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PERG News | IATSE Strike and the Contractual Concerns for Equipment Rental Companies

PLSN Staff • News • October 15, 2021

The Production Equipment Rental Group (PERG) has posted this information for its members, including equipment rental companies, stages, and other suppliers about the potential IATSE strike, which may come on Monday, October 18, 2021 at 12:01 a.m. PDT. The Production Equipment Rental Group (PERG) serves the film and digital community within ESTA. Here is that information in its entirety.

Further information from the Production Equipment Rental Group (PERG) (www.esta.org/PERG)

The talk of an IATSE strike for certain aspects of the motion picture and television industry has raised concerns and questions regarding contractual obligations running from the producers to equipment rental companies, stages, and other suppliers. In some instances, the rental agreements or licenses will spell out how to handle the specific situation of an industry strike/job action, but the vast majority of the agreements will be silent on this subject.

A strike will affect productions that are signatories of the IATSE Basic Agreement. The contracts that would remain in effect during a strike include the union’s Sports Broadcasting, Low Budget Theatrical and Pay Television Agreements as well as the Commercial and Music Video Production Agreements, and select independent agreements. IATSE is instructing workers under those agreements to report for work.

Rental equipment companies should be reviewing their rental agreements to see what provisions might be applicable should the industry shutdown as a result of a strike by the IATSE. Specifically, you should be looking at the payment terms, cancellation or postponement, force majeure and default sections of your agreement.

As previously mentioned most motion picture rental agreements will be silent regarding a strike or job action that causes a work stoppage. In the instance of a job action/strike and the inability of the producer to utilize the rented equipment, each rental company will need to figure out on its own what they think is a fair arrangement should the producer want to keep the rented equipment and/or be unable to return the equipment due to the unavailability of labor to help get the gear back to the rental facility.

In those rental agreements that contain cancellation, postponement and/or force majeure clauses that specifically address an industry strike or shutdown, hopefully that wording outlines the responsibility of the producer to pay for the equipment throughout the shutdown and/or return the equipment to the rental house and/or pay some sum of money during the labor action.

The common contractual provision people like to raise when something out of the normal or unexpected comes about is force majeure. People think that when these types of events happen, that they are excused from paying for goods or services. The reality is that force majeure clauses, when present in agreements, are far from get out of jail free cards.

Force majeure clauses, when present in agreements spell out those situations whereby a party to the agreement and/or both parties to the agreement are excused from performing their obligations specified in the contract. Force majeure clauses allow for the non-performance of the specified obligation under specified conditions and allows the specified party not to be in breach of contract. Force majeure clauses are limiting in scope, duration and may not relieve the party of their payment obligations. BEFORE YOU CHOOSE NOT TO PERFORM ANY CONTRACTUAL OBLIGATIONS CONSULT WITH LEGAL COUNSEL.

If the strike goes forward on Monday, it may be increasingly difficult to get equipment returned. According to information provided to their members by the IATSE, crew should plan to reclaim and personal equipment or equipment they are sub-renting before leaving work on Friday, October 15 or at the end of your last day of employment prior to Monday, October 18. They say, “Once the strike begins, you should not be wrapping any rental gear or other employer equipment as that is solely part of your work that is struck work.”

As with most instances of uncertainty, it is best to have these conversations with your customers sooner rather than later to set the proper expectations based on contractual terms and/or how your company is choosing to deal with this potential situation. Unlike some previous job actions, other segments of the motion picture industry are expected to continue working and there will be a need for rental companies to have gear that is not working or revenue producing returned.

Thank you,

The PERG Council

 

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