How to Limit the Power of the Option Clause in Your Author Contract
You’ve been offered your first book deal, for your novel. Congratulations! Now that you’re looking at the publisher’s draft contract, you’re concerned because it includes an option clause, requiring you to send your next manuscript to this company too. You’re excited about them, but you already have your next book idea in mind, and it’s non-fiction. This house specializes in fiction so may not be the best fit for your next book. What do you do?
What is an option clause?
First, let’s explain the option clause. Essentially it’s a paragraph in the contract giving the publisher the right of first refusal on the author’s next work. Most publisher contracts include them.
An option clause will read something like this:
The Author agrees to submit to the Publisher his/her next book-length work before submitting the same to any other publisher. Upon receipt of any such work, the Publisher shall exercise its option by notice in writing to the Author within 60 days after receipt of the work, except that it shall not be required to exercise it until two months after the publication of the Work which is the subject of this Agreement. If the Publisher does not give written notice to the Author within that 60-day period that it wishes to exercise its option, then the Author shall be free to offer such work to other publishers. If the Publisher does give such written notice to the Author that it wishes to exercise its option, then the parties shall negotiate in good faith for 30 days. If after such 30 days the parties cannot agree on the advance and royalties, then the Author may offer such work to other publishers.
You have to send your next book to the publisher before anyone else. They have 60 days to make an offer. If they do offer, you have 30 days to negotiate. If you don’t accept their offer in that 30-day period, you can take it elsewhere.
You’re not shackled by your publisher’s option
Option clauses aren’t meant to shackle you. From the publisher’s perspective, they spend a lot of time and money building your author name, and they want a chance to recoup that investment, and to continue a relationship with you. They don’t want to see you succeed and then jump ship to another house. That’s understandable. Besides, nothing in the option clause says you have to accept the publisher’s offer; you just have to give them a chance to make one.
Occasionally an agent or an author disregards the option altogether and takes the author’s next work to another house, informing their first publisher after the fact that they’ve moved on. It’s unlikely the first publisher will take legal action against you in such a case, but it’s considered very bad form in the industry and is not advisable. You will incur the wrath of the first publisher, which is not a good idea if they still hold rights to your first book. Besides, the publishing world is small, and you don’t want a publisher bad-mouthing you around the industry.
How to limit the power of an option clause
When you’re negotiating your contract, you can try to limit the clause’s power in a few ways:
• Ask the publisher to strike it from the contract. Most publishers won’t agree to do so, but you have a case if, say, this book represents a radical departure for you and they wouldn’t be the appropriate house for your usual work.
• Limit the time period the publisher has to consider your work. In the example above, the publisher has 60 days to make an offer, which is a long time to weigh your proposal. See if the publisher will agree to 30 or 45 days instead.
• Limit the negotiating period. You might reduce the 30-day period in our example to 15 or 20 days. By the end of that period you won’t have worked out every detail of the contract, but that should be long enough to come to an agreement on the key terms (advance, royalties, manuscript delivery, etc.).
• Specify genre. If you usually write fiction, give the publisher an option on your next work of fiction only, leaving you free to take your non-fiction elsewhere. (e.g. The Author agrees to submit to the Publisher his/her next fiction manuscript before submitting the same to any other publisher.)
• Specify that you’ll send a proposal, rather than the entire manuscript. This applies to non-fiction only, because publishers usually acquire fiction based on a complete manuscript. (e.g. The Author agrees to submit to the Publisher his/her next non-fiction book proposal before submitting the same to any other publisher.)
• If you’re co-authoring this book, agree to send your next co-authored work only. That will leave you free to pursue solo-authored publication elsewhere. (e.g. The Co-Authors agrees to submit to the Publisher a proposal for their next co-authored work before submitting the same to any other publisher.)
If you’re an unagented author, you should feel empowered to make such requests during your contract negotiation. The publisher will be accustomed to negotiating the finer points of option clauses with literary agents, so none of these requests will surprise them. And you can always contact us for a short contract consultation, to ensure the publisher’s terms are favourable.