Warranty and Indemnity Clauses

Reduce the Sting of Warranty and Indemnity Clauses in Publishing Contracts


Every book contract, whether traditionally published or self-published through Amazon, contains warranty and indemnity clauses. Authors tend to see the demands made in these provisions as grossly unfair and unreasonable. And for good reason. Warranty and indemnity clauses have the potential to deplete an author’s entire net worth.

Warranty Clauses

Before publishing, a publisher requires certain warranties about the manuscript – promises like the manuscript is not plagiarized, has not been previously published, is not in the public domain, is not defamatory, and does not infringe anyone’s copyrights, trademarks, or right of privacy/publicity. From a publisher’s perspective, the author should know if what they promised about the book is true. Such representations and warranties seem appropriate and reasonable. Authors should stand by their work and be held accountable if any of the warranties are false.

But often these warranties become onerous by forcing authors to warrant the manuscript does not violate the laws of infringement, defamation, invasion of privacy, or any other rights of any third-party in any state or anywhere in the world. Unless you have a handy crystal ball, who can truly warrant that?

Indemnity Clauses

Indemnification requires a writer to compensate the publisher for any losses should someone sue the publisher because a warranty the author made was untrue. It puts a sharp stinger into the warranties by directly affecting an author’s bank account. If someone asserts a claim against the author’s work, the author pays the litigation fees, court costs, damage awards, and settlement payments.

In addition to the hefty price tag of unlimited financial liability, indemnity clauses are far-reaching in other respects. The provisions often: 1) require indemnity whether or not the lawsuit brought against an author’s work is well-founded or frivolous, 2) give the publisher the right to settle a claim without the author’s consent, and 3) allow the publisher to withhold author payments to offset potential damages if someone asserts a claim.

Negotiating Equitable Warranty and Indemnity Clauses

So, what should an author do when faced with far-reaching and onerous boilerplate warranty and indemnity language? Limit the scope of the provisions when possible.

  1. Limit warranty clauses using “to the best of the author’s knowledge” language, i.e., an author is liable for breach of warranty claims the writer knows about but not for frivolous claims and facts unknown. Frivolous lawsuits are a cost of doing business which the publisher, not the author, should absorb. Strikeout any broad catchall warranty language that requires an author to warrant the work does not violate any rights of any third-party in any state or anywhere in the world. Such language is simply unreasonable.
  2. Request that any warranty and indemnity exclude editorial changes made or material added by the publisher. An author should not be liable for a publisher’s mistake.
  3. If the author is on the hook to pay the litigation tab, the publisher has an incentive to settle a lawsuit. In general, most lawsuits do settle because it is financially feasible. To avoid paying for the settlement of a frivolous claim or because it made sense for the publisher’s bottom line, request that any settlement be subject to the author’s reasonable consent. Any liability payment should be limited to a final judgment for damages due to an actual (not alleged) breach of warranties. If an author is worried about the admission of guilt because a case settled, most settlement agreements stipulate settlement is not an admission of guilt or wrongdoing.
  4. Request the publisher forgo withholding royalty payments if a claim against the author’s work is asserted. At a minimum, limit the withholding to a finite period, three to six months, or stipulate to a percentage. Funds withheld should be kept in an interest-bearing account.
  5. Cap an author’s liability by limiting damages to a set amount, like the advance or a certain percentage of the royalties received.

Other Options

In addition to making changes to the warranty and indemnity provisions so author liability is less onerous, the writer can consider the following options.

Insurance

Publishers carry media liability insurance, which can cover authors. If an author tailgates on the publisher’s policy, some publishers require the author to cover part of the deductible. According to the Authors Guild, deductibles run into the six figures. If the publisher’s policy covers an author, state so in the contract.

Authors can purchase their own professional liability insurance. Many writer organizations (like the Authors Guild) provide discounted rates (see Writer’s Digest for additional information).

Publisher’s Legal Department

If an author knows of particular legal issues with their manuscript (like defamation in a memoir or true crime novel), discuss those with the publisher’s attorneys. That is what the publisher pays them to do.

Legal Representation

If an author is concerned about potential lawsuits when their book eventually publishes, seek legal advice with a qualified attorney to review the manuscript prior to publication.

 

Just remember, when you get to the boilerplate language for the warranties and indemnities in a book contract, scrutinize the language carefully. If the provisions place the bulk of risk on the author, request language that is more equitable. Publishing is a partnership after all, so the risk should be allocated fairly.

If you have specific questions about a publishing contract, consult a qualified professional for guidance.

 


Photo Credit: Ömer Ünlü |  VisualHunt | Creative Commons License

 

Legal Disclaimer: This information is provided for educational purposes only. Consult a qualified lawyer in your jurisdiction for all legal opinions for your specific situation.

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  • Dreams-ComeTrue.com DCT

    You make a lot of sense and I like that!
    These catch-all clauses shouldn’t have a leg to stand on in court as being too broad and vague.
    So the question is…are they legal and can they be implemented, or simply rejected by the court as unfair practice?


    • Matt Knight

      Thanks. It’s incumbent on the party signing the contract to know what they are signing. Catch-all clauses are valid, so narrow the scope if possible. The court might reject a broad interpretation of a clause if the language is vague and there is a discrepancy as to what each party intended the clause to mean.