The Writer and The Writing – Agent’s Commission Case on Book Sales Fails Where No Written Agreement

On 10 December 2018, Justice Ward handed down the decision of Anthony v Morton [2018] NSWSC 1884, regarding a disputed oral contract between a literary agent Ms Anthony, and an author Ms Morton.

Ms Anthony claimed that the contract provided for 15% commission on all royalties earned from Ms Morton’s first six books, for the life of the works. Ms Morton said that commission was limited to the agency duration and cross-claimed against Ms Anthony alleging that as her agent, she had breached fiduciary, contractual, and tortious duties.

While the Court considered a number of factual and legal issues, the matter turned on two questions. First, did the oral agreement provide for an entitlement to commission after termination. Second, did Ms Anthony properly advise Ms Morton in relation to world rights granted for the last four books.

Her Honour determined that a trailing commission term was unlikely to have been orally agreed to due to the agreement’s informal nature. The Court then considered whether the term was implied as a matter of fact, custom and usage, or by course of conduct.

The Court found that while ongoing commission is commercially desirable, it was not required to give business efficacy to the transaction, nor was so obvious to go without saying that it could be implied as a matter of fact. As to custom and usage, industry practice evidence only established that such terms were approached on a case by case basis. Further, the term was not so well-known in the industry that Ms Morton, an unpublished author at the time, could be assumed to have known about it. Finally, the Court held that no course of conduct implying the term occurred, as there was no previous termination and subsequent conduct to rely on.

Ms Morton cross-claimed that Ms Anthony breached her duties as an agent. The Court held that while a fiduciary duty existed, there was no evidence that Ms Morton had contravened the proscriptive “no conflict, no profit” duties. However, as to contract and tort claims, held that Ms Anthony had failed to advise Ms Morton regarding world rights. Specifically, that by engaging international publishers directly, she could yield better royalties than by assigning the world rights to a publisher to engage on her behalf.

However, Ms Morton’s claims for books 3 and 4 published prior to 2010 were statute barred. Ms Morton sought to rely on a 2010 email wherein Ms Anthony assured Ms Morton she had “fixed things” in relation to the world rights commission issue. The Court held that although the representation may have been wrong, misleading or negligent it was not fraudulent such as to extend the statutory time bar.

The Court dismissed Ms Anthony’s claim and entered judgment for Ms Morton’s cross-claim in the amount of $514,558.19 plus interest, in respect of lost royalties for books 5 and 6. The case is an important reminder to reduce agreements to writing, particularly, where contractual obligations will persist for a lengthy period of time.