If you are anything like me - and why wouldn't you be? - the idea of publishing contracts fills you with a cold panic. While writing is an art for you, it is a business for your publisher. They would like to make money. As pro-writer, as friendly, as positive as the publisher may seem, you are well advised to assume that they are out to steal all your characters and give you no royalties ever. If this happens to not be the case in the end - as will almost definitely be true - you are welcome to be pleasantly surprised.
Here is my advice for any serious contract:
Follow Yog's Law: Money should flow toward the author. Any contract that wants money from you - upfront, in installments, whatever configuration - is a crock and you absolutely should not sign it. Frankly, you should not deal with any company that wants money from you because they are a scam vanity publisher and beneath you. (Of course, you do have to pay for copies of your own book that you resell at signings and events.)
Get a lawyer. I know they are scary. They wear suits and carry briefcases. Unless you are James Patterson, you likely treat your fictional lawyers as little more than pompous punching bags. But this is the one moment in your life where you genuinely need them. Consider it, if you must, as a lesser of two evils situation.
I know, you are a poor writer. If you got an advance (I never did) you imagine that most of it is about to go to some law firm. Not so. First of all, Volunteer Lawyers for the Arts will be willing to chat with you for free, thus the "volunteer". (A slight warning: the last time I had to deal with Volunteer Lawyers for the Arts, it was over a month later - well after I had sent the contract back - before they called me in reference to my voice mail. They are busy people and, if you need to see someone right now, you are likely going to have to pay for the privilege.) Secondly, though they may not be experts in entertainment law, most lawyers have looked at a contact before. Some advice and guidance is better than none.
Your publisher will be willing to negotiate, if you are any good. They want to keep you happily churning out sequels and not complaining. Further, they do not want you to seek out other publishing houses if you are a lucrative prospect. If they are willing to let you go, it is either a power play (at which point, you are dealing with short-sighted jackasses and would be better served with a more mature and professional house) or you aren't as good as you would hope and they do not mind losing you.
Most importantly, your publisher will be willing to negotiate if they are any good. Good publishers have dealt with all this before and have thought ahead for potential objections and solutions. Any publishing house that reacts unprofessionally to a request for clarification or a request to amend something is either very new or about to file for bankruptcy.
Check any percentage against what other authors get. If it seems low, ask your publisher why. Dealing with a contract - a legally binding document - is not the time to develop a streak of meekness. Again, if your publisher is remotely worth their salt, they will be not only willing but eager to discuss this with you. Doubtlessly, you are not the flakiest writer they have dealt with. As long as you are not a prima donna pain in the ass, they will work with you and allay/address your concerns.
If you see clauses that say they gain copyright of your book or characters, don't sign it. If you think "I can just write new characters and getting my name out there matters more" realize that the contract might specify the publisher owns any characters you create and that will be a costly bitch to fight in court. You want to retain all rights to your work, otherwise you can end up trapped. (My publisher specifies a five year renewal period; if either party is dissatisfied after this, the contract is not renewed). If the company goes under, you might be stuck with a property you cannot legally market.
As another author, Deborah Lipp, reminded me when last I had to deal with a contract (for the film rights to my first novel), "The important parts of the contract are not the money bits, but the rights and responsibilities. Are you indemnified from their malfeasance? Their contract will make damn sure that they're indemnified... if you turn out to be a plagiarist... Make sure the clause protecting you is as strong as the clause protecting them."
Everything in the contract is negotiable.
Thomm Quackenbush is an author and teacher in the Hudson Valley. Double Dragon publishes four novels in his Night's Dream series (We Shadows, Danse Macabre, and Artificial Gods, and Flies to Wanton Boys). He has sold jewelry in Victorian England, confused children as a mad scientist, filed away more books than anyone has ever read, and tried to inspire the learning disabled and gifted. He is capable of crossing one eye, raising one eyebrow, and once accidentally groped a ghost. When not writing, he can be found biking, hiking the Adirondacks, grazing on snacks at art openings, and keeping a straight face when listening to people tell him they are in touch with 164 species of interstellar beings.