On Contracts & Running a Small Business (Patreon)

One thing I recently ran into, and I realised people might not realise is the value of contracts. To put in a short way, a contract is only as useful as your ability and desire to enforce it. Otherwise, it's just a piece of paper.

Enforcement

Let's say you decide to sign a foreign publishing deal with someone in Mongolia. They promise to send you $500 every year and sign a contract stating that.

They don't.

Now, how are you going to get your money? Even if your book is published and translated in Mongolia - how are you getting the money? 

You can sue them. Maybe, you even can sue them in your own country.

Maybe you can win. And pay your lawyers thousands of dollars to get you that win. 

How are you going to collect? Maybe you could get a collection agency in Mongolia to take the work... but you'd be paid only a portion of what they collect. And they might not be able to collect anything.

In the meantime, you are out your $500 and the cost of the suit and all the time you spent.

Contracts are only useful if you are willing and able to enforce them.

So, what are contracts for then? Why bother with them?

Spelling out Terms of Your Agreement

A good contract will spell out all the details of an agreement so that you both have a very clear understanding of what you are working from.  It can and should list what is being contract, when, for how long, payment terms and timelines, and more.

By having a robust contract and discussing the contract; you'll be able to nail down details. And figure out details that you won't know before.

It is a legal document for 3rd party verification

Useful for things like Amazon, D2D, etc. if you need it. A proper contract will make things a lot easier, and will provide backup if you get sued or have contentions about what is going on. 

Potential things? If you had your cover done up, is it a work for hire or a license? What does the license cover? For how long? etc.

And yes, you can sue people

Much more useful when the individual you're going after is a bigger and more established organisation.

A contract with Amazon means I know where they are and where to go if I need to sue them. And, unlike with a smaller individual, there's no real worry about them hiding or running away. Now, doing legal shenanigans to not pay... that's a different ballgame.

Lastly, it's an insight into the other party

What is or is not in a contract can be very enlightening. For example, a lot of Big 5 publishing contracts want all your rights and copyrights in perpetuity. That's.... a long time. And a clear idea of where they start and how they see you.

If there's a million and one locations absolving them of things (like moral clauses, etc.); then it's another idea of the party you are signing with.

If the entire contract is built lopsided, well; can you guess what kind of person you're working with?

So.... what should you consider before signing a contract?

First and most importantly - who are you signing this with?

Starting with the assumption that you might not ever reliably and legally enforce the contract, then; look at who you are working. 

Not just the individual, but if it's a corporation; who is in the corporation and their history. What is that corporation like? What s their history?

Do they have reputation that they need to uphold? Or are they a fly-by-night operator? Social pressure (see people tweeting and getting things suddenly fixed) can make a lot of organisations 'do right', when they would ignore a legal suit.

Also, realise that while the contract may cover a large portion of eventualities, it probably won't cover everything. Can you trust the person on the other end to do the right thing when what isn't covered comes up?

Can you afford to lose whatever you are giving up?

I would be more blase about selling off my foreign edition translation rights in Mongolian. 

I would be much less so for English Worldwide rights.

Understanding what is being negotiated and what you can lose in a worse case scenario is important. 

Understand the power dynamics of the relationship

I sign contracts with Amazon that I'm not happy with because I need to to publish.  That includes Kindle Unlimited exclusivity.

I wouldn't do that for Thisisanewwebsite.com. 

Sometimes, you have to take a bad deal because the power dynamics is so lopsided. 

In either case, know what the power dynamics are, and how it affects you.

That's what I always look at before I sign something. I might be missing some other things. Let me know.

Lastly, one thing to note. Just because a contract might seem like a paperweight and not important; it is a legally binding document. Never sign something you aren't happy with. Always consider what happens when the person / corporation / etc. you are signing it with dies / goes away / gets replaced by someone evil. Things you might be okay with for the current party in the contract might not be with someone else. And should be viewed in that light.

Read it all. Understand it all. Negotiate hard and do your research.

Oh. And most importantly...

Get a lawyer.

Just because you think you are signing one thing, doesn't mean it's what the contract says. Legalese is another language by itself and unless you're very, very familiar with it, can be arcane. And even if you are - IP lawyers (or contract lawyers or whatever you are signing - like real estate) will always know more than you do. And understand the issues that might arise.

One thing to add. Make sure you get a lawyer who is actively practising in that area of law. Law is a huge area, and a lawyer who does case law for criminal defense might not know anything about contract law (or, nothing beyond his basic classes), or a real estate lawyer might not understand publishing contracts. Or a corporate lawyer might advise you wrongly on inheritance law.

Listen to people in their areas of expertise. Don't hire a lawyer who doesn't practise in that area of law to help you. There's a reason specilisations exist.