Warranties and Indemnity clauses are important because they provide legal protection in the even of legal issues arising in the future.  They can be used for selling and publishing.  The indemnity clause is important in the event of a lawsuit being brought against a publisher who has breached warranties or representations. It provides that the publisher will not be held financially responsible for such lawsuit or legal claim.

The representations made by an author of a specific work should be provide that the work is free of legal defects and that the author has the unfettered right to enter into the publishing agreement.  Representations that are found in a publishing agreement usually include the following statements by the work’s author.

1. The author is the sole owner of the work in question
2. The author is the owner of the rights transferred to the publisher and that there has been no previous transference of these rights to another party.
3. The work had not been published before
4. The work is original except for some copyright material in the work for which the author has permission to use.
5. The work does not infringe on any copyrights or trademarks or third party’s privacy
6. The work does not violate the law
7. All statements of fact in the work are true and that the work is not harmless or negligent.

The primary purpose of the indemnity clause is to compel the author to pay all or part of the publisher’s cost and legal expenses resulting from the author’s breach of representations and warranties.  In turn, the publisher will have to defend him/herself against a lawsuit or legal claim and possibly pay a settlement.  Some contracts provide for the publisher to hold an amount of the author’s royalties for such contingencies.

Many authors especially those being published for the first time may be troubled by and might object to the scope of representations and warranties that they must make as well as the indemnity clause that obligates the author to be financially responsible for expenses attributed to a their breach of representations and warranties.  From the author’s point of view, the publisher is in a better financial position to settle or defend against such lawsuits or legal claims.  According to the publisher, the author is the owner of the works and is aware of its contents and therefore should bear this legal and financial responsibility.

In some cases, the publisher might help the author in their legal liability and that is by assuming a part of the costs of defending legal claims.  The publisher can do this by including the author as an additional insured on their insurance policy.  In this case, the publishing agreement must specify the author’s financial obligation.

In the case that the publisher does not have an insurance policy, both parties may agree to obtain a joint insurance policy, in which case, the publishing agreement should include both parties’ respective financial obligations in terms of policy premiums, deductible and further losses resulting from a legal action.  Moreover, it is imperative to include in the indemnity clause a provision that states that the warranties and indemnities survive the expiration of the agreement between the publisher and the author.  This is important because sometimes legal action is filed against the publisher after the agreement has expired and when the rights of the work have reverted back to the author. 

It is important to note that an indemnity clause does not mean that the publisher is completely off the hook in the event that the author breaches the representations and warranties resulting in a lawsuit against the publisher.  In this case, a publisher who has no insurance coverage might have to pay legal expenses and settlements resulting from the author’s own breach of representations and warranties.  This is why it is common for the publisher to withhold a part of the author’s royalties.  The publisher can in turn sue to the author to recover the incurred costs resulting from the author’s breach.  It is advisable therefore that the publisher obtain a media-perils insurance policy in case they don’t already have one.

Linda Finch

Return to top