## Facts

- Art Buchwald wrote an original screenplay and submitted it to Paramount Pictures Corporation as a potential film project.
- Paramount accepted the submission for consideration and later entered into an option/purchase agreement with Buchwald for rights to the story.
- The agreement used Paramount’s standard form terms, including a definition of “net profits” that heavily favored the studio and sharply limited the likelihood of profit participation payments to Buchwald.
- Paramount tried for a period of time to develop and produce a movie from Buchwald’s screenplay but was unsuccessful and did not move forward with production.
- After Paramount’s efforts stalled, Buchwald optioned his screenplay rights to another studio.
- Roughly two years later, Paramount began developing *Coming to America*, which Buchwald contended closely tracked the story in his screenplay.
- After *Coming to America* was released, Buchwald demanded compensation on the ground that the film was based on his screenplay and therefore fell within the agreement’s payment provisions.
- Paramount refused to pay. Buchwald sued for breach of contract and asserted related tort claims.
- The trial proceedings were addressed in phases, with an initial determination of contractual liability followed by disputes over damages and Paramount’s accounting under the contract’s “net profits” provisions.

## Issues

1. Whether *Coming to America* was “based upon” Buchwald’s screenplay within the meaning of the parties’ option agreement, triggering Paramount’s obligation to compensate him.
2. Whether Paramount’s standard-form “net profits” definition and related payment-limiting provisions were unenforceable because they were unconscionable.
3. If the profit provisions were unenforceable, what measure of compensation should apply in calculating Buchwald’s recovery.

## Decision

- The court found Paramount contractually liable because *Coming to America* was based on Buchwald’s screenplay within the meaning of the parties’ agreement, and Paramount breached by failing to pay him.
- In the damages/accounting phase, the court concluded that key provisions governing “net profits” and the resulting studio accounting were unconscionable and therefore unenforceable.
- The court declined to allow Paramount to use the challenged profit formula to reduce Buchwald’s recovery to little or nothing and instead required a damages approach not controlled by the unconscionable terms.
- Paramount pursued further review, but public accounts report the matter later resolved by settlement, limiting any lasting appellate effect.

## Legal Principles

- When a film-rights option agreement ties compensation to whether a produced motion picture is “based upon” a writer’s submitted work, the court may determine contractual use by comparing the film’s story to the submitted screenplay and evaluating whether the film falls within the agreement’s scope.
- A studio may be liable for breach where it uses the submitted story after taking rights under an option agreement but then denies compensation once a commercially released film employs that story.
- Unconscionability can render contract terms unenforceable where (a) the agreement is presented on a non-negotiated, take-it-or-leave-it basis by a repeat-player drafter (procedural unconscionability) and (b) the substance of the term is excessively one-sided, effectively defeating the contingent compensation promised (substantive unconscionability).
- Where a profit-participation scheme is found unconscionable as applied, a court may refuse to enforce the profit definition and associated accounting charges and require a different, fairer basis for calculating the participant’s compensation.

## Conclusion

*Buchwald v. Paramount Pictures Corp.* held Paramount liable for breach of an option agreement after finding *Coming to America* was based on Buchwald’s submitted screenplay, and the court further refused to enforce Paramount’s boilerplate net-profit provisions after determining they were unconscionable and could not be used to avoid meaningful payment.


Buchwald v. Paramount Pictures Corp. , 90 L.A. Daily J. App. Rep. 14482 (1990)