A little over a week ago, Frances McDormand gave a rousing acceptance speech for her Oscar win for the Best Actress category. It warmed our lawyer hearts when we heard her proclaim:
“I have two words to leave with you tonight: Inclusion rider”.
Ever keen to educate our readers on the law in relatable terms, we couldn’t resist dedicating this week’s newsletter to a small but powerful contractual provision: the rider.
What is a Rider?
A rider is a contractual term. It is possible to include a rider clause in any agreement. A rider clause is a fully customizable provision that can address issues that fall outside of the actual business terms of the agreement. One of the most common uses of a ‘contract rider’ is to enable the parties to make changes to some of terms of the agreement after the contract has been executed. Ultimately, including a rider provision in the agreement enables the parties to renegotiate terms of the agreement, without having to renegotiate the entire agreement. However, care must be taken to specifically limit what the rider pertains to. Otherwise, you’ll leave the entire agreement up to renegotiation, which defeats the purpose of the rider: to enable pinpointed amendments to the agreement.
What is an Inclusion Rider?
An inclusion rider is slightly different and is most commonly used in the entertainment industry. As referenced by Frances McDormand, an inclusion rider is a contractual provision whereby one party (presumably in this case, actors and actresses) demands that the other party (presumably in this case, the movie studio) is contractually obligated to ensure that the project workers are diverse from an ethnic and/or gender standpoint. Thus, an inclusion rider places an obligation on party A to adopt particular hiring practices that do not specifically impact party B, but is a condition placed on party A by party B in order for party B to enter into the agreement. As with any contractual negotiation, the contents of the provisions are entirely customizable to the demands of the parties, as long as there is a meeting of the minds. Failure to perform whichever obligation is itemized in the inclusion rider could be grounds for termination, and possible breach of contract.
What Do You Stand For?
Contractual negotiations are akin to a rope pulling match. Whichever party has greater strength generally dictates how far the other party will get pulled across the line. Including riders that address morality issues within your industry as part of your negotiating strategy is fantastic; as your bargaining power strengthens, consider incorporating riders into your agreement.