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When do you need a contract?

Welcome to the business of monetizing intellectual property.* No, you’re not in a different dimension or that nightmare of a class where you showed up for the test without studying (or clothes). I say again, welcome to writing and publishing.

What is a story? What is a nonfiction book, or a work of art? The writerly answer may be that it’s a form of communicating facts and emotions to an audience. The business answer is that it’s intellectual property, and intellectual property is something you can resell again and again to many audiences, in may formats. For art, the original may be an oil painting, but it can be resold as a poster, a fine art print, a t-shirt, a mousepad, a desktop background, or a book cover. For a story, it might have been written on paper (or not), but you can license or sell it as a paperback, as a hardcover, in English, in Polish, in ebook, in Indian translation, in audio, as the basis for a movie, a play, or tv show, or all of the above. As long as you hold the copyright, you can license the IP to anyone you want, or not, for any terms you can come to mutual agreement on how long, and for how much.

As a one-author business, you’re also going to find times when you want someone else to do work for you – a cover artist, cover designer, editor, proofreader, formatter, advertiser, or retailer. So, how do you make sure they pay you what you wanted? How do you make sure they turn the property back over if circumstances change? That, my friends, acquaintances, and strangers on the internet, is what a contract is for. A contract is nothing more and nothing less than a formal, legal way to clarify a business relationship, define terms, and lay out who will do what if the business relationship is no longer going swimmingly.

So, here’s a few good points to contemplate on contracts.

1.) A good contract protects both parties.
The best contracts make everything fair to both parties, and ensure both are happy. Contracts provide clear guidelines, and clear resolution to problems on both ends. They’ll save you lost time, frustration, and lost money trying to recoup due payment, and provide a clear bright line for when to cut your losses and stop hoping things will work out. A good contract also means that even if a particular project goes south, or the business relationship sours, you can see get out of it with the professional relationship still intact and often still friendly. You may even be able to do more business with a different project, when circumstances change!

This isn’t just for court; this is when you’ve submitted a rough draft to a copyeditor and found out they only did the first third of the book and the last chapter , or when you paid a cover artist $500 and they returned one proof of concept, then stopped answering emails. This is for when the small press gives you a horrid cover, no release press, and you have some real doubts about your royalty statements. This is for when you’ve agreed to turn in a sequel, and you find out your spouse has cancer, and nothing’s going to get done that’s not medically related. It’s for when you get the avian flu and aren’t going to make your slot with your editor, and aren’t sure you could make a pushback date, either, or the house washes away in a flood and you weren’t even thinking about when your cover artist finished her painting and wants paid.

2.) Don’t start work without a contract!
Without a contract, you don’t have a leg to stand when things get rough, any more than when sitting in the back seat of a car trying to prove “did not!” against a sibling’s charge of “did too!”

Mike Montiero summed up concisely, if rather saltily: “Starting work without a contract is like putting on a condom after your girlfriend has gotten a home pregnancy test.”**

3.) Don’t blindly accept terms. Read the contract carefully. All contracts will be written for maximum protection of the business; it’s the opening round of negotiation, not the final answer. Don’t want basket accounting? (You really, really don’t.) Don’t want to give all rights, worldwide, for the life of copyright? Negotiate.

In fact, at least one author out there who went hybrid specifically licensed his audio rights before shopping the Big Five, so they couldn’t take it in the contract.

On the indie publishing side, a lot of the heartbreak I see over sudden changes in Amazon algorithms or business practices as they go after people gaming the system could have easily been avoided if people had read, remembered, and abided by the terms of the contract. Really. “Everybody’s doing it” doesn’t mean it’s what you signed your agreement to.

4.) IP Transfer on full payment – Your artists and designers should have this clause in their clause. Even if they don’t, it’s a really smart business decision – don’t use their stuff until you’ve paid them for it. If you do any work for hire, like media tie-in or ghostwriting, you REALLY NEED to have this clause in your contract, so the client can’t start making money on it before you’ve been paid.

5.) Kill Fee – a kill fee is the fee to terminate a project when it’s not working out for all parties. This ensures the person doing the work, and turning down other paying projects, gets paid for the work they did. If you and the cover designer have gone through 8 designs and none of them work, this ensures the designer gets paid for their time, and you two can part ways without really bad blood. If you’ve licensed a book to a press (small or large), and they absolutely drop the ball on it, a kill fee allows you to terminate the license, and republish it elsewhere. (This is referred to as “paying back the advance” in publishing, sometimes, but check your contract carefully. The kill fee may be anything from any portion of your advance that hadn’t earned out to whatever else they want it to be, as specified in your contract. “Industry standard” isn’t, and the publishing term may be completely misleading.

6.) Liability – This is legal talk for “Who’s in trouble?” If you publish a book labeled as nonfiction that claims our current president ordered the assassination of American citizens and is having wild affairs with some celebrities, who’s going to get sued for libel? (Or, if you promoted it on TV and podcasts, slander as well?) If you criticize the king of Thailand and the book is published there, who’s going to have the Thai legal system out for their blood? Do you know the difference between libel and slander laws in the US vs. varied European countries, and are you sure you’re in the clear if you’re published there?

KDP Contract terms are really clear – Amazon takes no legal liability for what they sell. Whether it’s a pissed off French mime, a really hopeful lawyer playing the lawsuit lottery out of California, the government of Thailand, or a handful of savages eager to use a cartoon of Mohammad as an excuse to burn, loot, rape, and kill – they’re going to step aside and let the publisher bear the blame. If you’re indie, that’s you. If you’re not indie, then the critical question is: who was assigned the liability in the contract? If you blindly signed, you may be surprised when somebody envisions deep pockets of a publisher, and you find out the six-figure lawsuit is aimed at you alone, in the end, because you agreed to shouldering all liability.

If you’re writing fiction, make sure you put the disclaimer that it’s fiction in the front matter!

7.) Lawyers talk to lawyers. People hire lawyers to protect themselves – so if the party you’re negotiating with wants to bring their lawyer, wrap it up and end the meeting. Bring in your lawyer.

8.) Be specific and confident about money. If you don’t know what the cost will be, tell the other party you’ll research and get back to them. But be confident when you ask for what you feel your time is worth and you know the market can bear. Similarly, make sure people you’re working with have their rates, amounts, and when it’s due (usually tied to when work is delivered, which often also has a due date stated in the contract). When your payment is due, audit it. Make sure the numbers all line up, or ask for clarification. If it doesn’t come, send a friendly reminder first, referencing the contract. (That’s what it’s there for!)

9.) Be Ready To Walk Away. If you’re not willing to walk away, then what leverage do you have? As much as people like to laugh about “Dear Publishers; I have reviewed your offer of publication, and have decided that you do not meet my needs at this time” – it’s true. If you cannot get a contract that provides a business relationship you’re happy with, don’t do the business. If you get an offer from a publishing house that comes with such a lowball offer on the advance you know they have no skin in the game, and it locks up not only that IP for the life of copyright and grabs all rights, but includes first right of refusal with no time limitation (so you could be blocked from publishing under that name ever again if they never get back to you on the next manuscript)… and most especially if they’re unwilling to negotiate on any of the above… It’s time to walk away. You  may get a better offer (just about any offer would be better than that, unless it’s one of the many faces of PublishAmerica.) You may have to take the book indie. But getting an offer is not the same as agreeing; you are under no obligation to take any contract.

Two last notes:
10.) Contracts should be clear. They’re usually written in legalese, not layman’s english, when written by lawyers. If you’re not sure what it’s asking you for, granting, or withholding, your best bet is to write down what you think it’s saying, then take it to a lawyer and have them write down what it actually says. Sometimes, it’ll be the direct opposite of what you thought, because you missed how Page 35 paragraph 2 clause (d) acts on what was laid out on  Page 2.

11.) If you’re writing down a quick contract with your artist or editor, neither of you want sixty pages of mock-legalese. Aim for this: Who is doing What, When, and for How Much. If something goes wrong on the who, the when, the what, or the how much, then how much goes to whom, who owns the work, and what can they do with it?

By the way, obligatory disclaimer. I am not a lawyer, this is not legal advice. Consult an Intellectual property attorney for legal advice. This is advice to help you understand what you need and what ground to cover when consulting the attorney.

*Thought you’ve seen this before? You may have! It was first published 12-27-2015. You can check out the comments there, too!

**His entire talk is here. Warning, contains adult language. Which, given a title of “F*ck you, Pay me!”, you know what you’re getting into…

4 Comments
  1. I’ve gotten burned twice. Both times, it was an electronic handshake agreement, no contract. One I reported to Predators and Editors. The other DID give me what I’d paid for, but the quality was far below standard to the point that it endangered book sales. (I suspect the artist had Life Events going on, because the work was sent right at the end of the last possible deadline, and lower quality than they usually did.) A written agreement would have protected me in the latter case, not so sure about the first one (person took my money, said they sent the edits, then disappeared.)

    July 14, 2019
  2. naleta #

    I would say you need a contract whenever you get into a business relationship. Technically, marriage is a contract. 😉

    July 14, 2019
  3. Draven #

    as an experienced freelancer burned a couple times, before even reading the article i can say my answer is ‘yes’

    July 15, 2019
  4. Draven #

    on point 4: also specify WHAT IP is transferred. if you spend a thousand bucks having a cover artist model out the exact ship you describe in the book, and you want the model and the scene for that cover, you’re going to have to cover that in the contract.

    Other considerations along that line:

    if the cover artist builds a custom model for you and you dont want that asset reused, you’re going to need to specify that. otherwise expect to see that model used to fill in the background in the future, even in as an easter egg ( e.g. the Serenity visible in the skies over Caprica)

    I could keep going on this particular topic but i will let it go for now

    and yeah, that level of custom work from me is going to *start at* a thousand.

    July 15, 2019

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