This article is the third (of twelve) in my publishing series.┬áThis article is going to be long, but worth the read. It’ll cover everything (or almost everything) that you wanted to know about contracts.

Whether you’ve landed an agent who has just received an offer from a large publisher, or whether you’ve dealt directly with a small or medium publisher, the contract is the single most important document you will ever sign. It’s even more important than Copyright. There are a lot of different things that can go wrong with contracts, so I’m going to try to highlight the most important aspects of specific types of clauses, things to question, things to avoid, and a basic explanation of the parts of the contract so that you have a better idea of what you are dealing with. Obligatory statement: I’m not a lawyer, so don’t take these statements as specific legal advice. They are intended for educational purposes only and deal in generalities. If you have specific questions about a specific contract, I would get a consultation from a qualified attorney in your area.

When it comes to problem contracts, there are three types: The Short Form, The Long Form, and the Over-worded Form. Of the three, the over-worded form is probably the least dangerous, but I would still be very wary when seeing it. I’ll circle back to these documents in more detail in a bit, but in short; the short form is a very brief contract comprising of a couple of pages, the long form is the exact opposite, it’s typically a dozen pages or more. The over-worded contract doesn’t have a particular length, but the words themselves are written in such a way that you have to scrutinize the text very carefully. They say things like “I am about to initiate a temporary cessation of work-related functions and utilize bipedal locomotion to traverse to the petroleum distillate distributary facility whereby the party of the first part shall remit monetary units with the party of the second part in exchange for a carbonated refreshment”, instead of “I’m going to take a beak and walk to gas station and buy a soda”. They both mean exactly the same thing, one sentence is just vastly over-worded.

Before I dive too much further into explaining why these are bad, let’s a take a moment and talk about common clauses that you may see in a publishing contract.

Now, hopefully you’ve already read my article on Copyright. If not, definitely do that. But, to recap briefly for the purpose of this conversation: copyright isn’t about who created something, it’s about who owns it. Thus, the copyright clause of any contract is of vital importance. There are some publishers who will want you to grant them “exclusive rights” to publish and distribute your work “in perpetuity”. Exclusive rights are common, but “in perpetuity” is not (unless you are dealing with large, traditional publishers, in which case I would still offer the same advice). Never sign that. You’re basically handing over your rights to your work.

Look for the Term of Agreement clause. This specifies how long the contract lasts. “In Perpetuity” means forever. Contracts should never last that long. They should be a fixed date in terms of number of years, or a fixed event. There should also be clear language about how a contract is termed (although that might be supplemented by additional language later).

In the clause Grant of Rights, “Exclusive Rights” means that you have submitted a book or a work to a publisher and are authorizing that publisher to be the sole distributor of the work until the time the contract expires. This is pretty common. Most publishers won’t want a contract that allows you to take the same book to a competing press and let them carry it as well. Publishers do invest time and money into the book, so there’s incentive there from their end to protect it. If you see a contract that says “Non-Exclusive Rights”, which are more common for flash fiction, some short stories, or charity cases, then that means you may distribute the book through other channels.

All of these terms of copyright on a standard contract are found (usually) under the section titled “Grant of Rights”. I have seen a few strange cases where it’s labeled something else (Permissions, Authorization, etc), but “Grant of Rights” is the standard language. There are a couple of other important things to note about Grant of Rights, the first being, in general, you want to grant as few rights as possible to the publisher. A lot of publishers will use boiler-plate (template) language that includes all kinds of rights by default. In addition to “reproducing and distributing” your work “in printed and electronic formats” there are other things to consider. A lot of contracts authorize “worldwide distribution”. You may restrict that through negotiation to a specific region. Some contracts offer distribution “in any language”, but you can restrict that to just English and then use a different publisher for a foreign language version. You can mix and match them; Publisher A has world-wide rights in English, but Publisher B has worldwide rights in Spanish. There are also typically terms in there for Audio-books and CD-Rom. If your publisher isn’t producing audio books, then it’s silly to grant them rights to do so because that prevents you from allowing another publisher to take the audiobook rights. These terms should all be negotiable. If the publisher is not willing to negotiate these terms, or any term really, think long and hard about whether this contract is in your best interest. A clause that you should look for says something to the effect of: “All rights not specifically granted to the publisher in this contract remain with the author.”

Some contracts include a Copyright section. Read this carefully. This, if present, talks about the registering of a copyright (which isn’t typically done until the book is actually published), and the display of copyright notices within the book. Things that will often be addressed here; who will pay the copyright fee, who will actually register the copyright, and most importantly, who’s name will the copyright be in. If you only granted the publisher limited rights in the first part, but then you tell them that it’s okay for them to register the copyright in their name in this part, guess who owns your book? (Hint: it’s not you.)

There’s a pretty common section about “Author’s Warranty“. The whole purpose of this section is to limit liability to the publisher. This is where you make promises to them. No, your non-fiction book isn’t blatantly wrong or made up. No, you didn’t plagiarize the work from anyone else. Yes, you do in fact still own the copyright and can legally enter into this contract with them. Etc. There’s usually a line or two in there about you not being able to sue them if your work contains errors or is bad. (This is mostly for Non-Fiction where the editor’s job might be specifically copyediting and not actual verification of your facts. It prevents you from being able to sue them for “not double checking your work”.) Some contracts also include a penalty or a clause that allows the publisher to sue you for breaking those terms. Keep in mind, even it’s not directly spelled out, publishers may still file suit if they can prove that you knowingly produced a fraudulent manuscript.

There’s typically a section called “Manuscript“. This talks about time-frame you may have to complete the work, if there is one. It talks about what you will provide to the publisher, and in what formats, and talks some about who might have final say in editing disputes, who’s responsible for fees for research or travel expenses to produce the manuscript (more common for non-fiction). It may also spell out how long the publisher has from receipt of the manuscript until publication.

Many contracts include a clause called “Subsidiary Rights“. A lot of people are confused by this. It’s basically ways that the publisher can extend their reach. For example: Suppose you grant the publisher “rights to reproduce and distribute in any format and language worldwide”. So, they temporarily have rights to make everything. But suppose they only do Paperback and e-books. Because you granted them the temporary right to produce it on your behalf, they can hire someone else to produce other products on their behalf. Like the audio books that I mentioned earlier. The publisher might sub-contract a Third Party company to produce the audiobook. In this case, those would be subsidiary rights. Or if they had it translated to Swahili or something. Also subsidiary rights. These are things that many people sort of expect to happen anyway, but it’s still important to pay attention to because the royalty rates are typically different here.

Some contracts have a clause about Advertisting and Promotion. This part can take many forms be listed in many ways. Some contracts call it different terms, but the main point is that it talks about who will promote the book, and in what mediums and formats. It may talk about promotional materials and excerpts that the author may or may be permitted to use.

Almost all contracts have a “Force Majure” clause. This is sometimes called the “Act of God” clause in layman’s terms because it outlines who is or is not responsible when things aren’t done for reasons beyond your control. Oh, the Publisher said that they’d publish my book, but their offices were damaged by a hurricane. It gives them a little breathing room to get back on track. It also protects you under those same types of events. Common events that are listed here include, but are not limited to: natural disasters, wars, political and civil unrest, worker strikes, supply shortages, and the like.

The Royalties clause is pretty self-explanatory. How much do you get? How much do they get? How often do you get it? Etc. The biggest things to pay attention to here are how royalties are calculated. There’s a huge difference between royalties calculated based on retail/gross price, and net price. No one uses Retail price. Most will use the term “profit” to mean net price, which takes into account the actual price the book was sold for. But even with profits, there are Gross Profits and Net Profits. This is what the publisher gets paid from the reseller. Suppose you have a $10 book on Amazon. Amazon takes their 30% of that. This means that the Publisher’s Gross Profits are $7 per book. If your royalties are based on that amount, then it’s a higher cut for you and a lower cut for the publisher. The most common way is Net Profits. The difference is that in the Gross Profit calculation you are paid first. For the sake of the example we’ll say that you get 50% royalties. In the Gross Profit calculation you get 50% of $7, which is $3.50. Maybe the book costs $3 to print, so the publisher would only get $0.50, which isn’t a very good profit margin for them. Under the Net Profit example, they would pay that $3 printing fee first, and then have a Net Profit of $4, of which you and the publisher both get $2. This is a more common system of doing it because it’s the most fair method to the publisher.

Some other clauses to pay attention to include Accounting. There should generally be a clause in here about the publisher providing you with detailed sales lists on a regular or semi-regular basis. There should also be a clause that permits you the ability to audit the publisher’s records. The most common way that this is written is for you to hire an accounting specialist who will audit the records on your behalf. But there are a lot of ways this can be written out.

Dispute Resolution is another important part of a contract. This outlines the methods by which disputes are resolved. Importantly it also may specify a place. Some agreements may require you to travel to a specific location in order to have a resolution hearing. This is a crucial clause because it may bar you from filing a “breach of contract” suit against the publisher if you did not follow the remediation steps outlined.

Termination is another huge part of the contract. This is sometimes briefly mentioned in the Term of Agreement clause, but this is where all of the details are spelled out. Watch this section for language about contract termination fees. If you want to break your contract, some publishers may try to charge you a fee for doing so. Their logic is that they spent money to invest in your book, and if you pull your contract before they’ve had a chance to recover their costs, then they will take a loss. Know your options and consider trying to negotiate this point. Some publishers don’t include termination fees. Other publishers may put a cap on it by saying that if you cancel within a certain time, you owe the fee, but if you cancel after a certain time you don’t.

Check for a Bankruptcy Clause. What happens if your publisher files bankruptcy? Is the publisher required to pay you? Can they keep your rights? Are you still locked into the contact? These questions should be answered one way or the other.

Assignment (Sometimes called Successors and Assigns) is another important clause to look for. This clause specifies what happens after either party ceases to exist. For example, if your publisher gets bought out by another company, what happens to your contract? Does it endure, or is it terminated? What if you die? Is your contract automatically cancelled, or can the inheritors of your intellectual property elect to keep the existing agreement in place?

The last major clause is Governing Law. This clearly establishes which state laws the contract will abide by. This is important because something may be legal or illegal in your home state, but opposite in the publisher’s home state. Most publishers chose to have their home state as the Governing Law of the contract because it’s convenient. However, some publishers will have the contract governed by the laws of an entirely different state simply because the laws of that state might be more favorable to the publisher. This also determines where court cases must be filed.

So now that we’ve gone over some of the major types of clauses often found in publishing contracts, let’s circle back to those problem contracts.

That “Short Form” contract is terrible. People will push the Short Form as a champion of “convenience”. They’ll say that it’s quick and easy. It certainly may be quick, but there are actually a lot of issues. The first and most important of which is this: if it’s not spelled out in writing, it didn’t happen. Sure, sure, the short form contracts may cover the basics of copyright, payments, and termination, but what about everything else? If it’s not written down, then it remains an unanswered question. You aren’t guaranteed anything that isn’t written into the contract. Period. Let me say that again: you aren’t guaranteed anything that isn’t written down in the contract. Short Form contracts are missing about half of the items that I addressed above.

The Long Form contracts have the opposite problem. They spell out everything so meticulously and with so much detail that it’s hard to do much of anything. They’re too restrictive and lock both the publisher and author into situations where they may not be able to act as they should. These contracts are 30+ pages and they might take a page and a half to explain who the parties are and what work they’re talking about.

An ideal contract should be between 7-10 pages. It should cover all of these clauses outlined above in some capacity, and then some. It should be worded in a way that is easy to understand, yet clear enough that it holds up under legal scrutiny.

Here are some general rules that will help you navigate contracts:

Rule #1: Never be too quick to sign anything. Always take the time to read every line. Yes, really. Every line. If your book is good enough to publish today, it’ll still be good enough to publish in a few days after you’ve had ample time to review the contract. If a publisher tries to rush you or pressure you into signing something, politely but firmly decline.
Rule #2: It never hurts to get a second opinion. Whether or not it’s from a trusted friend or a lawyer, have someone else check your contract.

Rule #3: If it’s not written in a contact, it’s not a real, binding agreement. A Verbal agreement doesn’t count. And although emails are technically “in writing”, they don’t hold up well in court. If your publisher promises you something different than what’s in the standard contract, get them to either change the contract, or sign a contract addendum, officially.

Rule #4: Always keep a copy for your records.

Rule #5: Never be afraid to ask the publisher to re-negotiate anything. A good publisher who is interested in maintaining good author relationships will relent where they can. They might not agree to everything you ask, but they should at least be willing to consider your requests when possible. If they flatly refuse any request for changes or modifications, my advice would be to decline and keep searching.

I hope I answered a lot of questions about Contracts and that you learned something helpful. Tune in next week when I talk about Editing. You can laugh at some of the mistakes I’ve made there and learn vicariously through my experiences.

Contracts