Article by Nicola Solomon published in The Author of Spring 2002 Vol. CXIII No.1. Leading literary lawyer Nicola Solomon is Head of Publishing with solicitors Finers Stephens Innocent (179 Great Portland Street, London W1W 5LS, tel. 020-7344-7652). She has kindly given AKME permission to reproduce this article, and can be e-mailed at nsolomon@fsilaw.co.uk.
The article is reproduced without any comment or editing by AKME.
Are you free to choose the subject and publisher of your next book? Before you answer 'Of course,' take a careful look at your publishing contract. Option and non-compete clauses are not usually deal breakers when you negotiate your contract; like much of the small print, they are often entirely overlooked in the excitement of advances and royalty rates. However, a few years later, when your relationship with your publisher has not lived up to its earlier rosy expectations and you are looking at an exciting new offer from another publisher for your next work, the clauses that you signed so blithely may prevent you from going elsewhere. What do you need to look out for?
Option Clauses
An option clause gives your publisher first refusal on your next work. Publishers say they need them because if they are going to invest in you and build up your reputation, they want to treat you as a long-term prospect and not in terms of one book only. It all sounds fair and heart-warming until you realise that an option clause is one-sided. The publisher has no obligation to publish your next book, only to consider it, and, unlike film options, you don't get paid for granting the option. If publishers need a long-term commitment they should offer a two-book deal with a guaranteed advance for the second. However, unlike many agents, I am not keen on these either; although you are guaranteed a second advance, they restrict your bargaining power if the first book is a success. Worse, I have seen too many unhappy authors tied into contracts with publishers that they no longer trust or feel comfortable with. For one of my author clients, the conflict and pressure over a six-book deal resulted in such awful writer's block that she felt unable to deliver any of the sequels.
There is a myth that option clauses are not legally binding - but this is dubious at best. Judges do not have much sympathy with people who agree terms and then try to avoid the consequences. However, in case you need to use the arguments, here they are. First, lawyers sometimes argue that option clauses lack 'consideration', which is a legal way of saying that there is no such thing as a free lunch. Promises given with no reciprocation are not binding. However, the consideration does not have to be monetary, and an option clause would not be considered in isolation but as one of the obligations you took on.
The second argument is that the option clause is an 'unreasonable restraint of trade'. As a matter of public policy, the law does not allow contracts which unreasonably prevent you from working freely. Obviously, all contracts are in restraint of trade in the sense that having agreed to provide goods or services to one person, you are prevented from selling them elsewhere. The law will only interfere if the restrictions are wider than the publisher needs to protect its investment. It is likely that an option clause would be regarded as reasonable because it does not prevent you working, while protecting the publisher's interests. Incidentally, do not confuse unreasonable restraint of trade with reasonableness under the Unfair Contract Terms Act. That Act does not apply to publishing contracts.
The third and most likely reason that an option clause may not be binding is that it is 'void for uncertainty'. In English law, you cannot enter into an agreement to agree; a contract is not binding if its terms are not certain. Unfortunately, the better option clauses, those which say you will enter into a new contract on 'terms to be mutually agreed' are less likely to be legally binding than the objectionable ones which commit you to entering into a second agreement 'on the same terms as the present agreement' because the latter have clear terms.
What should you do if your proposed contract contains an option clause? Ideally, ask for it to be removed. If the publisher will not remove it, try to limit it as far as possible. Ensure that you are only giving the publisher the right to consider the next book and make you an offer on terms to be mutually agreed, not an absolute right to publish on the same terms as the first contract. Publishers may baulk at this because of the fear that the agreement will not be binding, but this can be cured by stating how the terms will be settled if not resolved; for example, you could appoint a named umpire to agree any disputed terms. In the unlikely event that the publisher insists that the new terms are to be the same, ensure that the option applies to the first book only - otherwise you will be bound to a new contract complete with option clause in a continuous cycle of options.
Make sure that the option does not conflict with any option rights you have already given other publishers. State that the option only covers a book of the same type, your next fictional work for children on the subject of fairies, for example - so that you are not bound to a publisher whom you consider unsuitable if your next work is of a completely different type. The clause should only cover your next book as sole author. Otherwise, you would have to offer the publisher any joint work or compilation, which would be problematic if your co-author had given an option to a different publisher.
Some contracts delay implementation of the option until after publication of the first work. Publishers say they will not be able to judge the second until they have seen the success of the first. Obviously, however, this is most unsatisfactory because it is very likely that you will start writing the second work as soon as you have finished the first and sometimes much earlier. You will not want to wait for publication of one book before you enter into a contract for another. The publisher should be obliged to decide on the basis of a synopsis and a sample chapter, not the complete work.
The publisher should have a time limit in which to make its decision, say, six weeks from delivery of the synopsis and sample chapter. A delayed decision may cause another publisher to lose interest in a topical book.
Publishers should understand that most authors are faithful creatures. They are less likely to be lured away by offers of large sums than frightened off by indifference and poor service. Rather than concentrate on the legalese of an option agreement, your publishers should be smoothing the relationship with you in order to make sure that you will want them to publish your next book.
Non-compete clauses
These prevent you from offering other publishers works which might be considered to compete. At first blush, this may seem fair - a publisher does not want to pay you a large advance and put considerable investment into your book Shetland, A Complete History only to find your A Complete History of Shetland published by its main competitor. These clauses are common and most publishers will insist that they remain, even though publishers are protected to some extent by the exclusive licence granted to them.
Again, there is a myth that these clauses are not legally binding, being an unreasonable restraint of trade. Some are drafted so widely that they practically prevent you from writing anything else (especially in educational publishing), but others are less onerous; whether the restrictions are binding depends upon whether they are limited to meet your publisher's reasonable business needs. For this reason, it is in both parties' interests to amend them so that they cover the publisher's legitimate concerns whilst not unreasonably hindering you.
Non-compete clauses should only apply to non-fiction. If you are asked to sign such a clause for fiction, strike it out.
Look carefully at who is to decide if the new work competes with the present work. Many contracts state that the decision is 'in the publisher's sole opinion'. You should delete this or at the very least amend it to say 'in the publisher's reasonable opinion' which starts to impose some objective test. You can also clarify what is likely to compete; for example, 'no other hardback illustrated non-fiction book about Shetland with a selling price of between £10 and £20 published within one year of publication of the original book or any new edition.' You can also try inserting wording which states explicitly what must be implicit: that the non-compete clause will only be operative if your work is selling over a defined number of copies or earning you over a defined amount per annum. Your publishers will then have to continue investing in your book if they wish to avoid another publisher selling a competing work.
Option and non-compete clauses can impose very real restrictions on you and your writing. Do consider them carefully when negotiating the contract. They will focus your mind on your relationship with your publishers and whether you want to be bound to them for many years or only have a brief flirtation. The drafting can be rather technical and, as you can see from the comments above, only slight changes of wording can make the terms very much more or less favourable to you. I recommend that, before signing any contract, you take the advice of the Society of Authors or a solicitor expert in this field if you want to ensure that you keep all your future options open.
Click to return to the top of this file. Return to the Law Library index. Return to The Remedy + options. Return to The History of AKME. Return to The Site Index.
e-mail: akme@btinternet.com