so my promise to profit share in the unlikely event I made money on this project is, in fact, deferment? Cool.
Yeap that's the deal. The way it's done contractually is you agree to pay the day rate or a fixed fee for the work done, the cast and crew sign releases so you've legal proof that you own the filma dn can use the performances.
In the deferment contract it's specified at which point payment is made. The core of this part of the agreement is the payment heirarchy, so normally the bank and any loans are top of the list, then the investors and then the cast and crew. It's normal to build in clause that allows you to make part payment if, for instance, the film makes enough money to pay the bank, loan and investors, but can only offer 50% the crew.
Deferments are particularly useful when it comes to sell your film because although you may only have spent $40,000 in a actual outlay, if you've got your cast and crew on union rate deferals then the actual budget for the film goes up to more like $400,000. As the first question a distributor or sales agent ever asks is "What was the budget?" ironically $400,000 is a better answer.
The down side is that once you've created what is in real terms an artificial budget of $400,000 it becomes much harder to get that film into profit. However, even if you've not gone into profit the good news is that becaus eof the payment heirarchy your investors are still going to make money back because they get paid early.
I'd strongly advise against giving points in your picture for two reasons:
1) If the film breaks out and does mulit million pound worth of business you end up vastly over paying your cast and crew.
2) It contractually binds you to distribute in part form every piece of money that comes in on the picture for perpetuity. (In reality this mean that if in fourteen years time the film is shown on Columbian TV and you're paid a fee you have to post out fifty cheques to people who've probably moved house half a dozen times since then.)
Most people who take deferments from indies know that in real terms they are working for free and see the contract as a lottery ticket. You tuck it away in the hope that it'll pay off.
I think deferments are a good thing for lots of reasons:
1) They allow you to say to your crew "I think you are worth union rates." Psychologically this is good and you get better work
2) It sets up a legal and contractual relationship between you, your cast and crew. This means that they have entered into a contract with you to provide their services for the payment that you've agreed. In real terms this means they can't walk out in the middle of film without being in breach of contract. On a feature I think this is very important, you can't have people opting in and out of the project when they like just because they are doing it for free.
3) I think that knowing how much each person is investing in the film in terms of their labour makes the producer and director see the cast and crew differently. In reality they are your biggest investors. If you're paying your lead actor $500 a day and they are putting twenty days into your picture, that actor has invested $10,000 in your picture. It puts a whole new spin on the concept of valuing people.