Co-author, Gerald M. Levine
The traditional publishing process begins with an editor’s enthusiastic response to an author’s outline, proposal, and sample chapter, followed by an offer and contract from the publisher. Once the contract is signed the focus shifts to the quality of the final manuscript. The publishing contract includes a “d & a” (abbreviation for delivery and acceptance) clause, which requires the author to deliver a manuscript that is complete and satisfactory to the publisher in form and content. The question is how to deal with an unsatisfactory manuscript. If the manuscript is unacceptable to the publisher for any reason it can terminate the contract and demand return of the portion of the advance already paid.
Both Federal and state courts have interpreted the unsatisfactory manuscript clause to allow publishers wide discretion to terminate contracts provided that the termination is made in good faith. Determination of the publisher’s good or bad faith is tricky. In a federal lawsuit for return of a $350,000. advance paid by Random House the judge noted that “evaluations of editorial acceptability are based on the subjective judgment of the publisher” and “[what] in good faith may be acceptable to one publisher may be, in equal good faith, not acceptable to a different publisher.” (By paying a large advance Random House had taken a calculated risk that the author’s next work would be as commercially successful as his earlier books.). At the same time, to properly reject a manuscript the publisher must demonstrate that it did not “arbitrarily change its mind.” There must be good reason other than a change of market conditions for the publisher’s decision to terminate the contract.
Following guidelines set out in several important cases, “good faith” is arrived at by examining the publisher’s efforts to provide editorial assistance to the author to produce a book the publisher believes can be profitably sold. Even if the publisher has accepted and paid for portions of the manuscript it may only terminate a book contract on the basis that the completed manuscript is unsatisfactory if it has provided editorial assistance to the author and reasonable time for the author to make revisions.
New York courts have ruled that there is an implied good faith obligation in publishing contracts “for the publisher to engage in appropriate editorial work with the author of a book”. This means giving the author editorial suggestions and an opportunity to make revisions. In a lawsuit by the publisher Harcourt Brace Jovanovich against Senator Barry Goldwater [Harcourt Brace Jovanovich, Inc. v. Goldwater, 532 F. Supp. 619, 624 (S.D.N.Y. 1982)] for return of the advance after delivery of a memoir the publisher rejected as unsatisfactory, the judge concluded
It cannot be … that the publisher has absolutely unfettered license to act or not to act in any way it wishes and to accept or reject a book for any reason whatever. If this were the case, the publisher could simply make a contract and arbitrarily change its mind and that would be an illusory contract. It is no small thing for an author to enter into a contract with a publisher and be locked in with that publisher and prevented from marketing the book elsewhere..
In an action by Random House against the novelist Herbert Gold [HBJ, Random House, Inc. v. Gold, 464 F. Supp. 1306 (S.D.N.Y.), aff’d mem., 607 F.2d 998 (2d Cir. 1979)] another judge held that “allowing unfettered license to publishers to reject a manuscript submitted under contract would permit overreaching by publishers attempting to extricate themselves from bad deals.”
The major unsatisfactory manuscript cases have had varied outcomes: Senator Goldwater was permitted to keep his $65,000. advance. In that case the publisher simply rejected the manuscript and did not work with the author. In the Random House case the publisher terminated the contract after two rewrites and the author had to return $350,000. A fundamental rule emerges: the party that breaches the contract pays, either the publisher who fails to give the author editorial guidance or the author who fails to submit an acceptable final manuscript. Both parties have rights and obligations which should be clearly expressed and acknowledged in their contract.
The legal issues I discuss are the underpinning of the delivery and acceptance clauses in publishing contracts. If you or your lawyer or literary agent is negotiating a contract, try to include the following protective provisions:
1. All communications from the publisher relating to acceptance or rejection of the manuscript will be in writing.
2. The publisher is required to either accept the manuscript or direct the author to make editorial revisions by a specified time after delivery of the complete manuscript.
3. The editor’s suggestions for revisions will be reasonably detailed and specific.
4. The author will have a reasonable time to deliver a revised manuscript; and
5. The publisher is required to make a final decision about the revised manuscript within a specified time after delivery.
6. A “first proceeds” provision. If the final manuscript is unsatisfactory the author is permitted to defer repayment of the advance until she resells the book and receives another advance. In the past some publishers would agree to limit repayment to the amount of the second advance, even if it was smaller. Most traditional publishers’ contracts now require the author to repay the entire first advance within a stipulated period after the contract is terminated, even if the author fails to resell the book.
A final point: By both industry custom and most literary agents’ agreements, if the contract is terminated the agent does not repay the 10% or 15% commission she received for making the sale to the publisher.