Establish the rights granted. This covers the copyright of the material, which usually belongs to the author. This also determines the rights in various territories and subsidiary rights such as translations, motion picture rights and reprints.
Establish the amount of royalties, the advance and schedule of payments. Monies should be nonrefundable and should be delivered as follows: 50% upon signing, 25% on delivery of manuscript and 25% on final acceptance and approval of manuscript. Royalty rates will be different for hardcover, trade paperback and e-books. Bonus payments should be written in for things such as bestseller appearances, awards or earning out the full advance.
Clarify delivery issues. Establish deadlines, and formats for delivery. Clarify terms of acceptance of the manuscript. Clearly define whether the manuscript is fiction or non-fiction, the reading level and whether a proposal or sample chapters are required. Also define the publisher's rights in regards to comments or edits.
Establish whether the editor on project will be exclusive and if the author has the right to terminate that working relationship if it is not suitable. This also covers editor's duties, including line editing and proofreading.
Set the publication date and print run. Also, outline author approvals of final edits and work. Outline the author's approval of the title and jacket or cover layout.
Establish advertising and promotion commitment. This includes the publicity tour, the marketing budget and the amount of time the publisher has to keep the book in print. Specify the costs of illustrations or photographs.
Establish the accounting and payment process regarding financial records with regard to the book contract. This includes the author's audit rights, access to detailed accounting procedures and viewing of quarterly reports.
Detail warranties, indemnities and liabilities regarding the rights of the author and the responsibilities of the publisher. Also, decide what will be done with any remaindered book stock and which party is responsible for paying for any overstock.
Clarify revision issues. This is to determine whether the author must complete requested revisions and what happens if a third party is hired to revise the author's work while the author retains credit for the original work.
Establish the terms of reversion of rights and termination of contract. This determines whether the materials or manuscripts will be returned to the author if the book is not published.
Establish the author's assignment of rights and/or obligations. This deals with the rights of the author to assign payments to parties other than him or herself. It also allows the rights not to automatically change ownership in the event of bankruptcy.
Establish option rights. This deals with the author's obligation to the publisher and whether the author's service is exclusive or non-exclusive. Other terms such as the author's rights to free copies and the ability to publish material in competing publications should also be covered.