The creation of a contract can be a dangerously simple thing. The recent Court of Appeal decision in Malcolm v OUP has reminded publishers and authors that a binding contract to publish a book, like any other contract, can be created surprisingly informally, even by a verbal commitment given by an editor during a telephone conversation.
It can certainly be created long before any standard form agreement document is ever signed. If the publisher subsequently changes his mind, as many in the current commercial climate are having to do, and seeks to withdraw from publishing the book after all, he may well find that his editor's words have already bound him - especially if the author took the sensible precaution of switching his tape recorder on.
The traditional publishing view that editorial conversations are merely pre-contract negotiations, or at best, gentlemen's agreements, is now highly unsafe. It was never very reliable as a legal principle, and probably reflected the unequal bargaining positions of strong publishing corporations and weak authors so well illustrated in Ian Norrie's article in The Bookseller of 28th September 1990. It is still true that many authors are prepared to spend months and sometimes years of work preparing and revising manuscripts, often without advances, on the basis of nothing more than informal editorial encouragement. Perhaps this is bound to be true of creative businesses like publishing where supply always exceeds demand, despite the best efforts of agents and bodies like the Society of Authors.
There comes a point, however, when even the vaguest understanding with the least demanding author becomes a moral obligation, especially where the editor gives the impression that a contractual commitment is likely, or even perhaps a foregone conclusion. In such circumstances it takes very little in the way of legal formality to turn the moral obligation into a binding contractual one that a court will enforce. The Malcolm case gave us a rare opportunity to see how true this is.
The sequence of events in that case will be familiar to anyone in publishing. The author, after a number of unsatisfactory experiences with other publishing houses, submitted a manuscript to Oxford University Press. Their reader gave an encouraging report but felt it was too long - OUP's editor passed this opinion back to the author and suggested cuts. The author responded enthusiastically, but his previous experiences had made him wary, and he made an important proviso:
"In the light of experience, one firm resolution that I have made is not to embark upon any further major polishing/rewriting exercise, which I reckon could well take up to six months of full-time work, without first securing a firm commitment from a publisher."
There followed two telephone conversations, both of which the author unusually, but perhaps understandably, tape recorded. In the first the editor was not yet in a position to give a suitable commitment, but hoped to be so soon and apparently gave the author the impression that his section of OUP would then be able by itself to commit the Press to a publishing contract, although it would later have to be reported to the Delegates.
A defence by OUP denying the apparent authority of an editor to make contracts at all was raised too late to be admitted at the trial (but there is an interesting legal point to be explored here one day: an author might be forgiven for assuming that his commissioning editor - who may be the only "publisher" he ever meets - is fully authorised, among other things, to make contracts, and most publishers do little to dispel this impression).
In the event, the case hinged on the second telephone conversation, in which the editor made some crucial remarks. They should be required reading in every editorial department.
". . . we would like to do it. That is to say, I mean I know you want a commitment sufficient to take you through the last stage of revision and that's what I'm offering.""I'll be getting in touch again when I've done the costs and cast off and so forth and then we can, er, talk about some sort of contract."
"It seems to me that because it's such a risky venture I'm not going to be terribly generous financially, ermm... I mean what I think we should agree is that you have a fair royalty so that if the book is a success you will do well out of it."
The following day the editor sent the author an Author's Publicity Form to complete and ended his letter thus:
"I'm pleased we are going to do your book, and hope that it's a terrific success. As I said, do get in touch if you have any queries as you work through it."
OUP subsequently declined to publish, and the author sued for breach of contract.
At the original High Court hearing, the judge found ("with great regret") that there could be no contract, on the basis (1) that he felt there were matters uniquely "fundamental" to publishing contracts, such as royalty, print number and format, which were not agreed; and (2) that he did not believe there was a clear intention at the time to enter into a binding legal relationship. Both findings were overturned in the Court of Appeal.
Firstly, there is nothing in English law which says that a contract to publish a book is incomplete unless it covers details such as royalty or print run at the time. Such matters will be important later on, and some may then need to be in writing (for example an assignment of copyright) but they do not all need to be settled when the bargain is first struck.
It has been established law for well over 50 years that an agreement is not incomplete simply because it calls for further agreement: if the parties can be said to have settled the essential elements of the bargain, it does not matter if other details are left to be settled by further negotiation (a modern option clause is a good example). This was reinforced in the Malcolm case by expert evidence showing that in current publishing practice the exact amount of royalty is often left until later, and lesser details, such as format and print run, are routinely reserved for the publishers' later discretion in most standard-form contracts (including, ironically, OUP's).
When a book is first contracted for publication, therefore, the only "fundamental" detail required is one that is common to all contracts - provision must be made for some kind of recompense, financial or otherwise, something of value must change hands, or be promised. This is all that is required.
The Court of Appeal itself confirmed that this applied equally to publishing in 1922, when the athletes Harold Abrahams and Eric Liddell (later made famous in "Chariots of Fire") successfully sued a magazine publisher for failure to publish their illustrated articles in the form of a book - in that case, the only matter specifically agreed at the time was a royalty of 4d per copy. "I cannot but wonder that publishers and authors enter into agreements as indefinite as this," Lord Justice Scrutton said, but Abrahams and Liddell won their damages nevertheless.
The same court 70 years later in the Malcolm case was still of the view that a publishing agreement that dealt only with the basis for recompense (and "4d per copy" and "a fair royalty" were considered equally effective) could be a complete and enforceable contract,
The trial judge was also held to be wrong (secondly) on his decision of fact, that no contractual intention was present at the time of the second phone call. Lord Justice Leggatt rebutted this view with particular vigour:
"It is difficult to know what was meant by 'a firm commitment' other than an intention to create legal relations. Nothing short of that would have had any value whatsoever for (the author). He had made it clear that without a commitment he was not prepared to undertake the work of revision expected of him. To suggest that (the editor) intended to induce (the author) to revise the book by giving him a valueless assurance would be tantamount to an imputation of fraud."
It is important to note that the Court interpreted the words used in their context, as any reasonable observer might expect. And their context was a course of dealing lasting longer than one telephone call - a clear (written) requirement for a commitment, acknowledged and discussed, followed by key words the author had been waiting to hear, and confirmed the next day in a letter saying, "I'm pleased we are going to do your book".
In that context, Lord Justice Leggatt and a majority of the Court were in no doubt that OUP did contract to publish the author's book, for a fair royalty: "It follows that in my judgment when (the editor) used the expressions 'commitnient' and 'a fair royalty' he did in fact mean what he said, and I venture to think that it would take a lawyer to arrive at any other conclusion."
So the author won his case, and there remained only the question of an appropriate remedy. The author had asked for an order of specific performance, which if granted would have obliged OUP to continue with publication of the book. Specific performance has been granted before in publishing cases (most notably against Chappell & Co in 1951) but the courts are reluctant to be drawn into the difficult task of supervising and enforcing personal obligations, and the author/publisher relationship is a highly personal one.
Where the main part of the creative work is already accomplished, however, and all that remains is for the publisher to perform his side of the bargain, it might be argued that the personal element becomes so routine (passing proofs, checking blurbs etc) that supervision by the Court ceases to be a practical problem, and specific performance might be ordered, This was true in the Chappell case, and would have been equally so in Malcolm had it not been for the author's frank admission that the personal relationship had by the time of the trial entirely broken down.
An order to publish was therefore not felt appropriate, and a more straightforward order for damages was made instead, but it is worth bearing in mind that specific performances may still be ordered in the right circumstances.
It is therefore in the interests of publishers as well as authors to make sure that intentions on both sides are clear when discussing any book. If further work is required, agree whether it is to be done entirely at the author's own risk. It is also worth taking care at an early stage to explain the limits (if any) of the commissioning editor's authority, so that neither party is later misled. Do not use words like "commitment", "contract", "undertake", or "promise" loosely in conversation. Similarly, do not discuss specific payment details ("a fair royalty", or "a reasonable fee") unless you really mean to.
Putting "subject to contract" on all editorial correspondence might be one way of limiting the risks to publishers, and it will be interesting to see if, following the Malcolm case, this usage becomes more widespread. But editors, for the best of motives, do like to encourage authors verbally as well, and authors, as we have seen, are learning to use tape recorders.
Hugh Jones is a barrister with 15 years' publishing experience and a member of the Intellectual Property Department of London solicitors Taylor Joynson Garrett. He is a member of the PA's publishing law and anti-piracy committee.