What if my publisher loses my artwork?

Q. I write and illustrate children’s books. My contracts say that the publisher is “not responsible for the loss or damage of any material” submitted by me. That’s okay for my manuscript since I have a copy on my computer, but what can I do about original drawings and watercolors that I submit?

A. Publishers that still have such unqualified, antediluvian language in their contracts should be embarrassed (though I’m not holding my breath). What they presumably mean to say is that if something happens to your artwork that is not their fault (the building burns down, a messenger taking it to another location is mugged, etc.), they are not responsible. That may be acceptable to you. But if an employee takes a piece of your artwork home to hang in his living room or someone inadvertently uses it as a placemat when eating lunch at h/h desk, there is absolutely no reason why the publisher shouldn’t be responsible.

Virtually every publisher recognizes this and, if asked, will readily qualify the clause you quote with “provided Publisher has exercised reasonable care with respect thereto” or, at the least, “other than in the case of Publisher’s gross negligence or willful misconduct.” Although these—especially the first— can be okay, better yet would be “other than in the case of negligence, willfulness or reckless misconduct by Publisher, its employees, agents or freelancers.”

The reasons why this alternative protects you (and your work) more than the first two are:

  1. A “gross negligence” standard doesn’t provide you much protection. Essentially, it means a major foul-up—bordering on either incredible stupidity or intentional recklessness—and isn’t always that easy to prove. “Negligence” (without the adjective), however, is more likely to be the type of (mis)conduct that leads to the damage or loss of your artwork. Negligence is “the failure to act as a reasonably prudent person would under similar circumstances” or, briefly speaking, carelessness. Quite simply, the basic question involved is whether the publisher or you should bear the “risk of loss” for the carelessness of one of the publisher’s employees or freelancers. Even publishers who are intransigent on other issues should see the validity of your position if you phrase it this way.
  2. Although mentioning only “negligence” should suffice to encompass standards of conduct that are worse—such as recklessness and willfulness (negligence is by definition unintentional; recklessness, though often bordering on being intentional, is generally not either) —specifically mentioning willfulness and reckless misconduct alongside negligence should eliminate any attempt by a publisher’s lawyer to argue that negligence means carelessness only.
  3. Ordinarily speaking, referring solely to conduct by “the Publisher” should include any action (or failure to act) by its employees, freelancers and agents even if those groups of people are not listed in the clause we’re talking about. In some situations, however, a company might successfully argue that it acted with proper care in hiring the individual involved and, as such, is not responsible for certain acts by that person (e.g., ones that it could not foresee). Listing those groups of individuals in the damages clause should eliminate that possibility.

(Originally published in the Winter 2010 issue of the Authors Guild Bulletin. © Mark L. Levine

Answers to questions on this site are general in nature only. You should consult a lawyer for information about a particular situation. For more information about book publishing contracts and issues, see Levine’s book.

Can my publisher stop paying me royalties because its distributor went bankrupt?

Q: My publisher told me that I won’t be getting royalties for copies of my book that it sold lately because all its bookstore sales were made through its distributor and the distributor recently filed for bankruptcy. Is there language I can put in my next contract to make sure this won’t happen to me again?

A. Bad debt and credit problems are traditional business operating risks that publishers should properly assume; they are not an author’s responsibility.

To prevent a publisher claiming that it has the right not to pay royalties because it was not paid for books it sold, add “There shall be no reduction in royalties or ‘amount received’ because of nonpayment by customers” or similar language to your next contract. (The reference to “amount received” can be deleted if your royalties are based on the book’s suggested retail price rather than on the publisher’s net receipts.) It makes no practical difference where this language is added, although the logical place would be in the section about royalty statements or the one listing royalty rates.

If your royalties will be based on the “amount received” by the publisher from sales of your book (or if the contact says that your royalties are based on the publisher’s “net receipts” and that term is defined as “amount received”), you can also ask that “amount received” be replaced by “amount payable” or that net be defined as follows:

As used in this Agreement, “net receipts” means all monies payable to the Publisher from the sale or licensing of the Work pursuant to this Agreement. In determining “net receipts” for purposes of the royalty and licensing percentage sections of this Agreement, shipping, handling and insurance charges, and sales and similar taxes shall be excluded.

Not all publishers using “amount received,” directly or indirectly, intend that it be construed as excluding bad debt. Those using it innocently will be glad to clarify the issue. For those who understand and mean what they are saying, the clarification is even more important.

Note: Rather than readily accepting a publisher’s statement that it is not required to pay royalties on books sold by it because its distributor has filed for bankruptcy and didn’t pay the publisher, authors should contact the Authors Guild or consult a lawyer to see if your publisher is correct. Even if your contract does not have any of the language recommended here and says that your royalties are based on “amounts received,” you may still be able to argue successfully that from a legal viewpoint the distributor was acting on the publisher’s behalf in collecting the money – in legal terms, as “agent” for the publisher — and that for purposes of your contract, the distributor’s receipt from the bookseller of payment for your books was the same as if the publisher itself received that money.

(Originally published in the Spring 2007 issue of the Authors Guild Bulletin. © Mark L. Levine)

Answers to questions on this site are general in nature only. You should consult a lawyer for information about a particular situation. For more information about book publishing contracts and issues, see Levine’s book.