarantee clauses can be found in other industries, under different names. In the sports world, standard player/coach contracts are guaranteed for the life of the deal, regardless of whether the player or coach actually works for the full duration; the name for such contracts is guaranteed contracts. In another example, if a baseball player is signed to a 5-year, $30 million deal but is cut by his team after the third year, the team will still owe the player the balance of the $12 million due regardless of whether the player is performing services for that team or another team. For example, in 1996, when Kirby Puckett suffered a career-ending glaucoma in his right eye, he was only two years into a five-year, $15 million contract; he was then paid for the subsequent three years. The balance owed can be mitigated if the player signs with another team, with the balance owed by the cutting team subtracted from the amount paid by the new team.

A notable exception to the rule is in the NFL, where only the bonuses outlined in player contracts are guaranteed. NFL players are not guaranteed the salaries outlined in their contracts; they are paid the salaries outlined only while they are actually still employed by their team.

Business

In the business world, high-level executives are often guaranteed to receive their salary for a specified period of time outlined in their contract, regardless of whether the company continues to employ them or not; that is a so-called golden parachute. Similar clauses are often negotiated during mergers and acquisitions to protect the management team that is being merged or acquired into the new company.

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