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Business: Contract Considerations

Written by Vicki Hinze

On December 28, 2010

Vicki Hinze © 2003-2011

Q. What 5 things do you consider most important in book contracts?

A. Literary contracts are long–averaging about 30 pages–and complex, and there isn’t a clause in them that isn’t important or there for a specific reason. Frankly, they’re all important. I’m not an attorney, and even those who are typically aren’t comfortable advising clients on literary contracts. You need a specialist–an attorney who specializes in literary contracts–to review your contract before you sign it.

If you’re with an agent, most have extensive experience and legal staff on hand to review all contracts. If you’re not with an agent, you need to invest in a qualified literary agent to review. Most charge $200-$300 for this service, and it’s money well spent. For the names of some good literary attorneys, ask Author’s Guild for references. (www.authorsguild.com)

Author-to-author, I check the following especially closely:

1a. Rights: what rights exactly are being conveyed. US and Canadian? World Rights? If world rights, what percentage goes to the publisher and what percentage goes to the author? 50/50? 60/40? 70/30? This varies substantially. What about film and audio rights? Merchandise licensing? Rights that are not yet in existence but come into existence during the term of the contract? Sell the rights you wish, but know the rights you’re selling.

1b. Pseudonym ownership. If you’re writing under your legal name then this doesn’t apply, but if you’re writing under a pseudonym, who owns it? The publisher or the author? If the publisher: when and if that author leaves the publisher for a different one, then s/he cannot take the name with him/her. Does the contract limit the use of that pseudonym to one specific author, or will many authors write under that one name. Do what you wish, but know what you’re doing with regard to ownership of the pseudonym.

1c. Dissolution of Rights. At what point and time does the contract end? Are the terms and conditions for the dissolution of the contract spelled out clearly in the contract? If not, they should be.

2a. Option clause. When you sell a publisher a book, there is typically a clause granting that publisher first rights to the authors’ next work. The object is to narrow the clause to the type of work being contracted. For example. If you sell Silhouette a Bombshell novel, then your option agreement should be for your next Silhouette Bombshell novel. Not for your next novel, which well might not be suitable for a Bombshell. If your current novel is a 100,000 word historical romance, then your option should be on your next 100,000 word historical romance novel. This is especially important for writers who write different types of novels in the same genre, but also for those who write in different genres.

2b. Formats and forums. What formats are you agreeing to for your published work? Hard cover, mass market paperback, trade paperback, electronic rights, audio? Whatever you choose is great, just know what you choose. On occasion, the publisher won’t know which format they will choose and they’ll include say, hard cover and mass market paperback. Again, that’s common and not a problem. But the author should know what to expect.

2c. Time restrictions. What are the deadlines? Is meeting them a reasonable expectation? What about the due date of the option book? The dates of royalty payments? Competing works? Is there a restriction on publishing other fiction within a set time of the publication of this contracted novel? Double-check for conflicts.

3a. Reversionary Rights. When the book is no longer available does ownership of the rights revert to the author? What is the time span between the absence of availability and the reversion? What are the conditions of the reversion? Understand that “out of print” and “out of stock” or “permanently out of stock” are two different things.

3b. Out of print means the book will not be reprinted and the reversionary rights clause can be initiated provided the author does so in accordance with the procedure outlined in the contract.

3c. Out of stock or permanently out of stock means the publisher doesn’t have any more copies of the book and doesn’t intend to print more, but it does not signal the beginning of the reversionary time clock, which is often 5 to 7 years. The author must request the time begin, request the rights back, again, in accordance with the procedure outlined in the contract.

3d. Special circumstances (bankruptcy). What happens to your book if the publisher declares bankruptcy? Do rights automatically revert to the author? Or are those rights going to be tied up as publisher’s assets–regardless of whether or not the book has every physically been published? Obviously, the author wants the rights to automatically revert to him/her in this situation.

4a. Accounting. On multiple book contracts there is no “basket” accounting, where the advances on all books must be repaid to the publisher before royalties are distributed. Separate accounting for each book under the contract is preferable. Are royalties paid on retail or net? Retail is preferable. If net, are the expenses of the publisher limited and/or restricted. Otherwise, theoretically, the author has no say over how much money the publisher spends on the book and the author can end up owing the publisher money.

4c. Discount limitations. Books sold at deep discounts bring lower royalty rates. So you want to limit the ratio of books printed that can be sold under the deep discounts or increase the royalties after a specific percentage of books are sold at those deep discounted rates.

5a. Dispute Resolutions. The contract should contain the means for resolving any disputes and the procedure (mediation, etc.) and conditions should be set forth in the contract as should agreement on payment of the costs.

As I said, those are the things, I watch most closely, but every clause is important, so be diligent in reviewing. And if you aren’t a literary attorney, cover your assets by having a professional review for you. You could inadvertently agree to disagreeable terms that will generate challenges for you for the rest of your career.

Understand that the publisher’s job is to get the best contract for the publisher s/he can get. As the author, your job is to negotiate the best contract for the author you can negotiate. Be reasonable and realistic, and most importantly, informed.

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