March 10, 2014

Contract Basics: Termination & Reversion of Rights

Believe it or not, we've made it to the final post in this publishing contract sequence!  The Termination and Rights Reversion language basically covers what happens when things just aren't working out.  How can the publisher get out of the contract? How can you? In some circumstances, the contract ends automatically, and those circumstances will be defined in your contract.
  • The most common reason, stemming back from the days when books were only physical and took up storage space, for a contract to end is lack of sales. 
    • In such case, your contract should say something like "If ____ years from the publication date, sales drop below ____ per payment period, for ___ consecutive periods…" the contract is automatically terminated. 
      • This is also known as an "Out of Print" clause, though it's been adjusted for the new understanding of "in print," meaning basically "available for purchase in any format."
      • Without such specific language, it may be difficult to get your rights back from a stubborn publisher, as with digital "printing," a book cannot really be "out of print."
  • Another standard reason is simply nonpayment on the part of your publisher. Generally, if the publisher doesn't pay you when it's supposed to, and doesn't rectify the situation within X days (30-90) of you pointing that out in writing, all rights automatically revert.
    • You should ensure that this says something along the lines of "without prejudice for author's claim to any monies" that you should have been paid — meaning you still have a right to sue the publisher for money you're owed if necessary.
  • Other situations may be specified outright, but basically, if the publisher fails to do what they're supposed to do, such as publishing your work in the time allotted in the publication clauses, the contract will terminate, either automatically or with a written request from you.
  • It is in your benefit that the contract also state that you could terminate the contract at any time with written notice.
    • There will almost certainly be language stating that if you terminate the contract for any reason other than the specified ones (poor sales, nonpayment, etc.), your compensation may be affected.
      • Though the rights revert immediately, there will be language specifying what the publisher is allowed to do with any physical merchandise (books, posters, etc.).  If you are the one asking to terminate the contract, the publisher may require you to sign an alternative compensation agreement, basically saying you're entitled to a lower royalty rate for that leftover merchandise.
        • E-books should immediately be taken off of sale as of the termination date of the contract.
    • Many writers miss that there aren't similar limitations on when or why the publisher can terminate the contract, which means they can do so at any time.  However, the publisher can't terminate the contract in order to avoid paying you money you're owed.
  • Though this may be included under a separate clause, the contract may also terminate due to the publisher's bankruptcy, in which case rights automatically revert. 
    • Unfortunately, though the contract may say that rights automatically revert, this scenario will almost certainly require a long legal process with bankruptcy courts. Having this language in your contract is important, however, as whichever entities need to be paid off by the publisher's assets will not (as far as I'm aware) be able to acquire rights to your work as a result of the bankruptcy.

The last little bit of language that I haven't covered is the Arbitration Clause. Basically, this states that instead of taking your publisher to court, you will agree to a neutral arbitrator. This clause should also state that, if either party fails to do their job (e.g. publisher doesn't pay you or you don't deliver the manuscript), the other party has the right to forego arbitration and sue. Of course, we all hope it doesn't come to this, but it's important to know that you do have the right to pursue legal intervention if necessary – and that the publisher can do the same if you don't hold up your end of the deal.


That's it, folks! The posts will continue to be available for your use, and if you have any questions (or corrections), please feel free to leave them in the comments!


This post is a part of my Publishing Contracts sequence. Please click here to learn more about it and view the very important disclaimer.

4 comments :

  1. Great posts, simple and easy to understand. Thanks for all your hard work.

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    1. Thanks, Sherry :-) Now I have to figure out what to write about next!

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  2. I'll be waiting to see. Have a great weekend. ^_^

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    1. Well at the very least, there's a Flash! Friday entry for you ;-)

      You as well!

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