Contracts Act, 1950
CONTRACT ACT, 1950
A contractual relationship arises when an agreement, either written or oral, is made between an author and a publisher. Many established publishers in this country have a standard publishing agreement to be signed by both parties, namely the author and publisher. Without the signatures of both parties, the agreement is not considered valid. In the case of an oral agreement, its validity can be ascertained only if the parties involved (author or publisher) is able to submit evidence that is acceptable to the court.
In the agreement, the author allows the publisher to publish his/her work, and in return, the publisher agrees to publish the work and to pay royalty to the author according to the rate stipulated. As most publishers have a standard letter of agreement, authors are powerless to set conditions of the agreement. The conditions are wholly determined by the publishers.
A problem which constantly arises in this author-publisher relationship is the payment of royalty. Royalty is an amount of payment made by a publisher to an author according to a specific percentage that has been agreed upon from the books sold. This percentage of royalty is not fixed and is subject to the policy of the publisher, credibility of the author, type of book, negotiation between both parties, etc. On average, authors receive 10% of the list price of the book sold. Payment will be made by the publisher according to the period stipulated, either once a year or once every six months.
The Contracts Act, 1950 is not specifically intended for the publishingworld; it covers all agreements made in other fields too. Apart from outlining general contract matters, the act also outlines matters which may lead to breaches of contracts. There are five elements that need to be met in order to make a contract valid. They are:
- There is intention between the parties to create a contractual relation.
- There is consideration.
- The parties have the legal capacity to make the contract.
- The parties must give consent to the terms of the contract.
- The contract is not entered into for unlawful purposes.
In the event of a dispute between author and publisher in court, the court will examine the five elements above before making a decision on the validity of their agreement.