Contract Negotiation 101: What’s a “Defined Term” (& Why Should I Care)?

Many authors find publishing contracts difficult to read and understand. One reason for this is the use of “defined terms” (sometimes called “parentheticals”) – a lawyerly way of defining terms for use in legal documents. Use of defined terms changes the meaning of certain words that appear in the contract, usually by investing them with far more meaning than the words themselves suggest.

Today, we’ll take a brief look at how defined terms are used in the contract context, the function they serve, and ways to avoid confusion when negotiating a publishing deal.

What is a “Defined Term” and why should I care?

Courts, lawyers, and businesses use “defined terms” as a form of contract shorthand, to reference longer concepts in an abbreviated way. The law considers a property defined term to include all (relevant) elements of the definition every time it appears in a contract, which means some contracts say more “between the lines” than the words may suggest.

Sometimes, defined terms appear as separate sentences, with the defined term set off in quotation marks:

For purposes of this Agreement, “Audiobook Rights,” means the rights to create, publish, use, and sell audiobooks and other non-dramatic recordings and readings of all or any portion of the Work.

Sometimes the definitions appear in parentheses at the end of the definition (in which case, they’re also called “parentheticals”):

Author hereby grants to Publisher, for the legal term of copyright of the Work including any extensions thereof (the “Term”), the sole and exclusive right to …

[In the example above, the word “Term” acquires the meaning “the legal term of copyright in the work, including any extensions thereof.”]

If a term is “defined” in a contract, by either method, that term carries the specially defined meaning whenever it appears in the contract. Defined terms are often capitalized, to set them apart as defined terms, but that’s not a legal requirement.

How can an author avoid being tricked or trapped by defined terms in a publishing deal?

First, remember: legitimate publishers aren’t using defined terms in order to trick or trap the author. They’re a form of legal shorthand used in almost every contract, and their primary function is to enhance legibility by avoiding repetition.

Here are some tips to avoid confusion when reviewing your publishing deal:

1. When you come across a defined term, read it carefully and make sure you know what it means before continuing. If you don’t understand a definition, find out what it means (or ask your agent or attorney to explain it). Don’t keep reading, assuming the definition “doesn’t matter” or that you’ll come to understand it later. If you don’t understand the defined term, you won’t understand the implications of its later appearances in your contract.

2. Print a review copy of the contract and highlight the defined terms the first time they appear. Highlighting the definitions makes it easier to refer back to them when reading.

3. When you come across a defined term later in the contract, make sure you understand what it means in that context – and take the entire definition into account. Refer back to the initial definition if you have any doubt about what the term means. Don’t assume the “plain English” definition applies – in the case of defined terms, it doesn’t.

4. Remember: defined terms in a publishing contract are (somewhat) negotiable, and definitely subject to rewording for clarification. If you don’t understand a defined term, or believe it’s ambiguous, negotiate rewording or re-definition before you sign the publishing deal. Never, ever sign a publishing contract with ambiguous terms or terms you don’t understand.

Overall, defined terms streamline publishing contracts and establish clear definitions for terms that might otherwise be ambiguous or confusing. Read carefully, defined terms can add clarity to otherwise confusing provisions in a publishing deal. 

The key to defined terms, as with every part of a publishing deal, is to read them carefully and never sign anything you don’t agree with or don’t understand.

I hope you’ll join me next week, when we launche into negotiating specific terms of the publishing deal, and we’re starting with a monster: grants of rights.