Producers can obtain insurance (eg. errors and omissions cover) but writers cannot. It is right that writers work to high professional standards but a breach of warranty may be unintentional and it could result in a writer having to pay as a result of the producer not taking out insurance. On the whole it is unrealistic for producers to want the right to sue a writer but this is still standard practice.
Warranties can be seen as a useful coercive tool to ensure that a writer will be careful not to breach the warranties, but this is not a compelling reason for including sledgehammer terms in a contract. In reality it is most likely to be the requirements of a third party that are being addressed when warranties are demanded by a producer.

Producers of theatrical films generally obtain E&O insurance and to do so the producer will have to comply with the insurer’s compliance procedures. This generally includes the producer’s lawyer confirming that all necessary rights have been acquired. Financiers of films have stringent requirements in that they will want to approve all rights’ agreements, they will expect standard warranties and generally have the right to sue the writer for a breach of warranty.

In television, the standard practice is still for broadcasters to finance and own programmes 100% so they exert control over the agreement with writers. Since broadcasters generally self-insure, the issue of warranties is the broadcaster reserving the right to sue the writer for breach of those warranties. Different broadcasters have different policies as to how firmly they stand behind their producers and creators but it would be an extreme example for a broadcaster to sue a writer for breach of warranty.

This helps to explain why the producer often does not really engage in specific negotiation of the warranty and takes the attitude that standard warranties are what they need in order to make the programme or film. This also explains why there is often no real discussion as to whether a producer would want to sue for breach.

Writers will continue to be obliged to give warranties but by appreciating the reasons for them being required the writer is in a better position to negotiate concessions. There are a number of specific issues that raise their ugly heads time after time:

1. Defamation warranty

Where a writer has used current events, which may include living people.The writer should consider whether they should limit their warranty by using the qualifying phrase ‘to the best of his/her knowledge’ which, if accepted by the producer, is normally countered by the request from the producer that the writer shall have made all reasonable enquiries. Quite what these sorts of enquiries would mean is unclear and they are potentially onerous. For instance, do you have to negative name-check all characters? What about checking place names, streets and so on to ensure that there is no coincidental use of such details?

The onus should be on the producer rather than the writer given that the film/programme may well be very different in style and substance from the writer’s script. When addressing these issues it is desirable to distinguish between what is defamatory on the page and defamatory on the screen. It is possible that the script is perfectly innocent (and therefore not in breach of any warranty) although someone might sue for the way in which they may be identified and portrayed on screen.

2. Originality/copyright owner

These are similar and the real problem tends to be one of unconscious copying rather than conscious borrowing. Writers are sometimes not clear what they are entitled to ’take’ which can lead to problems. Even so, I feel the onus should be on the producer to establish that there is no underlying material that needs to be cleared. Instead of this sort of warranty and a warranty for defamation there could be a report given by the writer to confirm research sources and, as long as that were accurate, that should suffice the producer for taking the risk.

3. Full Title Guarantee

This is a term that crops up in most assignment clauses and perplexes writers and agents alike. The use of this phrase is not a major issue. It is just that, not surprisingly, non-lawyers are worried by the term. Its origin is in the Miscellaneous Law of Property Act 1994 that says that when the phrase is used, certain warranties are implied. The aim is to enable property contracts to be shorter and it applies to copyright since it is a property right.

The implied warranties are, in brief:

(i) that the owner has the necessary rights in the rights to be disposed.
(ii) that there are no relevant charges/encumbrances over the copyright nor any third party rights.

Some lawyers and producers rely on the fact that the warranties requested are apparently ‘standard’ and therefore most writers tend to accept them. It is true that writers are rarely sued under warranties but should a writer take a risk unless he or she really has to?

Standard Writer Warranties:

1. Defamation
All material written by the writer will not (to the best of the writer’s knowledge and belief) contain any matter defamatory of any person.

2. Originality/ownership
All material written by the writer will be original to the writer and will not infringe the copyright or any other right of any person

3. Availability
The writer is free to accept the engagement and has no commitments and will not make or accept any commitments which shall prevent the full rendering of the services required in accordance with the terms of this agreement.

Alternative Warranties:

1a. An alternative defamation warranty when based on a true story:
The producer acknowledges that the script is based on/inspired by real characters as disclosed to the producer and accordingly gives no warranty that the script is not defamatory or infringes any third party's rights of privacy or otherwise.
1b. A general substitute for a defamation warranty for a fictional subject which excuses the writer from the need to name-check and ensure no correlation with real characters:
The writer confirms that the script is not knowingly based on real characters or events.

2. An alternative to an originality warranty:

The writer confirms that he/she has made full disclosure to the producer of his/her sources which are detailed in schedule x. The producer agrees that it shall be responsible for obtaining all clearances of that material.

From an original article by Sean Egan in "Scriptwriters Magazine" which is highly recommended for anyone interested in this field.