Defusing Contract Landmines

by Steve Laube

Laptop explodes

During the last six months we have run into some landmines buried within some small press contracts. In each case it was the author’s relationship with the publisher that helped land the offer, and so we proceeded to review the paperwork in order to protect the author’s interests.

In one case the small publisher was very grateful for our negotiations and contract changes. They plan to change their contract for all authors in the future. We were glad to help our client form that new partnership.

In two cases the publisher said they could not afford to hire a lawyer to review our requested changes to the contract and thus were unwilling to negotiate. We recommended the author walk away both times.

In yet another case the publisher wouldn’t negotiate and said, in essence, “take it or leave it.” We walked away. Our client terminated their relationship with us and signed the deal on their own.

A Couple Landmines (just a couple for the purpose of this discussion):

Royalties based on Net Profit not Net Receipts. This means the royalty the author receives is based on the Publisher’s revenue AFTER expenses. In the movie business this is called “Hollywood Accounting.” Read the linked article see how it is a clause that can be easily abused.

I laughingly told one publisher “You could go on vacation to Bermuda, call it a ‘research trip’ and charge it as an expense against my client’s book!”

The publisher did not laugh and said, “We would never do that.”

“Of course not,” I replied, “but how do I know that?”

“Plus,” I continued, “if your company is sold to someone else, the terms of this agreement will go to the next owner who may not have the same moral compass you have.” The Publisher was unwilling to change this clause in this case, although another publisher agreed to change their contract to “net receipts” after hearing our arguments on this point.

Bankruptcy Clause
This was missing in one of the contracts. It means there is no mechanism for the reversion of rights if the publisher declares bankruptcy. We have heard too many author stories about books they can’t get back because of bankruptcy proceedings with their publisher. While I’d rather not assume a publisher will go bankrupt, the principle of “Expect the best, but prepare for the worst” is something to consider on this issue.

Such are the weekly frustrations of an agent. While these were small publishers we have to watch every contract even if we have negotiated with that same publisher before.

By the way, if you got to the end of this article, “Congratulations!” Most have their eyes glaze over when they see legal stuff in these posts, despite the importance of such dry information.

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L is for Libel

by Steve Laube

 To libel someone is to injure a person’s reputation via the written word (slander is for the spoken word). I wrote recently about Indemnification but only touched on this topic. Let’s try to unpack it a little further today.

First, be aware that the laws that define defamation vary from state to state, however there are some commonly accepted guidelines. Anyone can claim to have been “defamed,” but to prove it they usually have to show that the written statement is all four of the following: 1) published 2) false 3) injurious 4) unprivileged.

The first is obvious. Posting something on Twitter or Facebook is “published.” And yet two weeks ago a Federal judge ruled that a blogger has the same defamation protection as a journalist. (Read the article here.)

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I is for Indemnification

by Steve Laube

Publishing is not without risks. Plagiarism, fraud, and libel by an author are real possibilities. Thus within a book contract is a legal clause called indemnification inserted to protect the publisher from your antics.

The indemnification clause, in essence, says that if someone sues your publisher because of your book, claiming something like libel (defamation) or plagiarism etc., your publisher can make you pay the fees to compensate for their losses. This is to “indemnify” which is defined as “to compensate (someone) for harm or loss.” Bottom line: The publisher has the right to hire its own attorneys (at the author’s expense) to defend against these claims.

Doesn’t sound like a happy clause does it? But you can understand why it is there. This clause and the Warranty clause are notoriously difficult to negotiate. (The Warranty clause is where the things the author guarantees or warrants are listed; i.e. the book is original, it is not libelous in content, etc. This clause will be more fully covered by me at another time) The language has been written by the publisher’s attorneys and are usually set in stone.

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D is for Dispute Resolution

by Steve Laube

Pray that it never happens to you. But if there is a situation where you find yourself in a legal battle with your publisher regarding your book contract there are terms that will dictate how that disagreement is handled.

Here is one version from an old contract:

Any claim or dispute arising from or related to this Agreement shall be settled by mediation and, if necessary, legally binding arbitration in accordance with the rules of a mutually agreed upon alternative dispute resolution service. Judgment upon an arbitration decision may be entered in any court otherwise having jurisdiction. The parties agree that these methods shall be the sole remedy for any controversy or claim arising out of this Agreement and expressly waive their right to file a lawsuit in any civil court against one another for such disputes, except to enforce an arbitration decision.

Regardless of the place of its physical execution, this contract shall be interpreted under the laws of the State of XXXXXXXXXX and of the United States of America.

If you read this carefully you’ll see it lays out the rules that keeps a dispute out of the court system and forces the two parties to use binding arbitration instead.

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C is for non-Compete

by Steve Laube

Both Tamela and Karen wanted “C” to stand for coffee or chocolate since both seen to be must-haves for any writer. Instead I’m going to fudge a little (pun intended) and write about the “non-Compete” clause in your contract. This clause has become the latest playground for negotiations.

Here is a simple version of a non-compete clause:

The Author will not publish or authorize the publication of any other work which would adversely affect the sale of the Work without the Publisher’s prior written consent.

Seems fairly innocuous, and it is. This publisher is basically saying “don’t write another book similar to this one.”

Take a look at this language from another publisher’s contract:

Author will neither publish nor authorize the publication anywhere of any Competing Work, including any Competing Work co-written by Author, in any form equivalent to a Physical Version, Digital Version, or in any form hereafter devised. A “Competing Work” shall be any work on the same or similar topic contained in the Work, treated in the same manner and depth, and directed to the same audience.

Imagine you have written a book about anger in the workplace and then later want to write about anger as a parent for a different publisher. Are those “competing” works? Would the second adversely affect the sale of the first?

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Do Some Plots Break Their Contracts?

In 1995 I watched the movie Cold Comfort Farm. A British comedy, the story was not without charm, though I wouldn’t recommend this parody of literature for everyone. Early on, Aunt Ada, who seemed to be a bit crazy, said, “I saw something nasty in the wood shed.”

Throughout the movie, I waited to find out what Aunt Ada saw. I waited. And waited. But the question was never answered, at least not for the viewer. I tried to find out if the novel solved the mystery and was unsuccessful in that quest, making me believe the book did not reveal the answer, either.

In my mind, the story broke its contract with the viewer. Since whatever Aunt Ada saw had a great effect on her, I think the nasty something should have been revealed.

Apparently I am not alone. Even now, the Internet is rife with posts about the mystery.

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Author Accounting 101

by Steve Laube

You are a published author. You must be rich!
You are an agent. I know you are rich.

If it only were true.

A couple weeks ago we peered at the bottom line for the brick & mortar bookstore, now let’s attempt to do the same for the author. Please remember this exercise is generic, your mileage may vary. As before we will use some round numbers so we can all follow the math.

Let’s start with that $10 retail price book we dealt with before. The publisher sells the book for $6.00 to a store. That creates a “net price” for the publisher. Be aware that some contracts pay the author a royalty based on the retail price and some on the net price.

The net price is $6.00. They author’s contract pays them 15% of the net price. That would mean when this book was sold to the bookstore the author’s account was credited for 90 cents.

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Review Any and Every Contract You Sign

by Steve Laube

Today’s headline sounds like a blinding flash of the obvious but you’d be surprised how many writers are not careful about the agreements they sign. Those with a literary agent have that business partner who will review their book contracts, that is a given. But what about their magazine article or online article contracts?

Earlier this month the Condé Nast organization, which includes Wired, Vanity Fair, and The New Yorker, surprised their freelance writers with a new agreement that has Condé Nast controlling the film and television rights on articles published by their magazines, with a cap on the revenue paid to the writer. Why? Because past articles turned into big box office hits like “Argo,” “Eat Pray Love,” and “Brokeback Mountain.”

This contractual assertion has put writers in a bind because they do not want to lose the chance to writer for these prestigious magazines.

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Serious Talk with your Potential Agent

What are some of the things you should ask when an agent has called to offer you representation? Here goes, in no particular order:

1) Would you go over your contract terms with me? Even though you will be reading the agency contract before signing, this is your chance to learn the main points you can expect to see.  Ask questions now. After you review the contract, don’t be afraid to ask for clarifications in writing.

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Why Is My Royalty Check So Small?

This is it! You’ve had a book published, and your advance money is long gone. But your publisher has promised a royalty check and you know exactly when that check is supposed to arrive. You run to the mail box every day for two weeks until finally, Voilá! The check is here! You rip open the envelope to see a grand total of:



How can this be? So much for the big screen TV. Maybe the pizza place is running a Tuesday night special.

What happened?

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