Contract Basics: Read This Before You Sign on the Dotted Line!
By Jodi Brandon

Hurrah—your book proposal or your magazine query has been accepted, and a contract is on its way. “Great,” you say enthusiastically to your agent or editor, even though you’re thinking, I don’t know how the heck to read a contract!

Don’t panic. Perhaps the most common misconception among writers—especially new writers—is that contracts aren’t negotiable. Certainly some clauses aren’t, but I bet you’ll be surprised to learn that many are. You can’t negotiate what doesn’t exist, though—on paper. Do oral contracts count? Maybe. When it’s your word versus that of a publishing house (big or small), having the legality on paper is definitely to the author’s advantage. Let’s get started.

BOOK CONTRACTS

Book contracts can certainly be daunting. All those pages, all that legalese. Even if you have an agent and/or a lawyer (and we’ll get to them shortly), my opinion is that it’s not a bad idea to familiarize yourself with the basics.

Keep this question in the back of your mind: Who writes the contract? The publisher’s lawyers. It goes without saying, then, that if the contract is going to favor one party over another or be more advantageous to one party, it’s not going to be you, the author.

Now about those agents and lawyers. Both are valuable, and both probably have more experience reading contracts than you do. Is one of these “experts” better than the other? An agent’s job involves dealings with publishing houses every day. He or she has read and negotiated many contracts. He or she is familiar with various publishing houses’ standard contracts. Furthermore, it’s in an agent’s best interest to get you, as his or her client, a good deal. (Don’t forget that he or she works on commission!)

If your contract is with a smaller publishing house and/or you don’t have an agent, absolutely have a lawyer take a look at your contract. Publishing law is a specialty that many lawyers choose, so look for someone who has the expertise you’re looking for.

Now for the meat of the contract itself. Publishing experts disagree about what the most important element/clause of the contract is. Some say it’s the royalty rate, some the rights clauses, some the option clause, and so on. Let’s take a look at some of these critical clauses.

Royalty/Advance

Your advance is the amount of money the publisher pays you up front. Authors get a portion (generally half) of the advance when they sign the contract and the rest when their final manuscript is accepted. The real term is advance against royalties. That means you won’t see a penny in royalty money until your advance has earned out. Publishing lawyer Jonathan Kirsch, in his books Kirsch’s Guide to the Book Contract, likens the advance to “a prepayment of royalties.”

So which is more advantageous to an author: a large advance or a generous royalty rate? It depends. How sure are you that your book will earn out its advance? Many, many books—unfortunately—do not, which might make a larger advance (read: up-front money) appealing.

Description of Work

You’ll find this clause early on in a contract, and you could miss it if you blink. Many agents attach the initial book proposal to the contract as an appendix. Therefore, instead of “Author shall deliver the Work (a complete, 50,000-word manuscript on editorial jobs at book publishing companies) on disk no later than June 1, 2002,” there’s a reference to the appendix. The idea is to leave no room for confusion over what you’re submitting versus what the publisher is buying.

Rights

You’ve got basic print rights, which aren’t negotiable (after all, you do want your book in print), as well as a slew of subsidiary rights—everything from foreign rights to book club rights to serial rights to film rights to…you get the idea. Sub rights are negotiable—insofar as which rights you’ll handle yourself (or your agent will handle) as well as the income split from sub rights sales.

A quick word about electronic rights merits mention. When many of today’s contracts were written, electronic rights basically meant that a book would be made into a CD-ROM. Oh, how times have changed. Now there are web sites, e-zines, on-line libraries, and so on to deal with. As Jonathan Kirsch reminds us in Kirsch’s Guide to the Book Contract, “Electronic rights are still too new and changing too fast to allow for settled legal definitions.” The fact that there aren’t standard—or settled, as Mr. Kirsch says—definitions makes this clause as especially touchy one. Pay special attention to it to make sure you aren’t giving away anything you don’t want to (or aren’t aware of).

Manuscript Rejection

Somewhere in all that single-spaced fine print is a clause that gives the publisher the right to reject your manuscript if you don’t turn in what the publisher wants/expects. I previously mentioned attaching your initial proposal (or at least an outline) to your contract. This should prevent any confusion or questions about the content you’ve delivered.

Revisions

You don’t need a new contract if a revised edition of your book is being issued. Where this clause can get sticky is regarding the amount of revision required. Remember that when the time comes for you to make revisions (if the time comes), you’ll have moved on to other projects. Will you have the time—or the inclination—to devote to revising your book? It can be a fine line between extensive revisions and a new, updated edition—for which you’d be issued a new contract and a new advance.

Keep in mind that, as publishing lawyer Lloyd L. Rich notes, revisions clauses for fiction books aren’t usually necessary.

Frontmatter/Backmatter

Make sure you’re clear about who’s responsible for providing (and obtaining permissions, if necessary) photographs, tables, charts, an index, appendices, a glossary, etc. Obtaining (or commissioning) these materials can be both time-consuming and costly. Know what you’re responsible for before signing the contract. 

Option/Right-of-Refusal

If you can avoid an option and/or a right-of-refusal clause, say the experts, do so. An option clause gives your publisher the right to publish your next book. Brad Bunnin spells it out for writers in his book, The Writer’s Legal Companion, when he says, “…neither the option nor the right-of-refusal clause does you—the author—any good. They buy you nothing; at the same time, they restrict your freedom to seek the best market for your book.”

Let’s assume your book did great: It continues to sell well, you landed an interview on Good Morning America (or Reading with Ripa, if that’s more your style), you’re still selling subsidiary rights left and right, and so on. Now you’ve got a new book ready to submit to a publisher. You’d be in a great bargaining position if it weren’t for that pesky option clause that was part of your first contract. That publisher now offers you the same terms. You’re much more marketable and bankable this time around, but you’re stuck. The option clause has come back from the past to haunt you.

If one is better than the other, the right-of-refusal clause is the one. The right-of-refusal clause allows your current publisher the first look at your next manuscript. You still want to avoid it if you can, but if it comes down to option or right-of-refusal, go with right-of-refusal.

Warranties, Representations, and Indemnities

These words are just plain scary, aren’t they? No matter how many times you see them on paper, and no matter how many times your agent assures you that you aren’t going to get sued (either individually or via your publishing house), they’re still scary. As an author agreeing to this clause, you’re basically saying to your publisher, “My book isn’t going to cause you any legal trouble, but if it does (whether the claim is true or not), I’ll be financially responsible for some (or all, depending on the specifics of your contract) of the costs.”

You might be thinking, No problem. No one could bring a claim against my book. I haven’t infringed on anyone’s copyright and I wasn’t libelous. But what if someone does? The clause doesn’t say a valid claim; it just says a claim. Whether you win the lawsuit or not, you’re still financially responsible. Surely you’re familiar with the recent publicity had by Stephen Ambrose and Doris Kearns Goodwin, two highly public and respected writers with regard to copyright issues.

In his book, Negotiating a Book Contract, Mark L. Levine recommends getting the indemnification clause to be free of the words claims and allegations. Certainly you’re responsible if a claim against you turns out to be true, but, Levine asserts, “if someone merely claims that they [your representations or warranties] are wrong, but they are not, you should not have to reimburse the publisher; that is a risk the publisher properly takes as a business enterprise.”

Here’s how you can at least partially protect yourself, because you’re not going to get these clauses removed from your contract. Publishing companies have insurance policies just like you and I do. Get yourself listed on that policy. Interestingly, the July 15, 2002 issue of Publishers Weekly cites that insurance companies are raising premiums and deductibles on policies involving copyright and libel. For example, according to the article, Random House’s deductible just went from $100,000 to $1 million. That’s quite an increase! In turn, Random House has announced that its authors will take a greater financial responsibility in the event of a lawsuit. Other publishers will surely follow Random’s lead. Stay tuned.

MAGAZINE, NEWSPAPER, AND WEB CONTRACTS

The idea behind these contracts is the same as it is for book contracts, but the contracts themselves aren’t likely to be as lengthy or as cumbersome. Indeed, you could get a two-paragraph writer’s agreement serving as your contract. As long as the basics are covered (deadline, payment, and rights sold and retained), the length and format of the contract don’t matter.

With magazines, newspapers, and work for the web, you’re more likely to have a verbal agreement (than you are with a book deal). If you find yourself in this situation, make sure you follow up the conversation with a letter that outlines the terms discussed and agreed upon.

As book writers do, magazine, newspaper, and web writers have several rights that they can sell part and parcel. These include the right to publish in an anthology and foreign rights. Again: Be especially careful with electronic rights. As Moira Allen cautions in “Know Your E-Rights” (published in the August 2002 edition of The Writer), “Watch out for a contract that asks you to grant a publication the ‘nonexclusive right to distribute the material electronically.’” Allen also reminds writers that electronic rights are not necessarily included in FNASR (first North American serial rights), according to Tasini v. The New York Times (the milestone case for freelance writers). FNASR are what most writers are selling to magazine markets most often. 

You’ll also sign the scary warranties and indemnities clause. The caution here is that it’s not standard practice for a magazine to put a writer’s name onto its insurance policy, if it has one. (You’ll remember that was the protection I recommended in the section on book contracts.)

Do your darndest to negotiate a kill fee in the event that a magazine, newspaper, or web site changes its mind about publishing your article after signing an agreement with you. Once you’ve negotiated the kill fee, make sure it’s included as part of your contract.

Finally, I want to mention work-for-hire agreements briefly. The advice is simple: Avoid them if you can. By signing a work-for-hire, you’re handing over all rights to the publication (whether it be a book publisher, a magazine, a newspaper, or a web site or e-zine), including your copyright. This kind of agreement is clearly not in favor of the author—the one who’s done all the work to get the material written in the first place!

***

Navigating the maze of legalese that comes with getting a book deal or having an article published either in print or on the web can be tricky, but with the right tools—namely knowledge (and perhaps the assistance of a smart agent and/or lawyer) —you’re well on your way to a successful career as a published writer. Good luck!

Jodi is a faculty member of Absolute Editorial.  

In her role as president of JBedit, she has edited and/or contributed to a number of high-profile book projects, including The Barnes & Noble Guide to Children's Books (3rd Edition), The Buzz on Beer anthology, the Frommer's Irreverent Guide travel series, The 50 Best (and Worst) Business Deals of All Time, and Copyright Plain & Simple. In addition to her editing responsibilities, she has also completed a number of writing projects on behalf of national and regional clients, including Arcadia Publishing, Inc., Amateur Chef magazine, The Newark Star-Ledger, Bride's Guide magazine, Lebhar-Friedman Books, The Pathway School, and TheOddSpot.com.

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