Demystifying Contracts #4: Agency – Terminating Contracts

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    Whenever a contract is being offered, it is easy to look at them only in the best of light. You may have waited years or decades to sign with an agent, seeing this as a gateway to your publishing career.  But if you are smart, you’ll look at the contract with an eye toward “what if things go badly.”

    A few things I should note.  I have three agents, and for two of them I have no agency contract.

    • One, my media agent, has never brought in a deal, if she can find someone interested in the project, we’ll sign something official.
    • Two, my Riyria Revelations agent has no contract, but each time we negotiate a deal, there is an agency clause that explains the % of the contract that goes to her.
    • Three, my Hollow World agent sent me her standard contract, and then the two of us reworked it until it met both of our needs. In a nutshell it says she gets a % of any deals she brings in, and we can part ways whenever we like. Yeah there is more to it than that – but that’s the gist.

    I like these kinds of arrangements.  But more often then not, you’ll be working with an agent that has an agency agreement,  which is fine, as long as you review it carefully. From time to time I help other authors when they get agreements. No I’m not a lawyer or do I play one on TV but I have a good eye for looking at contracts to see if anything smells fishy.  If it does, I ask them to consult someone with more credentials then me, or make adjustments. What kinds of things are we talking about?  Well today let’s talk about terminating the contract.  As this is a biggie.

    First off, it is important that you are signing A SPECIFIC work for a SPECIFIC time (or indicate under what circumstances you can cancel).  You never want a contract that is going to be for “everything you write.  Spell out the name of the project and how many books it entails.

    It is reasonable for the agent to want a certain amount of exclusivity.  In my contract with Laurie for Hollow World we set it at 3 months as she was confident she could find a buyer in that amount of time. Other contracts I have seen ask for 6 months or a year. All of which I think is reasonable.

    Usually if the agent can’t find a publisher in that time, then it’s good to try someone else. If they are “hot on the trail” at the 11 month mark you can always renew the contract.  Just don’t have yourself roped in indefinitely.

    Okay, but what happens beyond that year? Well it only makes sense that either party can ask to terminate the contract – within some reasonable amount of time (30 days) upon written notification.  That just makes sense.  Open ended contracts that go on and on forever aren’t the way to go – and actually from my reading aren’t legal (but who wants to fight it in court). Technically speaking the body of law regarding agents states “An agent’s authority can be terminated at any time.”  So you can always get rid of an agent…but what about the more important aspect — their cut of the money?

    This is the thing to pay particular attention to. There is often language in the contract that tries to grant the agent an irrevocable right to their cut. Which is fair…but dig a little deeper. An irrevocable right to their cut of contracts they negotiated – sure.  But an irrevocable right to a cut to ANY contract related to this work – well that’s a horse of another color.

    Let’s say you are with an agency.  They get you a US deal.  After a few years you change agencies.  And that new agency gets you a German translation.  Should the first agency get their 15% in addition to the 20% you pay to the new agency?  I don’t think so…but if you don’t make sure the language of the contract is worded correctly you just may need to give them their cut.  It should be clear that any contracts not executed by them is protected from this “double royalty dipping.” Seems simple but unless you read carefully…you may be stuck paying the royalty twice.

    And what about self-published income?  Again look at the language carefully.  If worded wrongly you could owe then the cut of your self-published work while they are shopping it around…or after a contract is signed…and you decided to self-publish they may still be getting their 15% even though they never brought in a deal.

    And what if your agent dies, leaves the agency, or your agency goes bankrupt, out of business, or is sold?  Well if you have the ability to cancel the contract at any time…then you are protected. But what if your not?  Again going back to the money issue.  I remember a case where the agent died and their son (who wasn’t an agent and had no idea what agents do) wanted to continue receiving the 15% commission.  He simply declared that the agency was now him and he wanted to continue to receive thousands of dollars over the years even though he played no part in the contracts that money is associated with.  These are the types of “what if” scenarios you need to consider.

    There is one other clause that should raise particular warning flags and it is “agency coupled with interest.” Quite frankly this phrase has no right being in an agency agreement as its whole purpose is to join two entities at the hip forever…even past the death of the author…or even if he is no longer mentally capable of making decisions.  Again a basic tenant of agency law is the right to terminate – so a “coupled with interest” flies in the face of that.  So what does this term mean?

    The USLegal Website describes it as follows:

    Agency coupled with an interest is when an agent has possession or control of the property of his principal and possesses a legal rights against interference by third parties. It is an agency relationship in which the agent is given an estate or interest in the property that is the subject of the agency. It is distinguished from situations in which an agent merely derives proceeds or profits from transactions.

    And this is what BookContracts.com says about it:

    The typical purpose of the phrase is to assure that the agent’s appointment will be irrevocable. Under the law governing relationships between agents and the people appointing them, an agent’s appointment will be irrevocable — and continue after the death or insanity of the person who appointed the agent — only when the agent has a legal interest (as part-owner, for example) in the “subject matter” for which the agent was appointed. Saying in a contract that the agent’s appointment is “coupled with an interest” is intended to be an acknowledgement by both parties to the contract that the agent has that requisite legal interest.

    The site goes on to say:

    One, the concept that an agent’s appointment can never be revoked is contrary to a basic provision of the law of agency. Second, the interest that the agent must possess in the “subject matter” – which, in a publishing contract, is the manuscript — has to be something other than the right to receive part of the proceeds derived from exercising its authority as the agent (i.e., something other than its commission). Thus the phrase cannot be validly used in the typical author-agent relationship since, absent special circumstances (e.g., if the author and agent were co-authors), the agent lacks the requisite legal interest in the author’s manuscript.

    As I said, having such language in the contract makes no sense, and should be stricken from the language of the contract.

    In Summary

    • Based on the basic premise of Agency Law you can terminate whenever you want, but have the contract state the explicit conditions so you don’t have to fight it out in court.
    • Make sure that when you are talking about the money they get to keep during or after termination it is ONLY money for contracts they negotiate – not any money that work brings in.
    • Make sure that the contract is dealing with a particular work – not everything you write.
    • Watch out for words like irrevocable.  Saying that the ability to revoke their cut on a contract they negotiated is fine. But trying to say that you can’t revoke their association with the project – not so much.
    • Agency coupled with interest – is in direct violation with agency law and should not be in the contract. If you signed one with such a clause – you could probably win if you take them to court – but do you want to incur the court costs?

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