Long-Form versus Short-Form

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If your business is at the point where the deal has moved from the publisher's acquisitions staff to the legal department, you likely have two primary concerns:

Getting the deal done quickly so that you can get the cash advance; and
Getting the deal done correctly, so that you don't end up hamstrung down the road.

Deals fall apart sometimes, too, and it's best to find this out as soon as possible, since odds are you'll be dedicating team resources before you have a contract in place.

Rather than negotiate the entire contract in one fell swoop, which could delay the start of work (and receipt of advances), many publishers and developers negotiate a short form of their contract first.

NOTE

This document should be titled "Short Form Binding Agreement" or something of that ilk and not "Letter of Intent," because the latter may be interpreted as non binding.

The publisher and developer sign the short form contract, which creates a set of legal obligations on both parties (for example, what royalty rate will be paid for the game). This document is then fleshed out into a long-form agreement, which goes into more detail on terms that are very important but not crucial to the initial stages of work, such as audit rights. The short form is a binding contract, so if you and your publisher never get to the long form stage, there is still a valid contract in place setting out the basic rules of the relationship.

NOTE

CAUTION

Because it is binding, it is cru cial that you obtain counsel when negotiating the short form.There is little going back on terms agreed to in the short form, so don't rush to the sig nature line thinking that you'll go back and renegotiate later.

The short form is a great tool for developers for several reasons:

It allows them to manage cash flow responsibly.
Initial advances are received once the short form is signed, rather than having to wait until the long form is complete.
It avoids the risk (and diminished negotiating position) of fronting money and devoting team resources to the project before a contract is in place.
By vetting most of the "deal-breaker" issues early on, a short form helps avoid the unhappy situation of beginning work only to have the deal fall apart.

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