Check out my post on the Book Marketing Tools blog on How to Read and Negotiate Author Contracts! It was pretty fun combining my two areas of interest and expertise to write this article! Article reprinted below.
The opinions and information contained in this article do not constitute legal advice and should not be relied upon as such.
The modern author wears many hats: writer, editor, task-master, networker, marketer, business-person, and even, sometimes, lawyer. Whether you traditionally publish or go the self-publishing route, you will have contracts to sign. And chances are, if you’re starting out, you won’t have an agent or lawyer to negotiate for you. So short of curling up in the fetal position and ignoring the problem, how do you navigate through that complex legal jargon and sign a contract you feel good about?
I faced the same question as I started out. I have the benefit of being a lawyer by day, and so this comes much more easily to me. But I don’t do copyright or media law in my daily practice, and I certainly didn’t take those classes in law school. So as far as the ins and outs of the types of contracts authors face, I know just as much as the Average Joe. What I do know, however, is how to read and understand the contract, where to look for information, and then how to ask for changes.
Here is how you do it.
Step one. Get over your jitters or feelings of being overwhelmed. You are most likely contracting for a service. You are the customer. You have the right to understand and educate yourself about the transaction you are entering into. Even if you are staring at a publishing contract from the hottest Big 5 publisher and you’d sign away your first-born child if they asked you to…there is no harm in reading the contract, understanding it, and asking questions. They are not going to pull their offer because you asked questions.
Step two. Print the contract out. This is not negotiable. There is no substitute for looking at a physical document with a pen in your hand.
Step three. Read the contract. There are some key parts of the contract, and then most of the rest will be what we lawyers call boilerplate. Stuff that their lawyers threw in at the end, but that isn’t necessarily specific to your contract. Your job is to identify the key terms, understand them, and make sure they are correct.
Key terms to keep an eye out for (highlight these when you find them in the contract):
-Who are the parties to the contract? It may seem simple, but are they correct? If you have set up a business entity, is it the entity signing the contract, or you personally?
-What is the term of the contract? In other words, how long does it last? Does it say? If not, it probably should.
-Pricing terms: If you are buying a service, how much are you paying? This should be specific. What does your money get you?
-Payment terms: When are you required to pay? How does the provider bill you? It they are required to pay you (like royalties), when and how often do you get paid?
-Your and their duties under the contract: What are you required to do? What is the time frame for you to perform? Are their obligations clear? Do they reflect your understanding of the deal?
-Default terms: A default under the contract is where one of the parties doesn’t perform their obligations. The default terms will usually say what the other party’s remedy is. If you fail to live up to your end of the bargain, what does the other side get to do? And vice versa.
-Termination: Can you terminate the contract at any time? Can the other party terminate? If so, when and how? Is that something you can live with?
Side Note: If I only looked for two items of the boilerplate language, it would be to find whether there is an attorney’s fee provision and venue/arbitration provision. In the United States, generally each party pays their own attorneys fees. But some contracts say that that if you breach the contract and the other side has to sue, you have to pay your fees andtheirs. Ouch. The venue and/or arbitration clauses will tell you whether you are agreeing to submit any dispute to arbitration (and where), and what court will get to hear the dispute if you go to court. If the contract says you have to arbitrate in Florida and you live in Oregon, that is important to know.
Step four: Figure out what the heck it says. Maybe you don’t totally understand those key terms you have highlighted. Even I often have to read contract terms several times to truly understand what the legalese is saying. This is a great time to do some research. Google it. Often someone out there has struggled with the same question or term, and you can get a better sense of what the contract is saying based on the resources available.
There is one more important exercise at this stage. Think about your worst-case scenario. If you entered into this contract, and the other side totally failed to live up to their end of the bargain, what would it look like? Let’s say your cover designer creates a design that is so terrible it makes you want to cry. What would your remedy be under the contract? Can you withhold payment? Can you demand they fix it? Or did you agree to pay no matter what? Running through your worst-case scenario can help you see the gaps that need filling.
Now that you’ve highlighted the key terms, maybe the terms look great. If so, congratulations! Sign that contract and pat yourself on the back for understanding it and educating yourself about your rights and how the relationship will work.
Maybe the terms don’t look great. If that’s the case, move on to…
Step Five: Prepare for your negotiation. A key element of this stage is understanding the respective bargaining power between you and the other party. The bigger they are, and the more you need them, the less power you have. Amazon? Not much bargaining power, if any. Indie publisher? Some. Freelance editor? More. Based on this evaluation, I would pick your most important changes to present. The more bargaining power you have, the more changes you can ask for. But only ask for changes that matter. What do you really care about?
I would also do some more googling about what is common in the industry. Lots of authors have shared their contracts online. If you are asking the other party to change something that every publisher/editor/publicist since the dawn of time has had in their contracts, it is unlikely you’ll get it. If they are out of line with the industry, that is a strong point in your favor.
Step Six: Negotiate. Send the other party an email, and ask if they have time to have a quick phone call discuss some changes you would like to the contract. Ask them if they would like to see a summary list (or redlined version if you feel comfortable suggesting alternate language) of your suggested changes in advance of this call, so they are prepared to have a meaningful discussion. Be prepared to explain why each change matters to you and present any information you’ve gathered about industry standards.
Please don’t worry that the other party will refuse to contract with you at all just because you suggested some changes. If someone does that, then he or she is not a person you want to be in business with.
But maybe the other side won’t agree to make the change. It is at that point that you decide how important that change is to you. Either it is so important that you don’t want to be in business with them, or you agree to sign the contract as it was originally proposed. Either way, you have done your due diligence, become fully informed, and impressed them with your dedication and conscientiousness.
I hope this has helped pull back the curtain and reveal some of the mysteries of contract interpretation and negotiation. With a few tools in your toolkit, it is something that every author can tackle.