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Publishing Contract: Warranties, Representations & Indemnities Clauses
© Copyright
2001 Lloyd L. Rich
A publisher
must include a "Warranties, Representations and Indemnities" clause
("WRI Clause") in its publishing contract with an author. This clause
is of crucial importance to the publisher since it will provide the publisher
with some degree of protection in the hopefully unlikely event that any legal
issues arise with respect to the author's manuscript or published book.
The
author's representations are a series of statements of fact concerning the
author's writing and rights in the work that the publisher relies upon when
entering into the publishing contract with the author and the author's
warranties are guarantees that the representations are true and accurate. An
indemnification clause is only important in the event that an author's work has
resulted in a lawsuit or legal claim being brought against the publisher
because the author has breached the representations or warranties and it
usually provides that the publisher will be held harmless and not financially
responsible for such lawsuit or legal claim.
An author's
specific representations may vary between different agreements however the
scope of the representations should provide that the work is free of any legal
defects and that the author has the unencumbered right to enter into the
publishing agreement. Representations that are usually incorporated into the
publishing agreement should include all or some of the following statements by
the author: (1) the author is the only author of the work; (2) the author is
the exclusive owner of all the rights transferred in the agreement to the
publisher and these rights have not previously been transferred to another
party; (3) the author's work is original except for any copyrightable material
included in the work by the author for which permissions have been obtained by
the author; (4) the work has not been previously published; (5) the work is not
in the public domain; (6) the work does not infringe any third party's
copyright, trademark or other proprietary rights; (7) the work is not libelous,
obscene or otherwise contrary to the law; (8) the work does not violate any
third party's right of privacy or publicity; (9) all statements of fact in the
work are true and based upon deliberative research and all instruction and
advice in the work is harmless and not negligent or defective; and (10) the
author has the full power to enter into this agreement with the publisher and
agrees not to enter into any other agreement that conflicts with the rights
granted to the publisher in this agreement.
Although
certain of the author's representations may not be necessary in particular
publishing agreements based upon the subject matter of a particular title and/or
the specific circumstances surrounding publication of the author's work it is
generally advisable for a publisher to include the full scope of
representations in the agreement that is offered to an author. Then following
the contract negotiations between the author and publisher the parties may
agree that certain representations should be deleted from the contract because
they are not applicable and others may need to be revised to meet specific
circumstances. One such circumstance could be that the author's work had been
previously published in whole or in part as an electronic book.
The
specific terms of the indemnity clause will also vary between different
agreements but their primary purpose is to obligate the author to pay all or
some portion of the publisher's costs and legal expenses that are attributed to
the author's breach of his/her representations and warranties and therefore
require the publisher to defend itself against a lawsuit or legal claim and in
possibly paying a settlement or judgment with respect to such lawsuit or claim.
Many publishing contracts permit the publisher to withhold payment of an
author's royalties, sometimes from more than just the title involved in the
legal action, while the lawsuit or claim is pending against the publisher.
Although
the WRI clause is of critical importance for the publisher, some authors,
especially the author who is being published for the first time, are alarmed by
the scope of the representations and warranties that they must make and even
more so by the indemnity clause that obligates the author to be financially
responsible for all or some of the costs of defending or settling any legal
action with respect to a breach or purported breach of their representations
and warranties. Some authors may also object to the indemnity clause based on
their viewpoint that the publisher is in a much better financial position than
the author to defend or settle such claims or lawsuits. A possible publisher's
response to this objection could be that it is author's work and therefore any
breach of the representations or warranties dealing with the writing of that
work or the author's right to enter into the agreement with the publisher had
to be with the author's knowledge and therefore the author and not the
publisher should be financially responsible for his/her breach of specific
representations or warranties.
Some
publishers may agree to "soften" the potential liability for an
author by assuming the costs of defending frivolous or nuisance lawsuits or by
extending their media-perils insurance to their authors by including them as
additional insureds on their policy. When the publisher decides to include an
author as an additional insured then it becomes necessary to specify in the
publishing agreement and/or the insurance rider the author's financial
obligation with respect to the deductible or uninsured portion of any loss.
In those
instances where the publisher does not have a media-perils insurance policy,
and for those situations where (1) a particular title may raise potentially
high risk and liability red flags or (2) the author is overly concerned with
respect to the indemnification clause, then the author and publisher may decide
to obtain an insurance policy that provides coverage for the author's work. For
these situations the publisher should incorporate into the publishing agreement
and/or insurance rider the parties respective financial obligations with regard
to the premium payment for the policy, the deductible amount and any uninsured
losses that resulted from a legal action.
It is also
important to include in the WRI clause a provision stating that the warranties,
representation and indemnities survive the termination or expiration of the
agreement. This is necessary; because at least in theory a lawsuit or legal
claim may be filed against the publisher after the agreement has terminated or
expired even when the rights in the work have reverted to the author.
As a
general rule most publishers' warranty and representation clauses are usually
non-negotiable but on the other hand there may be some flexibility with respect
to the indemnification clause changes unless to that clause are prohibited by a
publishers' insurance policy.
As an
additional word of caution, the publisher must remember that the inclusion of
the indemnity clause in the publishing contract does not means that the
publisher is risk free in the event that an author breaches his/her
representations and warranties and the breach results in a legal action being
brought against the publisher. If this occurs and especially when the publisher
does not have insurance coverage, then the publisher at its own expense must
defend itself against any legal action and pay any settlement or judgment. Then
depending upon the particular author's financial circumstances, the publisher's
only immediate recourse against the author may be to withhold the payment of
royalties, assuming this is permitted under the terms of the publishing
contract, and then if necessary bringing a legal action against the author in
an attempt to collect the publisher's costs resulting from the author's breach
of his/her representations and warranties. Therefore, as a prudent business
matter it may be advisable for the publisher who does not currently have a
media-perils insurance policy to evaluate the pros and cons of obtaining such a
policy.