Today I’m welcoming back attorney Kathryn Goldman who discusses some of the general terms in a publishing contract, part 3 or her 4 part series.

In last week’s post, we examined the Author’s Warranties provision in a traditional publishing contract—What are the Author’s Warranties in a Publishing Contract?

This week, we’re going to take a look at various general terms which are found in many contracts, not just publishing contracts. Each term has an impact on the relationship between an author and publisher.

Here’s the text of general terms of contract from an actual publishing contract [the contract language is in black, my comments are in blue and not part of the contract]:

Terms of Contract.

a) Term. This agreement shall be for seven (7) years from the effective date of the contract and will terminate automatically. All publication rights will then revert back to the author. The author is free to resubmit their book to ABC Publishing Inc. or any other publisher at that time.

What you need to know:

• This is a sunset clause. The contract is over at the end of seven years. This is a key provision. A specific time limit in a publishing contract is important. Publishing contracts should not last forever.
• A time-based limitation is concrete and not susceptible to manipulation like a sales velocity clause in which a writer can request reversion of her rights if sales fall below a certain level.
• A time-based limitation is particularly important with on-demand printing and “never out of stock” ebooks. With current technology, reversion of rights based on the notion of the book being out of print is meaningless.

b) Tax Withholding. It is mutually agreed that State, Federal, and Foreign taxes on the Author’s royalties are solely the responsibility of the Author. Author is an independent contractor and not an employee of the Publisher.

What you need to know:

• This provision should serve as a reminder that you are in business. The publisher will issue you a 1099 in January reporting the royalties paid to you in the previous year. You will be responsible for paying taxes on those royalties. The publisher will not be withholding taxes for payment on your behalf.
• Because you are an “independent contractor” and in your own business, you need to keep good records. Remember that all business related expenses are deducted from your gross earnings at tax time reducing your taxable income.

c) Title Change. A change of title of the Work does not void this contract.

What you need to know:

• This provision cuts both ways. You cannot change the title of your work just to get out from under your contractual obligations and shop the work to another publisher.
• Similarly, the publisher cannot change the title of the work then reopen negotiations on royalties, length of the license, or anything else in the contract.

d) Bankruptcy. If for any reason the publishing company files for bankruptcy protection, ceases to conduct business, or makes an assignment for the benefit of creditors this agreement shall become void and all rights granted herein will revert back to the Author.

What you need to know:

• Rights reversion in the event of the publisher’s bankruptcy is a key provision and I recommend that it be included in any license agreement that you sign.
• If the publisher goes into voluntary bankruptcy or is forced into bankruptcy by its creditors, your copyrights revert to you and do not become part of the bankruptcy estate to be sold by the trustee to the highest bidder.
• This provision benefits the publisher, as well. If the publisher’s entire stock in trade, its licenses, reverts to the authors if bankruptcy proceedings are initiated, creditors are less likely to force the publisher into bankruptcy. All of the publisher’s assets would disappear and there would be nothing left for the creditors.

e) Arbitration and Venue. This agreement shall be governed by the laws of the State of WhereverThePublisherIs. Any controversy or claim arising out of this agreement or the breach thereof shall be settled by arbitration in accordance with rules then obtaining of the American Arbitration Association and judgment upon the award may be entered in the highest court of the forum, State or Federal, having such jurisdiction. Such arbitration shall be held in the City of XXX, State of YYY unless otherwise agreed by the parties.

What you need to know:

• This is the “choice of law” provision I referred to in the December 1 post. Laws are different in each state. Here, you are agreeing that the law of a state other than your own may apply to the terms of the contract.
• This is also where you give up your right to a trial by jury or even in front of a judge by agreeing to arbitration.
• Arbitration tends to favor larger corporations over individuals and filing a complaint in arbitration is more expensive than filing a lawsuit.
• Arbitration is faster than litigation, normally.
• If there is a dispute with the publisher, the arbitration will take place wherever the publisher is located, which is something else that can run up expenses if you have to travel.
• I recommend including a provision that encourages a good faith attempt at resolution of any dispute and perhaps mediation before resort to a complaint in arbitration.

f) Notice. Any written notice required under any of the provisions of this agreement shall be deemed to have been properly served by delivery in person or by mailing the same to the parties hereto at the addresses set forth above, except as the addresses may be changed by notice in writing, provided however, that notices of termination shall be sent by registered or certified mail.

What you need to know:

• Make sure you keep your address current with the publisher
• Keep track of where the publisher is if it moves its offices.

g) Assignment. This agreement shall be binding upon and shall inure to the benefit of the parties hereto, their successors, assigns, executors, administrators, and/or personal representatives and may be assigned by either party hereto, except that no assignment by the Author shall be valid against the Publisher unless the Publisher has received written notice from the Author and has consented to the same in writing.

What you need to know:

• This is a problem provision. In it, you are agreeing that the publisher has a right to sell (“assign”) this contract and all the licensing rights that go along with it.
• This is a problem because it means that you can start a relationship with a publisher only to have your contract sold to some other entity and you have no say over it. You may not want to be in business with that other entity.
• The publisher likes this provision because it allows them to be bought by a larger publisher.
• I recommend that this provision be negotiated so that the contract cannot be assigned by either party without the other party’s consent. That way you have control over who your business partners are.

h) Waiver. A waiver of any breach of this agreement or of any terms of conditions by either party thereto shall not be deemed a waiver of any repetition of such breach or in any wise affect any other terms of conditions hereof; no waiver shall be valid or binding unless it shall be in writing, and signed by the parties.

What you need to know:

• This means that if you (or the publisher) let a breach of the contract go uncorrected, that doesn’t mean you’ve given up your right to enforce the next breach of the contract.

i) Entire Agreement. This Agreement and any attachments hereto constitute the entire agreement between the contracting parties concerning the subject matter hereof. All prior agreements, discussions, representations, warranties and covenants are merged herein. There are no warranties, representations, covenants or agreements, expressed or implied, between the parties except those expressly set forth in this agreement. Any amendments or modifications of this agreement shall be in writing and executed by the contracting parties.

What you need to know:

•  The entire deal is in this contract. Period.
• Emails from the publisher saying, “Don’t worry about it. We’ll work something out,” mean nothing. Unless it is in the contract, it is unenforceable
• If the publisher is promising you something and it’s not in the contract, have them put it in there. Otherwise, there is no promise and you cannot rely on it.

Just a reminder, while I am a lawyer, this post is not legal advice on any specific contract. It is an attempt to educate you as to what the terms of a contract mean so you can decide whether you should negotiate for something different. Remember, nothing is standard.
In January, we’ll take a look at the non-competing works clause in a publishing contract.

Kathryn Goldman is a lawyer who protects writers, artists, filmmakers, and businesses from having their work and art ripped off. Since she’s a lawyer, she has to mention that she’s not *your* lawyer (so this article isn’t technically legal advice, just educational), but you’re still invited to download her Digital Artists Rip-Off Protection Report. You can also follow her on Twitter @KathrynGoldman