TERMINATION OF A PUBLISHING AGREEMENT BY THE PUBLISHER
A publisher can always terminate a publishing agreement at any time after publication simply by declaring the work out of print and doing so will not, in most cases, subject the publisher to liability. However, publishers often find that they want or need to terminate an agreement either prior to or after publication. Some of the grounds for termination which a publisher may want to address in its publishing agreement are as follows:
- Author fails to deliver the manuscript by the due date. Some publishers will provide for a grace period (usually 30 days) after the stated due date, but if the author does not deliver the manuscript by the deadline for delivery or the end of the grace period, if any, then the publisher should have the right to terminate the agreement and demand repayment of any advance. The agreement should state that the rights granted under the agreement will not revert to the author until the advance has been repaid, thus preventing the author from taking the work to another publisher until the advance has been repaid in full.
- Author delivers the manuscript but it is not acceptable to the publisher. Most agreements provide for two options in this situation. If the publisher determines that the manuscript can be revised, it will give the author a list of required revisions and the author will have a specified period of time to revise and resubmit the manuscript. If the publisher determines that the manuscript cannot be revised, or if upon revision the manuscript is still unacceptable, the publisher may terminate the agreement. In the event of termination, repayment options vary from requiring immediate repayment of part or all of the advance in full to requiring repayment of the entire advance or (if partial repayment was required upon termination) any remaining unpaid balance when the author sells the work to another publisher. In any case, the rights granted under the agreement will not revert to the author until the advance has been repaid.
- Other acts by Author. Publishers have become increasingly concerned about misrepresentations or other acts of the author, and as a result many agreements expressly give the publisher the right to terminate, before or after publication, if the publisher determines that any of the representations and warranties made by the author are untrue or if the author commits a crime or engages in any conduct or activity that is likely to damage the author’s reputation or harm sales of the work. In order for these provisions to operate as intended, the representations and warranties section of the agreement must address areas that are likely to be of concern to the publisher, including representations by the author that all statements asserted as fact in the work are accurate, true and correct, or are based upon reasonable research and have been reviewed for accuracy, that the author has disclosed all relationships which the author has had or currently has with the manufacturer or distributor of any product referred to in the work, and that all biographical information provided by the author is true, accurate and complete. If the agreement is terminated due to a misrepresentation by the author or due to the conduct of the author, the publisher will usually require repayment of any unearned portion of the advance before the rights granted to the publisher will revert to the author. Some publishing agreements also give the publisher the right to recover the costs of any unsaleable inventory and/or other development costs. As a variation on this theme, if there are multiple authors for a work, the publisher may want the right to terminate the agreement with respect to the author who is at fault, but keep the agreement in place for the other authors.
- Possible legal liability. If the publisher determines, either prior to publication or after publication, that the work may subject the publisher to legal liability, the publisher will want the right to terminate the agreement. As with the other grounds for termination cited above, the author will typically be required to repay the entire advance. In the case of termination after publication, the publishing agreement will usually require repayment of the unrecouped portion of the advance, and the publisher may also have the right to recover costs for unsaleable inventory and other development costs. In addition, the agreement should state that the author’s representations, warranties and indemnities will survive any termination of the agreement, as the publisher could still face a lawsuit if termination did not occur until after the work was published.
- Changes in economic conditions. Some publishers include a provision in their agreement which grants them the right to terminate if economic conditions change between the time the agreement is signed and the scheduled publication date. If an agreement is terminated for economic reasons, the author is almost always permitted to retain the entire advance and the rights will immediately revert to the author. Since almost all publishing agreements contain a clause providing for termination if publication does not occur by a specified date (see below), changes in economic conditions clauses may seem like excess verbiage, but such a clause could work to the benefit of both the publisher and the author in that it would provide for termination sooner than would be the case under the general termination for failure to publish clause.
- Publisher fails to publish. Almost all publishing agreements include an “ultimate out” clause which provides for termination by the author if the publisher does not publish the work for any reason by a specified time, which is usually a certain number of months after the publisher has accepted the final manuscript of the work. The time for publication may be extended if failure to publish is due to events beyond the publisher’s control, and in any case the right to terminate is not automatic and must be exercised by the author. The right may be coupled with a notice and cure period – for example, the author must give notice to the publisher after the time for publication has expired and the publisher will have another 90 days from the receipt of the author’s notice to publish the work. Regardless of how the right to terminate is structured, the author will get to keep the advance, all rights granted under the agreement will immediately revert to the author, and the author will have no other claims or remedies against the publisher.
Given that falsified credentials, unsavory conduct and fictionalized accounts pitched as true stories have become an increasingly common part of the publishing landscape, publishers may want to beef up the termination provisions in their standard agreements so that they will have a clear path to termination should any of these circumstances arise.