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Contract Disappointment: Indemnity Clauses

12/30/2016

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I was really hoping that this post would be announcing the sale of my first short story, but instead today kiddies, we're going to talk about an evil thing called an Indemnity Clause. An indemnity clause is part of a contract that holds you the author responsible for all legal fees if anyone decides to sue the publisher in regards to something which you've published with them (e.g. short story, novella, novel, etc.).

Now, one initial response is to say, "I've broken absolutely no laws in my writing so why should I worry about someone suing my publisher over my story?" Well, let me give you one example of why you should be worried. Let's say that Wannabe Author thinks that your story is very similar to one of his stories that has never been published, but which he did a poor man's copyright on, and he decides to sue your publisher, Mr. Publisher, claiming you violated his copyright because your publisher is very successful and Wannabe Author wants a new playstation. If you've signed an open-ended indemnity clause in your contract with Mr. Publisher, that means that Mr. Publisher can hire the best $900/hr lawyer in the copyright business, Highpriced Lawyer, to dispute Wannabe Author's claim, and you have to pay Highpriced Lawyer's fees. Mr. Publisher could also decide that it is way too much effort to go to court over the matter and settle with Wannabe Author out of court for any sum they decide, and you would be responsible to pay that settlement to Wannabe Author out of your own pocket!

So, what I'm trying to say is that particularly in the instance of a short story for which you are receiving a payment often less than one hundred dollars, an open-ended indemnity clause may expose you to having to pay thousands of dollars of legal costs even for frivolous lawsuits. Not cool. Many authors are willing to take this risk, especially if they are desperate to be published and the publisher will not amend the indemnity clause to mitigate the financial risks to the author, but I am not one of them.

If you find yourself in a similar indemnity situation, the following is an excellent website to help you attempt contract negotiations. It lists several means by which the contract can be modified to reduce the financial risk to the author. http://www.writersandeditors.com/blog.htm?post=869703

I know that we all want to be published, but stay safe out there, and know what you're signing.


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