Top tips when negotiating contracts
23 Jun 2017
Stephen Aucutt, formerly contracts manager at Hodder & Stoughton, draws on his thirty years experience to provide a contracts checklist when agreeing terms with trade publishers. He can be reached at firstname.lastname@example.org.
Ensure that any and all terms and conditions agreed before issue of the contract have been included accurately. Pay particular attention to any terms or conditions which have the effect of altering what was agreed pre-contract, e.g. a royalty of 10% of retail price on hardcover trade sales agreed but, contract contains several provisions which provide for a different royalty to be paid under certain circumstances.
Make sure the parties to the contract are correct. Author name should be the legal name, not a pseudonym and if the author trades as a limited company, the limited company name should be the contracting party; there are potential tax issues if this is not correct. Publisher’s name should be a registered company/corporation (not the name of an imprint) and if the name of the publisher is merely a trading name, e.g. Jane Book and Joe Editor trading as Bestselling Books, contract must be with Jane Book and Joe Editor, trading as Bestselling Books. Addresses of both parties should be stated and preferably the trading address of the publisher, not just a registered office address.
There should be a clear description of the book which is the subject of the contract – genre, approximate length and ideally reference to proposal and/or synopsis. This can be a key factor in resolving any dispute over acceptance of the book. Where the book has already been delivered and accepted by the publisher there should be a clear statement to that effect. If not delivered then date for delivery should be clear and there must be a clear period in which the publisher must accept, reject or ask for revisions and likewise a clear period for them to accept after submission a revised manuscript. If the book is going to contain illustrations, photographs, quotations, etc. from other sources, an index or other materials in addition to the manuscript these should be described and importantly responsibility for supply and payment of any costs or permission fees set out clearly. Following acceptance of a book, any alterations, additions or revisions or updating should be subject to approval.
Be absolutely certain that the grant of rights is by a licence of copyright and not an assignment. Whilst an assignment may be justified for some educational/academic books or required where the author is a ghost writer of a memoir or providing text for brand/character based books, there are few if any other reasons why an assignment of copyright should be necessary. If not granting all rights, the grant of rights provision shouldn’t include phrases such as ‘all rights in any and all media’ and ‘now existing or which may in the future come in to existence’ and the contract must include a reserved rights provision which makes it clear which rights are reserved. If not granting all rights beware of the inclusion of ‘adaptation’ – it can cover film, TV and stage adaptation, translation or adaptation into another genre. In summary, license as narrowly as possible and seek to retain any rights which the publisher is unlikely to exploit. With electronic rights there should be a clear distinction between electronic books (including electronic books with enriching/enhancing materials) and electronic versions. For electronic books the minimum royalty should be 25% receipts with provision for a review of that rate based on contract date or first publication.
Language and territories grant should be clear. Even if it only mentions English language in the grant of rights clause, inclusion of translation rights in the subsidiary rights provisions equals a grant of all languages. General terms like United Kingdom and Commonwealth (which doesn’t include Eire but, does include Canada) and North America (which can be held to include Central America and the Caribbean) are not sufficient.
Obligations regarding copyright notices and credits need to apply both to publisher’s editions of the book and editions published under licence from the publisher.
There must be a clear and enforceable commitment to publication within a set period of time – ‘reasonable endeavours to publish’ or ‘within a reasonable period following delivery’ are not sufficient. Any portion of a royalty advance due on publication should be payable at latest by the latest date for publication.
Royalties should be set out clearly by format and type of sale and royalty basis – retail price or receipts. If there is a rising royalty, it should be clear which sales are included. Any discount-based reductions in royalty rates need to be clear and fair – reductions at 50% for hardbacks and 52.5% for paperbacks will almost certainly result in less than 10% of sales being accounted for at the full royalty rate. Any provision allowing for a reduction in royalty based on ‘small reprints’ should be removed.
Each subsidiary right granted should be set-out clearly with a minimum author share of 50%. There should be provision for the author to be informed of any licenses, consulted and in some cases, particularly for major rights, author approval.
Accounts should be rendered not less than twice-yearly, irrespective of the sum due and statements supplied (and any monies paid) within a maximum of four months following the accounting dates. Timely (and preferably, accuracy) accounting should be stated as being of the essence. Any minimum payment amount should be reasonable - £50 at most. An audit provision should be included. Any provision allowing the publisher to retain a reserve against returns should be limited by percentage and period of retention and be based upon the publisher’s editions only and should not be applied to copies sold firm at high discounts, such as special sales outside the regular book trade.
You should be consulted over the settlement of any legal claims and any monies withheld to satisfy any liability resulting from a claim should be reasonable, necessity to withhold reviewed on a regular basis (not less than annually) and it should be clear that monies are to be repaid (less any liability) immediately if a claim is withdrawn or dismissed.
Your right to terminate the contract immediately if the publisher goes into liquidation (or ceases trading for any other reason) should be included and there must be provision for termination in the event of material breach of contract by the publisher not rectified within a maximum of sixty days – thirty days is preferable, as is fifteen days when the breach relates to rendering accounts and making payment. Termination should not permit the publisher to sell-off remaining stock, nor should it permit the publisher to continue to benefit from any subsidiary rights’ licenses.
Reversion of rights provision must be based on sales of copies of the publisher’s print and electronic editions (needs to exclude book club and remainder sales and preferably high discount/special sales) and/or earnings, e.g. 100 copies per year and/or £100 per year. On reversion publisher may continue to benefit from any subsidiary rights’ licenses but, should not be entitled to renew or extend any licences and preferably their right to benefit should be restricted to eight years after reversion. Publisher’s right to sell-off should be stated with up to twelve months being reasonable.
Publisher should not be permitted to assign the contract, other than within publisher’s group or as part of sale of publisher’s business, without consent.