Examining the Elephant: Publishing Contracts, Part 1

Autumn has arrived, and it’s time to turn the monthly “legalese” column from thoughts on pitching to talk of publishing deals.

My legal practice focuses on publishing contracts, so it makes some sense to focus on the “terms and conditions” part of the publishing process here. In the months to come, we’ll talk about everything from negotiations to contract pitfalls (and if you have questions, please ask them – I’m glad to help!)

Today, we’re starting with a macro view of the contract: what is it, and why do you need one?

The many new publishing options have changed the “face” of contracts a little. Ask a self-published author about the “contract” and some will say “I haven’t got one, I use Amazon” (or CreateSpace, or Smashwords, or something else entirely) – but the reality is that every published novel has a contract. Sometimes that contract comes in a form that’s titled “Terms of Use” but that’s a contract, nonetheless.

The wide variety of contracts and terms puts me in mind of the old joke about three blind men examining an elephant. The one who felt the tail said “the elephant looks like a rope,” while the ones who examined the trunk and legs compared the beast to a snake and a tree (respectively). Authors with different kinds of contracts may see a different side of the publishing deal, but one thing unifies them all: every publishing deal involves a contract of some kind.

So, What is a Contract, Anyway?

If I offer to publish the books of everyone who reads this blog for a year, is that a contract? If I promise to publish your book because you read this single entry, is that a contract? If I promise to publish “the first good manuscript I read” – is that a contract?

Would it matter if we pinkie-swear? If I offered you money? If I published in electronic formats only?

The answer requires looking at the law.

Many people think of contracts as “agreements” or “promises” to do or not to do something. (Note that the law considers corporations and other forms of businesses to be “persons” who can enter into binding contracts as long as right biological person signs the contract on the company’s behalf.)

By law, a contract is “an agreement which creates legally enforceable obligations.” In plain English, a contract is an agreement you can force the other person to comply with, by means of a lawsuit if necessary.

People make all kinds of promises and agreements which are not contracts because the law refuses to recognize the promises as enforceable. An unenforceable agreement isn’t illegal but it creates no remedies – meaning the injured party has no recourse if the other party won’t perform.

The key, then, is knowing whether your contract is enforceable or merely an “illlusory” promise where the other party won’t have to follow through if he changes his mind.

Generally speaking, a valid, enforceable contract requires five things: an offer, an acceptance, consideration (which has more to do with money than with kindness), proper parties, and appropriate subject matter. 

That’s a lot to take in at once, but let’s break it down a little:

THE OFFER usually needs to be made in writing – either by terms of service or in a written contract created for the author. It needs to describe the terms of the deal in sufficient detail for the parties (and a court) to understand what’s actually being offered and what the terms of the deal will include. Beware: if something isn’t in the writing, it isn’t part of the offer or the deal.

THE ACCEPTANCE occurs when the author signs the contract or clicks “I accept” or “I agree” on a website’s terms of service

CONSIDERATION means “something of value given in return for the parties entering into the contract.” In the case of a publishing deal, this usually means (a) for the publisher, acquiring the rights to publish a work, and (b) for the author, publication and the promise of royalties on sales of the work.

PROPER PARTIES means people (or companies) with the legal authority to enter into the contract. Minors can’t form valid contracts (a parent or guardian has to sign on a minor’s behalf) and authors who enter a publishing deal have to own the rights to the work in question.

APPROPRIATE SUBJECT MATTER basically means the contract can’t be an arrangement to perform an illegal act (like a murder) or otherwise contain illegal terms (like selling the author into. Generally speaking, a contract to publish a book is considered “appropriate subject matter.” Also, be careful: a contract with bad terms (even oppressively bad ones) doesn’t become “inappropriate subject matter” – the general rule is that you can make as good a deal, or as bad a deal, as you are able. Subject matter questions are generally limited to whether the contract involves a promise to break the law. If not, it’s usually acceptable.
You’ll notice the things I didn’t mention. A contract doesn’t have to involve the exchange of money. It doesn’t have to be “fair.” it doesn’t have to promise certain things or guarantee the author money, success, or even publication (Surprise! Read the fine print!)

Makes your head spin, doesn’t it?

Before this series is through we’ll discuss all the elements of a contract, how to make an agreement legal, and how to protect your rights through the contract process.

For the moment, though, we’ll leave it here.

Did you know the elements of a valid contract? Do any of them surprise you?

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Susan Spann is a transactional attorney and former law school professor whose practice focuses on business and publishing law. Her debut Shinobi mystery, Claws of the Cat (Minotaur Books) released on July 16, 2013. You can find Susan online at http://www.susanspann.com, or on Twitter @SusanSpann, where she created the #PubLaw hashtag to provide business and legal information for authors.