In a decision that could force publishers to rethink how they formulate contracts, a three-judge panel in California's Ninth Circuit has ruled that a publisher cannot cancel a contract because of changed market conditions. The case, Chodos v. West Publishing, involves Los Angeles author and lawyer Rafael Chodos, who in 1995 signed with Bancroft-Whitney to write a book on the legal topic of fiduciary duty.
Although Chodos missed his original deadline, he continued to submit chapters to the house and received encouraging letters in return. In 1998 he finished the book, but the publisher (now part of West) informed him it was canceling the contract, arguing that the book's commercial potential had dried up. Chodos argued that because the publisher had sent him positive letters, it had accepted the manuscript and could not cancel the contract.
A district court denied Chodos's claim, but the appellate court ruled in his favor last week. It remanded the case to the district court to determine compensation, which will be based on how much money Chodos lost in the three years he spent working on the book. Because West acknowledged that the book met its standard of quality, the case provided an acid-test on whether changes in the market are on their own sufficient to merit a cancellation.
A lawyer versed in publishing law said that because of the ruling, more houses might be inclined to build exemptions into their contracts. "I wouldn't be surprised if you see New York publishers try to have supervening clauses that allow for changing market conditions," said Lloyd Jassin. Some publishers already have such clauses in their contracts. Jassin added the case might make publishers more reluctant to offer reasons for cancellation.
Chodos called the appellate court's ruling a "blow for author's rights. West's attitude seemed to be that the author exists to perpetuate the publisher. But the ruling shows that it's the other way around." He said that the ruling on compensating writers for lost time could open up an important avenue for disenfranchised authors. Chodos could be awarded damages into the seven figures, "a lot more than I probably would have made in royalties."
