Let's suppose you've published a book by a new author. You didn't produce a contract document at the time, or perhaps you did produce a contract document, but it was never signed. You agreed the basics – advance, royalty rates and so on – in an exchange of emails. And perhaps you've paid the advance to the author, perhaps you've begun paying royalties.
You might think there's no contract – but I'll bet there is. It's an unwritten author contract: perhaps the worst kind.
The worst kind? Yes, that's an exaggeration. But in some ways, an unwritten author contract is worse than a contract that is manifestly unfair to you. At least with an unfair contract you've got a fair chance of knowing where you stand. With an unwritten contract, everything's up in the air.
Everything? Another exaggeration. Not quite everything. You've probably agreed advances and royalty rates, and you have a fair chance of knowing who the contracting parties are. But there will be far more unknowns than knowns. Some likely “known or knowable unknowns” are:
- If you need an exclusive licence or assignment of the author's rights, will the contract achieve that, given that the Copyright, Designs and Patents Act 1988 requires that such things be in writing and signed by the assignor/licensor?
- If the author fails to deliver on schedule, what are the penalties? At what point are you allowed to terminate? And what happens to the advance?
- If the author delivers a work that doesn't meet your expectations, will you have a right to terminate?
- Do you have an obligation to publish? If so, are there any minimum requirements (e.g. print-run numbers or jurisdictional requirements) relating to that obligation?
- If the work contains something naughty – perhaps it infringes someone's copyright, or defames them, or breaches their right to a private life – who is responsible?
The unwritten publishing contract is unlikely to answer these or many other important questions. Although there are accepted ways of implying terms into an unwritten contract (standard industry practice, previous courses of dealing and so on) it is impossible to predict for certain what terms a judge would imply if the contract was (re-)constructed by a court. For this reason, an unwritten contract is a recipe for dispute.
If you're already in the hypothetical predicament outlined at the start of this post, you should seek to rectify the situation as soon as possible. Yes, the process of agreeing a written contract may give rise to disagreements, but such disagreements are much more easily resolved in a spirit of co-operation, than after the emergence of a real dispute.
In addition, unwritten author contracts will be a great big red flag in a legal due diligence report. Even if you never get into a dispute or disagreement with your authors, the value of a publishing business, indeed the very possibility of a publishing business being marketable, may depend upon having good written author contracts.