Contract Conversations: Red Flags

I’ve written here before about how vital it is to read your publishing contracts. But recent industry dust ups make conversations about contracts more pertinent than ever. An author-friendly contract is imperative for the health of your career, and today I’m here to talk to you about some red flags to look for when reading the first draft of your contract.

Contracts are negotiable. If you see any of these warning signs, it’s not necessarily a death knell for your deal. But it is your responsibility to ask for explanations and push for better terms. Publishers want you to be happy in your business relationship with them; many houses will meet you halfway on important points. But if there’s no leeway on some of these issues, it might be time to consider walking away.

Changes After Signing

Once both parties sign the contract there is no changing it. No adding things in by hand, no email or letter to inform you that the terms have changed. A contract is legally binding and final as of signature. Period.

But of course things come up, and changes sometimes need to be made. Sometimes something important has been omitted or overlooked entirely by accident, and adding it back in will be beneficial to the author. Sometimes something within the contract is unclear and clarifying language needs to be added in so that the terms are explicitly understood. There is an official, legal process for making changes to contracts after they’ve been signed—amendments or addendums. These are short legal documents that add, change, or clarify your existing contract language. These documents should reference your original contract explicitly (your name, title, and date of original contract at the very least) and will explain the purpose for the new attached document and what changes are being made. Both parties must sign amendments or addendums. After signed, they become an extension of your original contract, and therefore legally binding. If your publisher tries to change the terms of your document informally without an amendment or an addendum–that’s a red flag.

Rights of Reversion

Your contract should make explicitly clear the circumstances under which you can request a reversion of your rights. Gone are the days when authors must surrender their rights to publishers until the end of time (work-for-hire is an exception here). The exact details of reversion clauses can vary widely; some contracts allow for a reversion of rights once the book goes out of print, others allow for a reversion a certain number of years after publication. The bottom line is that reversion language should exist within your contract. If there’s no clear, reasonable way for you to get your rights back—that’s a red flag.

Accounting

The accounting language in your contract should be very detailed. Advances should be clearly split, with each installment directly tied to a specific milestone (signing, delivery & acceptance, publication etc). Advance payments should either be due immediately at each milestone or within a reasonable amount of clearly defined time (usually 30 days). Specifying such details might seem nitpicky, but without them publishers can (and some will) delay payment.

Most publishers have standard royalty periods twice a year. These period should be clearly defined and statements and payments should be due on a specified date twice yearly. It is customary for Publishers to hold a “reserve against returns” but typically the reserve should not exceed 20% and should be released each subsequent period. Royalties should be clearly defined as either on list price or net.

Percentage splits for all subrights should be clearly defined, and there should be language in the contract that states that all rights not explicitly granted herein shall be reserved for the Author.

Vague, contradictory, or non-existent accounting terms are a huge red flag and should not be ignored.

Audits

Your contract should grant you the right to audit your publisher at least once per year if you suspect an error in accounting. Audits are time consuming and expensive, and most authors will never need to use this clause. But better to have it in place in case you find yourself in desperate need of it. The absence of an audit clause in a contract is a red flag.

Non-compete

Non-compete clauses are standard in publishing contracts and the presence of one is not an automatic red flag. They’re in place to protect the publisher’s investment and ensure that you don’t sell a significantly similar book to another publisher and thus create competing products in the market place that will harm sales. However, non-compete clauses can be overly restrictive, and so they should always be reviewed carefully. Your non-compete should be limited—usually to a brief number of years after publication—and should be as specific as possible. If you write across genres and categories then limit your non-compete to books substantially similar to the contracted work, so as not to impede possible publication in other genres or topics. Some non-competes extend to blogs or personal websites or any option books that may be included in your contract, so make sure to read this clause carefully and fully understand the restrictions in place. Continuing to publish and remain visible is important for the longevity of your career, so an overly restrictive non-compete clause is a red flag.

Publication

Not all contracts will specify a specific pub date, because so much can change during the production process. But your contract should at least guarantee publication within a certain time frame, typically within 18-24 months of the contract date. Your publisher should not be allowed to hold your rights indefinitely and never publish. You enter into a deal with the expectation that your work is going to be published, and that expectation is of the essence to the agreement. If your contract doesn’t state a time frame for publication, you should push for one. And if your publisher balks—that’s a red flag.

A solid contract cannot prevent problems from occurring, but what it can and does do is lay out clear expectations for both parties, and a pathway for remedy if something goes wrong. Most authors will never need to invoke the majority of their contract clauses, but for those that do they’ll be glad their contract includes provisions to protect them and their work. Without the protections of an equitable contract, and author has no recourse if they are mistreated by their publisher. I often say that I’m passionate about contracts because I want writers to be empowered. That’s true. Contracts are empowering. Seize control of your career.

For more on contracts you can read some of my previous posts on the topic here and here, or listen to the podcast episodes where we discuss contracts and advances and royalties. I am also teaching a class on contracts at the Loft Literary Center in July, and I offer contract review services through Pen & Parsley Editorial

  

2 Responses to Contract Conversations: Red Flags

  1. Leeann Jun 22 2016 at 2:01 pm #

    Thank you. I hope I reach this stage someday.

  2. Marina Jun 23 2016 at 9:45 am #

    This was really helpful, Kelly, thank you!

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