Red Flag Publishing Contract Clauses: A Termination Clause That Isn’t

I get a lot of questions about publishing contracts, and many requests to review them. I’m not a lawyer, but I do have a fair knowledge of publishing contract boilerplate, as well as a good grasp of the issues that writers need to look out for, and I’m always willing to provide experience-based feedback. (Plus, I am fascinated by contract language. What can I say, I’m a geek at heart.)

Since I see so many contracts, and so many are from small presses (which may or may not have the expertise to create a rational contract or choose a good contract template), I encounter some really bad, bizarre, and nonstandard stuff. So I thought I’d start an occasional series, to let you all in on the weirdness.

I won’t be posting the publishers’ names here, but you can write to me (my contact info is in the top right of the sidebar), and I’ll let you know who it is.

So, without further ado…here’s an excerpt from a contract that came across my desk this summer. (A relevant bit of info: the term of this contract is 3 years.)

Upon termination of the Contract, the Publisher retains the right to sell or dispose of any media format, of inventory. The Author will receive applicable or adjusted royalties on these copies, and the rights not used by the Publisher, will revert to Author for the manuscript, but not for the cover art. The Publisher will have an inventory amounting to 1000 copies per any media format at termination of Contract. Rights for the book will stay with the Publisher, until all copies are exhausted. This is any media format…e-book, print, pod, audio, etc., which the book is published. All media formats are considered published and in inventory, when they go up for sale.

This puts a unique spin on a publisher’s traditional right to dispose of unsold inventory when a book is taken out of print or a contract term ends, either by selling the inventory through traditional sales channels (and paying a royalty on those sales) or remaindering (in which case, usually, no royalty is due). The publisher can’t produce more inventory, it can only sell off what it has on hand; and “inventory” is understood to mean “physical inventory”–i.e., not ebooks, which should be removed from sales channels immediately (though it usually takes a little while for vendors to comply). Moreover, the fact that the publisher is allowed to try and recoup some of its expense for unsold product does not delay rights reversion, or indeed, affect reversion at all.

With this publisher, however, termination triggers a refill at the inventory pump. Whatever the publisher may have on hand (and ebooks are never really “on hand”), termination causes inventory to magically shoot up to 1,000. Worse, it delays the reversion of rights, making reversion contingent on all inventory being sold, down to the last book. Suppose your book was available from this publisher as an ebook and a POD print edition; just imagine how long it might take a small publisher to sell 1,000 copies of each format.

In effect, termination isn’t really termination–it’s an indefinite extension of your original grant of rights, rendering the official 3-year contract term moot. And–talk about a Catch-22–because the contract has officially terminated, you’re no longer covered by its guarantees and protections. Is this even legally enforceable? Perhaps a lawyer or two will weigh in.

Plus, you’d have to trust the publisher’s accounting. This particular contract does include an audit clause–but with the contract terminated, the publisher could argue that your right to audit had terminated too.

This isn’t the only bad clause in this publisher’s contract–bad clauses don’t usually appear in isolation. But it is by far the worst.


  1. That one's written awkwardly enough that even this author with no legal background would have refused to sign! I know not all sneaky clauses are this obvious, though.

  2. I like this. But why can't you, or someone, create a "CTRL F WORD" search? Most lawyers know to look for certain "language" without reading the entire contract. All a perspective client needs to do is find ONE hidden clause to toss the whole contract out..Right?

    So CTRL F + "RIGHT" and read.

  3. Anonymous, thanks for your comment. You're right, it's a small press, with very limited distribution and marketing.

  4. You asked for a publishing lawyer…you got a publishing lawyer to stop lurking and comment.

    I would strongly advise my author clients not to sign a contract with this language. As you point out, it is definitely a trap for the unwary because a book with poor sales (or even good sales that taper off) might never hit this 1,000-copy-post-termination level.

    The language is probably legal and enforceable, however. Many courts would see it as adding definite terms to the normally ambiguous "inventory on hand" and since most courts don't have much experience with publishing as distinct from other industries the general preference for definite terms would cut in favor of enforceability.

    Without seeing the rest of the contract, I can't speak to the presence or absence of warranties and protections during this "extended term" – many contracts (read: all of mine, whether publisher side or author side) provide that relevant terms and obligations survive expiration and termination of the agreement. If that's not elsewhere in this agreement, it's either an oversight or poor drafting. (Or, more likely, both.)

    I'm guessing this is a relatively small press (the big boys would have asked for 5,000-10,000 copies, not 1,000, though the big boys also would have known they wouldn't get it) and that this may not be as intentionally onerous as it sounds. That's no reason to excuse it, and even less reason to sign, however. If I saw a provision like this, my first two thoughts would be (1) they're trying to take advantage, and (2) if they're not trying to take advantage, they don't think the contract terms through far enough to avoid potentially serious issues. No matter which is the case, this clause would earn the entire contract a very, VERY thorough fine-tooth comb review if it came across my desk.

  5. Danielle, yes, a competent agent would certainly flag a clause like this–but if you do have a competent agent, you probably will never encounter such clauses. This kind of bizarrity usually only turns up in the contracts of the
    dubiously professional publishers a good agent shouldn't be submitting to.

  6. This is a great series. And, as I have no experience with publishing contracts, being shown what is nonstandard is very helpful! Also, if you have an agent, won't they spot these kinds of things for you? Or should you still have a literary lawyer look them over?

  7. I can see a publisher wanting rights to sell a given minimum amount (to recoup expenses such as typesetting, editing, etc if incurred), but this clause makes no sense. A minimum "inventory" at the end of the contract? What idiot thought up that one?

  8. I hope publishers read you as well, Victoria. There is a price for letting your lawyers trample over honest business sense – word gets around. The web is instant and universal, and no sensible author will sign up with you once this sort of thing is broadcast.

    There are honest and thinking publishers out there – I'll put a word in for Siren – and we should keep our business with them.

  9. It seems like they want to get you to buy the last 1000 copies of your own book from them just so you can get out of your contract, OR try to get your new publisher to do it for you.

  10. I understand where you are coming from. Ditto with TrebleheartBooks. It burns me that I never received a penny from them and yet my book is still being sold on Amazon

  11. Thanks, Victoria!

    Linda, when you do get an attorney, make sure you hire a literary attorney. As has been said on this blog and elsewhere, lawyers who deal with standard business contracts do not always have the publishing experience to spot clauses that may be bad for you and your rights, or for your book.

  12. Pretty sneaky. Goes to show you, one really needs to have an attorney look over any publishing contract one gets. I should have done that with Publish America AND with OPageFree. To date I have never received a single penny from Pagefree for my book, and it looks like they are now out of business!

  13. Yeah, that's a pretty unconscionable clause! "You can go, but you have to leave us with 1,000 copies, in any format we want, which we can continue to sell for as long as it takes, and we won't give you your rights back until they're gone. So, ah, good luck to ya!"

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