This post, by Passive Guy, originally appeared on his The Passive Voice on 10/9/11.
I’m starting a series of blog posts that discuss how to read a book contract. To be completely accurate, the principles I’ll lay out are important for reading any contract, but generally I’ll use illustrations from publishers’ and agents’ contracts with authors.
Given the tenor of the times with publishers and agents, I’m going to place an emphasis on how a skilled lawyer can hide a gotcha in plain sight and how you might find that gotcha.
As a background for today’s discussion, you need to understand that the entire contract is important. Just because it’s first, Paragraph 1 is not necessarily more important than Paragraph 35. Paragraph 1 can give you a nice big lollipop and Paragraph 35 can take it away or rub enough mud on your lollipop that you would never want to lick it.
Good contract drafting style includes grouping like items together in an organized manner and most well-drafted contracts put the important provisions up front and use the later paragraphs for routine boilerplate. However, there is no law that requires an attorney to follow good drafting rules and those later paragraphs can be wonderful places to hide King Gotcha.
Someone reading the whole contract makes lots of notes and changes in the early paragraphs, but once they hit the part about what addresses will be used to send official notices to each party, they’re kind of sleepy and tend to see what they expect to see instead of what’s actually written on the page.
An excellent example of this occurred in a multi-million dollar contract between the company I worked for a few years ago and one of the largest internet companies in the world. Giant Company delivered a proposed contract about 50 pages in length, organized the way I expected, obligations and dollars set forth upfront. The proposed contract left about a half-dozen meaningful issues to negotiate.