I’ve been working with a lawyer a bit on some things (good things, not bad things), so when I read this, it really struck me as a great example of why you really do want a lawyer on your side when legal things like contracts are involved. At first glance, Passive Voice talks about some contract language that seems simple and straightforward, but see both how he detangles the implications behind it, and how he finds ways to turn it back on the company that wrote it, assuming, of course, the company really had nefarious intent in the first place. Which it of course never would. Never.
This isn’t just true of book contracts, either. There’s a reason those EULAs look as funky and complicated as they do; and screwing you over is (mostly) not the root cause. It’s trying to make sure that little is left to interpretation, because it’s that interpretation that ends up in court some day…
How to Read a Book Contract – Audit Clause | The Passive Voice:
The second paragraph is where serious gnarliness appears. Since the paragraph begins with a run-on sentence, we’ll break that down and shorten it for comprehension.
As a condition precedent to the exercise by Author of his/her right to examine the books and records of Publisher,[the auditor] shall execute an agreement to the effect that
“As a condition precedent to the exercise” means if the auditor doesn’t sign an agreement for any reason, Author has no audit rights whatsoever.
What’s going to be in that agreement the auditor has to sign? The agreement isn’t set forth in the Publishing Contract and it’s a “to the effect” agreement which could mean almost anything. Is the agreement one page long or is it twenty pages long?
If the auditor finds the agreement objectionable and says, “No accountant in her right mind would sign something like this,” Author has no right to audit under the Publishing Contract.
Lawyers call something like this, an agreement to agree. It’s a classic unenforceable contract provision, but it’s also a “condition precedent” to any audit rights.
Who prepares this agreement for the auditor to sign? If PG were the Author, he would write up a very short agreement, have the auditor sign it, and hand it to the Publisher. As the audit clause is written, that agreement would satisfy the requirement. There’s nothing that says Publisher prepares the confidentiality agreement. (Look for the publisher who uses this clause to change it as soon as someone there reads PG’s analysis.)
