Model Trade Book Contract

8.

Termination of Agreement.

The Agreement may be terminated:

    1. by Publisher for Author's failure to timely deliver the work as provided in Section 7(b) or if Publisher rejects the manuscript as provided in Section 7(d).

    1. by Author for Publisher's breach of its material obligations under this Agreement, including but not limited to failure to Publish on a timely basis or failure to pay royalties as set forth herein. Author shall give Publisher written notice of the breach, and if such breach is not cured within 30 days of the written notice, this Agreement shall be deemed terminated. Author's right to receive royalties owed under this Agreement shall survive such termination, and Author shall be entitled to retain all portions of the Advance received, and any unpaid portions of the Advance shall be immediately due and payable to Author upon termination.

    1. [Morality clause – see commentary.]

Commentary

Most contracts contain language that give the parties a right to get out of the agreement under certain conditions such as non-delivery, lateness, or unacceptability of the manuscript; publisher's breach of its obligations including failure to timely pay royalties and failure to publish; and conduct of the author that can be deemed detrimental to the book's or its publisher's reputation (known as morals or morality clauses).

 

Section 8(a) of the Model Contract illustrates language that entitles the publisher to terminate the agreement if it complies with the provisions of Section 7 and ultimately rejects the work, or if the author does not deliver the work on time pursuant to Section 7(d) of the Model Contract.

 

Section 8(b) allows the author to terminate the contract due to the publisher's material breach of its terms, such as by failing to publish within the prescribed time or not rendering royalty statements and payments in accordance with the contractual deadlines, if, in addition to the breach, the publisher fails to remedy the breach within 30 days of receiving written notice from the author. The right to terminate for late payment and failure to cure can play a critical role in you getting your rights back from a publisher on the verge of bankruptcy. It is the only true protection an author has in the event of insolvency and it is important to terminate before a bankruptcy is declared. The Authors Guild too often sees well-intentioned, small publishers unable to pay royalties and go out of business or sell their assets (which always include author agreements), causing their authors' rights to get held up in bankruptcy or sold to someone who sits on the rights. Once a bankruptcy is declared, it is too late to terminate.

 

Morality Clauses

Recently, publishers, including most of the Big 5, have been inserting "morality" or "morals clauses" into their contracts, which can be used as justification for termination. They argue they need these to protect themselves against a drastic reduction in the market for a book if immoral behavior of the author comes to light and subjects the author to public condemnation. Publishers say that they especially need the ability to terminate a contract or renegotiate it if a major advance was provided to the author based on a very high number of anticipated sales and the market has completely changed as a result of the exposed conduct. Still, some publishers insist on including the clause in all of their standard contracts, regardless of the advance or anticipated sales.

 

The Authors Guild does not believe morality clauses are appropriate in publishing agreements because they relate to conduct that falls outside of the agreement. (See our statement on morality clauses.) If your publisher nevertheless insists on including such a clause, do your best to ensure it is as narrow as possible. In particular, it should cover only:

 

  • Proven or admitted conduct, and not merely allegations.
  • Conduct that is illegal or objectively morally condemnable behavior.
  • Conduct that has become public.
  • Conduct that is likely to adversely affect the sale of the book.
  • Conduct that the publisher did not know about when it signed the agreement.

 

And it should stipulate that:

 

  • The publisher may only terminate the contract; it should agree not to pursue any damages.
  • The rights revert to the author upon termination, and the author does not have to repay any part of the advance previously received.

 

Without these limitations, morals clauses could be applied too broadly and allow the publisher to unfairly terminate the agreement (e.g., if the publisher changes its mind about the market for the book, or on the basis of mere allegations). If an author has been untruthfully accused of conduct, it is hardly fair for the publisher to pile on and cancel the contract. The Authors Guild expects publishers to stand up for their authors and their rights to free expression.

 

Below is a sample clause that the Authors Guild has modified to be more acceptable:

Publisher may at any time prior to publication choose not to publish the Work if Author has been convicted or admitted to illegal or morally repugnant conduct (under commonly accepted, nationwide standards), unknown to Publisher and inconsistent with the Author's reputation at the time this Agreement is executed, where the conduct has become known to the public and resulted in sustained, widespread public condemnation of the Author and that will directly and materially diminish the sales of the Work. In the event Publisher desires to exercise this option in such circumstances, Publisher may terminate this Agreement upon written notice to Author describing the basis for the termination, including the conduct and how sales would be materially diminished; and Publisher shall give Author 30 days to respond and deny such conduct by sworn affidavit or provide evidence that the sales of the book will not be impacted. Upon termination under this section, all rights in the Work will revert to the Author, and Publisher will promptly provide written documentation thereof. No further advances with respect to the unpublished Work shall be payable, and the Author shall not be required to repay any sums paid to date for the unpublished Work.