Ten things you need to know about contracts
Kevin Stewart of Contracts People shares advice for improving practice in the crucial area of publishing contracts
It’s quite a challenge to distil 30 years’ experience in publishing contracts into ten quick tips. But here, in no particular order of importance—all things contractual are important, after all—are my top nuggets of hands-on contractual wisdom.
1. Paying a creator some money does not provide you with either an assignment of the copyright or an exclusive licence of the rights in that material. The Copyright, Designs and Patents Act 1988 tells us that. To be effective at law, an assignment of copyright or an exclusive licence must be in writing and signed by or on behalf of the assignor / copyright owner.
2. Giving a right a label doesn’t mean you will control what you think you control. Phrases like ‘app’, ‘enhanced ebook’, ‘electronic versions’ and the like continue to abound, and they can be useful—but they don’t define the rights. There is a world of difference between having the right to reproduce a work by any and all electronic means, and acquiring the right to adapt a work by any and all electronic means. The first really limits you to editions of the text that can be read (and, perhaps, heard); the latter goes well beyond that. But if you want a specific right—for gaming, say—be explicit.
3. ‘Be in it to win it’ / ‘use it or lose it’. These concepts are similar. By all means, name all the rights you wish to be able to exploit, but realise it may not be enough to secure them. Showing you can successfully exploit them is increasingly important. Others can licence rights as easily as a publisher can, and the upswing in audio is a good example of a right that authors can licence directly. Wanting to control the rights because you are the publisher is only part of the solution. Showing why this is best for the author is the real advantage.
4. Remember the case of Malcolm v OUP in 1991. In many ways, this case was the trigger to the inclusion of the ‘Entire Agreement’ Clause in most publishing agreements. More to the point, it reminds us that ‘subject to contract’ is a key phrase pre-signature of a formal document. Agreements can be reached without writing them down, and if they are witnessed or recorded in any way, then the evidence of that agreement can be shown. Emails, telephone calls or face to face conversations: any of them can create an agreement if the relevant ‘deal’ criteria are met.
5. Look beyond a warranty and indemnity clause. Both may be thorough. The indemnity may well cover all breaches of the warranty and, better still, all alleged breaches of them too. But does the other party actually have the wherewithal to cover the costs you will incur? It is better to hedge your bets and invest in a process that weeds out the possibility of issues arising (legal reads where you think necessary, with the cost shared equally between the author and the publisher) and insurance to back the contract up. The quid pro quo for any insurance is having to abide by the terms of that policy and make sure you do not agree any condition with any creator or licensor that could render the insurance invalid—for example, allowing the author consent to any settlement that the insurer is entitled to settle.
6. Be precise and careful, but be flexible. If you mean ‘and’, do not say ‘or’ (or vice versa). Is ‘shall’ synonymous with ‘may’? Can you water wording down to settle a negotiation without undermining your basic point? For example, what’s the material difference to you of revising ‘this Agreement shall terminate if the Author does not do X’ to ‘this Agreement may be terminated by the Publisher if the Author does not do X’?
7. Remember that delivery and acceptance are not one and the same thing. Acceptance can only occur after delivery. Does ‘acceptance’ mean by the editor or only after your lawyer has confirmed the edited script of a book is publishable? Author and publisher need to know what is expected of them in writing, editing and, ultimately, publishing the book. Point 6—be precise—really applies here.
8. Don’t leave things to chance. If you are not sure what something means or what the risk is, ask someone who does. If you do not like wording in a contract, explain what concerns you and see what can be done about it. This applies to any kind of agreement: with an author or a distributor or a licensee or… well, frankly, anyone.
9. Look at the future. And not only in terms of the publishing rights acquired from the creator. Think about the company’s future. A contract is an asset. Can you freely assign it or is there a total prohibition? Can you sell the business as a whole without your author’s permission?
10. Follow the money. What will you be paid and when exactly is it due to be paid to you? If you are paying an author on receipts, they will likely want you to be clear what you can or cannot deduct. If someone is paying you on receipts, you definitely should be clear what can or cannot be deducted!
These were the things that made my ten big lessons. Well, these ten and…
11. Get a copy of the indispensable Clark’s Publishing Agreements. The tenth edition is available now, and the eleventh is in preparation. IPG members get a 50% discount on copies.
12. Don’t put off dealing with contractual problems as they arise.
13. Don’t panic! Take a deep breath and read slowly.
Kevin Stewart is an experienced publishing contracts expert. He has contributed to recent editions of Clark’s Publishing Agreements, provided training via Publishing Training Centre and Publishing Scotland among others, and until 2008 was director of group contracts for Hodder Headline.
Contracts People provides various services including supply and advice for contracts in all types of publishing and related fields, training, mentoring and cover for contracts personnel. For more information, visit the Contracts People website.