Home » Contracts, Kristine Kathryn Rusch, Passive Guy » How to Read a Book Contract – For Avoidance of Doubt

How to Read a Book Contract – For Avoidance of Doubt

31 May 2011

Contract clauses beginning with the phrase, “For the avoidance of doubt” are a common feature of business contracts.

For example, Company A is negotiating a three-year contract with Company B to purchase twenty different products from Company B. The contract includes ten pages outlining minimum purchases, pricing and quantity discounts, price adjustments for changes in raw materials costs, methods of calculating credits for returns, etc., with variations for each product.

Company A carefully analyzes all the different combinations of prices, refunds, etc., but wants to make certain it doesn’t receive a big bill as a result of unanticipated future permutations.

Company A might insert a clause in the contract that says, “For the avoidance of doubt, Company A will never be required to pay Company B more than $2 million during any calendar month.” (PG has somewhat simplified the likely language.)

With this clause in place, as Company A’s CFO manages cash flow, she knows she will never have to write a monthly check for more than $2 million to Company B.

Last week, Passive Guy blogged about an important essay from Kristine Kathryn Rusch discussing borderline fraudulent contract practices of publishers in recent contracts with authors.

The practices Kris mentioned included embedding important contract provisions in difficult-to-decipher e-rights clauses or obscure clauses in the Warranties section of publishing contracts, traditionally the home of routine boilerplate. An example of one buried warranties restriction Kris identified would “warrant that the writer will not write anything until this particular book under this particular contract is published.”

So, how is an author to respond when the publisher or agent-turned-publisher offers up a shady contract?

An intelligent (and the recommended) response would be to hire a competent attorney to review the contract.

Now, to be completely truthful, is it possible for a clause to be hidden from a competent attorney? The answer is “Yes.” Not likely, but possible. Passive Guy would love to assure you that all attorneys sprinkle themselves with fairy dust each morning so they never make mistakes, but this is not the case. (Besides, fairy dust makes PG sneeze.)

In the absence of fairy dust, an approach to buried gotchas PG might consider if he were still practicing law would be to expand the familiar For Avoidance of Doubt clause into a Smoke ‘Em Out Clause.

The purpose of the Smoke ‘Em Out Clause is to:

  1. Reveal where the gotchas are buried, and/or
  2. Provide a reasonably good method for avoiding the effects of buried gotchas

Here’s an example, based in part on Kris’ essay, of what a Smoke ‘Em Out Clause might look like (with legalistic style amped up a little). The term, “Work” is a defined term identifying the book that is the subject of the publishing contract. Reservation of rights would be handled in a separate clause.

For the avoidance of doubt, no provision of this contract shall:

  1. Give Publisher any rights to any present or future work of Author other than new books with the same characters as the Work.
  2. Prevent Author from publishing any of Author’s present or future books with another publisher or self-publishing such books except for books with the same characters as described above.
  3. Give Publisher any rights to electronic versions of the Work except for an ebook version of the Work with features substantially identical to those being sold at retail by Publisher on the date of this contract.
  4. Give Publisher any rights to versions of the Work in electronic or other formats that are not being sold commercially at retail by one or more major book publishers on the date of this contract.
  5. Give Publisher any rights to past, present or future creations of Author that are not books, including adaptations by Author or others of the Work into a form that is not a book or ebook.
  6. Give Publisher any rights to modify the content of the Work as initially accepted for publication by Publisher without Author’s express written consent in a document separate from this contract.

Passive Guy could go on, but the purpose of the sample clause is to demonstrate what a Smoke ‘Em Out Clause might look like, not provide a comprehensive cut-and-paste example of everything that might be listed in one.

This clause probably doesn’t replace any other clause in a standard publishing contract. It’s added to the contract. What the author is doing is making a list of things that he/she is worried about and negating the publisher’s right to do those things.

The fundamental purpose of this clause is to conflict with hidden clauses that say something different. If you’re sure you’ve found all the gotchas, you may choose a different negotiating tactic to deal with them. However, it still may be a useful approach to set forth some clear and reasonable items in a For Avoidance of Doubt paragraph and make the publisher justify something much more restrictive.

The style of this clause should be simple and straightforward, both for clarity for the author and for clarity for a judge. I’ll talk more about the judge later.

What are some possible responses of a publisher to a clause like this?

Response 1: This is our standard contract and we’re not making any changes.

What you’ve learned from this response is that the publisher’s contract has at least one provision and probably more than one provision that conflicts with the Smoke ‘Em Out Clause. If the Smoke ‘Em Out Clause doesn’t make any changes in the standard contract, there is no cost to the publisher in accepting it.

By virtue of the blanket refusal to discuss changes in the contract, you’ve also learned that, as the author, you are not a respected partner for this publisher. Instead, you are an indentured servant. The only reason you’re not a slave is that slavery is prohibited by the 13th Amendment to the United States Constitution (and similar laws in another countries), so the publisher will have to be satisfied with indentured servitude.

A variation on this response is, We have dozens of contracts and the administrative issues involved in modifying our standard form for an author would be overwhelming.

Bogus. Hundreds of large companies have thousands of contracts that are completely different from one another and they manage to deal with them.

Response 2: We can agree to paragraphs 1 and 3, but can’t accept the rest.

Now you know where to look for gotchas. The ones you talked about in your paragraphs 1 and 3 are probably not in this contract, but you need to hunt through the contract for the rest.

Response 3: We can’t agree to your proposed addition because it conflicts with other parts of the contract.

Bingo! Your immediate response is, “Which parts of the contract do my proposed language conflict with?” You will then receive a nice little map to a flock of gotchas. If the publisher refuses to tell you where the conflicts are, see Indentured Servitude above.

Response 4: We can agree to your proposed addition with some minor changes to your language.

Watch the changes like a hawk. Analyze the contract until you are certain you know which contract provisions the changes leave in place. Once you think you know what contract provisions are involved and if they don’t bother you, generate another Smoke ‘Em Out Clause that just skirts around those provisions. If the publisher says OK to the new clause, you’ve probably found all the gotchas. If the publisher wants more changes to your language, analyze those carefully or, alternately, ask why the changes are necessary and which contract provisions are conflicting.

Response 5: Your addition is acceptable to us.

This may mean you have a clean contract. This may also mean your Smoke ‘Em Out Clause missed the hidden landmines. This may also mean the publisher will be relying on its standard contract language to override the Smoke ‘Em Out Clause. This reliance is, I believe, risky for the publisher.

As mentioned earlier, the Smoke ‘Em Out Clause is designed to conflict with objectionable provisions hidden in the contract. If your language does conflict and both remain in the contract, you’re looking at a fight somewhere down the road. The Smoke ‘Em Out Clause is not a guarantee of victory, but it should help you out.

When a judge is presented with a contract that includes unclear or conflicting language, the judge will first try to find an interpretation of the contract that honors all the language. One of the reasons for simple and clear statements in the For Avoidance of Doubt (FAOD) clause is to make it difficult for a judge to construe the contract in a way contrary to this clause.

The language of the FAOD clause (“For the avoidance of doubt, no provision of this contract shall”) is designed to tell the judge that if something else is floating around the contract that conflicts with it, the FAOD provision will govern.

Another reason for simple and clear statements is that, comparing those with the complex and roundabout wording necessary to conceal a good gotcha, the judge has more opportunities to construe the gotcha language in a way that preserves the fundamental intent of the FAOD language.

A general rule of copyright law is that an author is presumed to retain all rights not expressly granted to a publisher. Some of the FAOD provisions sound like retained rights.

Finally, a judge will understand the publisher was trying to distract or deceive with a hidden gotcha and will be aware of the great disparity in resources between a big publisher and an individual author. If the FAOD language gives the judge something to hang his hat on, he’ll come down on the side of simple, clear and fairer to the author 9 times out of 10.

An FAOD clause is not a replacement for carefully reading and understanding a publishing or agency contract. An FAOD clause is not a replacement for a competent attorney.

If Passive Guy were still practicing law and decided to use a Smoke ‘Em Out clause in a contract, he would probably adjust it for the particular contract involved. One of the principles of good negotiation is to fight about what’s worth fighting over and let the rest go. A laundry list of FAOD provisions may include some that pick a fight about an issue that’s not really important to you.

The Obligatory Disclaimer: As you may already know, a blog and a lawyer are two different things. A lawyer gives legal advice to his or her clients. A blog does not have clients and does not give legal advice. Even a blog written by a lawyer does not give legal advice. This particular blog includes informed and uninformed opinions, good and bad ideas, but it does not include legal advice. For all other disclaimers that apply to this blog and everything in it, click here.

 

Contracts, Kristine Kathryn Rusch, Passive Guy

7 Comments to “How to Read a Book Contract – For Avoidance of Doubt”

  1. Thank you. I bookmarked this page for future reference. :-)

  2. Another way to avoid doubt is never to sell your books through publishers whose contracts you don’t trust. Selling your own is one way to do this.

    And, even if you trust a publisher utterly, remember that ownership of publishing houses frequently passes from hand to hand—and you can’t know if you’ll trust the next owners.

  3. Thanks for this.

    Actually, “For the avoidance of doubt” actually brought a smile to my lips. Why? I worked for a corporate employment law attorney for many years. (I’d still be there if the company hadn’t been sold. But I digress…)

    This was one of the phrases he used all the time in any employee contracts that came his way: terminations, executive hirings, bonuses, etc. One of the ways he used it was to let the other party of the contract know that the terms hashed out in the contract were in accordance with certain employment laws, both federal and state. Depending on the state, certain laws were omitted, but the federal stuff was always the same from contract to contract.

    I think you’re right that contracts are all going to be different; I don’t remember any of those employment contracts being the same. Maybe similar, but $ amounts and other variables always needed to be plugged in.

    Why should publishing contracts = boilerplate?

    • Nancy – For Avoidance of Doubt is a very nice tool to use when you’re trying to make sure a very complex set of contract provisions don’t inadvertently do something weird. The other place where it can be helpful is if the law you’re relying on changes and you don’t want the contract to change with it.

      One of the points of the Joe Konrath/Barry Eisler discussion is that publishers should compete with better contract provisions, not just with bigger advances.

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