GDC: Charne Helps Devs Understand Termination Clauses

Video game contracts are rather unique in their composition when compared to other games in the entertainment industry. Here, a video game experienced attorney is absolutely essential, and Jim Charne, as he’s done in previous years at GDC, was there to advise developers on where they can negotiate for better terms than the initial contract draft. One of the most important suggestions Charne made was that developers make sure to define what constitutes a material breach. Throughout the lecture, he spoke repeatedly of solutions to breaches being simple and existing as the contract. Having specific language that details what exactly are material breaches makes everything simpler, and smaller “garden variety” breaches should be easily and quickly cured. Cure periods typically start out as well in the publisher’s favor, and developers should negotiate these down. A developer who misses a payment that’s done on a net-30 basis might have to survive 3 months without a payment if the contract affords the publisher a 60 day cure period. Similarly, the publisher’s first draft might have very short cure periods for breaches on the developer’s part. Developers should work toward making these as fair as possible. The publisher’s right to terminate for convenience is unique to the games industry. When this happens, it can be extremely disruptive and developers. The onus is on the developer to establish ways to soften the blow of a terminate for convenience. It’s also important that the developers don’t fall victim to a terminate for convenience being treated as a terminate for cause. Turn around is an interesting case where a game is dropped by one publisher and is picked up by another. The first publisher will often start out by asking for large percentages of royalties, or even all of the money they paid to the developer before they dropped the project. With three parties involved in the process, however, a little talking makes it relatively easy to get to terms that everyone is happy with. While most publishers are fairly polite about the whole affair, some smaller publishers will try to take advantage of the developers through such exercises as unfair termination after completion. Many things can get in the way of a small developer getting paid, and as long as the developer delivers his side of the bargain, smart and fair contract language will make everything work out.