It’s a fact that publishers are feeling the squeeze in these difficult and uncertain economic times. It’s also a fact that when this happens, there is pressure on publishers to cut costs. One way of doing that is to cut back on their publishing programs. Not only might this involve contracting, and therefore publishing, fewer books, but also cancelling existing contracts for books. What is the legal situation here?
If a publisher cancels a contract without good cause, the publisher is in breach of contract. In practice, it’s very difficult for an author in that situation to get an order from the court compelling the publisher to honour the contract and publish the book — particularly if the book still requires some editing. The author is therefore left with a claim for damages.
How would the damages be assessed?
There are two main recent authorities for the basis on which damages are awarded for breach of a publisher’s obligation to publish a book: Malcolm v. Chancellor, Masters and Scholars of the University of Oxford [Court of Appeal decision on liability December 1990; damages assessed August 1991]; and Myers v. Macmillan Press Limited [March 1998].
The Malcolm case concerned his book “Making Names”, a philosophical text, which had been accepted for publication by a senior editor, the main evidence of which was a telephone conversation which Andrew Malcolm had fortuitously recorded. Oxford University Press strenuously denied that there was a contract. When the case went to the High Court, the judge, albeit reluctantly, decided that there was no contract, as key terms did not seem to him to have been agreed. The Court of Appeal decided otherwise and found in favour of the author. An inquiry as to damages was ordered both to recompense the (previously unpublished) author, Andrew Malcolm, for loss of the opportunity for him to enhance his reputation by securing the imprimatur of the Oxford University Press on his work and also to compensate him for loss of royalties. Where the time of publication, number of copies and price and form of the book are left to the discretion of the publisher, the damages for failure to publish are based on a reasonable estimate of the amount that the author would have earned if the publisher had complied with his contract to publish. This will require consideration of everything likely to affect the amount of the profit, such as the nature and popularity of the subject matter, the reputation of the author, the cost of producing a book on that subject, the price of such a book, the business capacity of the publishers and the chances of earning profits by sales of the book.
In the Myers case, it was accepted by both parties that if the claimant author succeeded on liability (which he did), he could elect between two alternative bases for assessing damages:
- the loss of profits which, on the court’s assessment, he would have made had the defendant performed its obligations under the publishing agreement; or
- a quantum meruit.
The judge said that the second basis is less satisfactory, as it involves carrying out an exercise which does not reflect what happens in practice, i.e. assessing what would have been a reasonable number of hours for the claimant to have spent in writing the work and what would have been a reasonable hourly rate to pay for that work. In the event, the first basis of assessment would clearly have resulted in a higher award, and so damages for loss of profits were awarded. If the author has incurred specific expenses in connection with the agreement, such as preparing illustrations for the text, these can be claimed as special damages.
Where a publishing agreement requires the defendant to publish the first edition of the claimant’s book, and the agreement also contemplates that further editions will be published, the failure by the defendant to publish the first edition of the book will entitle the claimant to damages both for failure to publish the first edition and also for the loss of the chance to establish the title, by the success of the first edition, which would lead to repeat editions in the future, and hence generate royalties on those further editions. This would, for example, extends to US editions, foreign-language editions and electronic editions.
Bearing all this in mind, a publisher must weigh up carefully the pros and cons of cancelling an author’s contract, since a claim for breach of contract could end up costing the publisher more than it would have cost to publish the book, while leaving the publisher without the revenue from the sale of the book. And that’s without taking into account all of the headaches that litigation can cause: management time used up; adverse publicity — possibly leading to further claims by other authors; documents examined in open court; legal costs and the uncertainty of the outcome; and so on.
As a footnote, Andrew Malcolm ended up self-publishing his book through AKME Publications. His website http://www.btinternet.com/~akme/index.html makes very interesting reading.