## Facts

- A publisher contracted with Senator Barry Goldwater and writer Stephen Shadegg to publish Goldwater’s memoirs.
- The agreement required delivery of a manuscript “satisfactory to the publisher in form and content” by October 1, 1978, and provided a $65,000 advance on signing (paid), plus additional payments on delivery and publication.
- The publisher’s editor initially offered extensive editorial help, and Goldwater indicated he welcomed that involvement.
- The authors submitted seven draft chapters in 1977 for comments; the editor did not provide feedback to the authors, but expressed negative views to their literary agent and raised the possibility of using a different writer.
- By July 1978, the authors had produced a substantially complete draft (24 chapters) and requested candid, prompt editorial feedback to permit revision before the deadline; the editor again did not communicate substantive feedback to the authors.
- The authors delivered a full manuscript on September 29, 1978, within the contractual deadline.
- The publisher rejected the manuscript as unsatisfactory and demanded return of the $65,000 advance under the satisfaction clause.
- Another publisher later accepted the work with routine editing and published it successfully in 1979.

## Issues

1. Whether a “satisfactory to the publisher in form and content” clause allowed the publisher to reject the manuscript and recover the advance based solely on its asserted dissatisfaction.
2. Whether the publisher’s discretion under the satisfaction clause was limited by the implied covenant of good faith and fair dealing.
3. Whether the publisher’s conduct (including withholding editorial feedback and related communications) barred it from invoking the satisfaction clause to reclaim the advance.

## Decision

- After a bench trial, the court found for Goldwater and Shadegg on the publisher’s claim for repayment of the $65,000 advance.
- The court held the satisfaction clause did not permit rejection and recoupment where the publisher failed to exercise its judgment honestly and in good faith.
- The court concluded the publisher’s handling of the editorial process and evaluation of the manuscript breached the implied covenant of good faith and fair dealing, defeating its attempt to terminate and recover the advance.

## Legal Principles

- A contractual satisfaction clause granting one party discretion to accept or reject performance is constrained by the implied covenant of good faith and fair dealing.
- Subjective dissatisfaction must be genuine; a party may not invoke a satisfaction clause as a pretext or after conduct that undermines the other party’s opportunity to perform.
- Where cooperation and evaluation are part of the bargained-for performance, a party’s failure to provide reasonable cooperation may bar it from claiming the other side failed to satisfy the contract.
- Subsequent acceptance and successful publication by another publisher may be considered as circumstantial evidence bearing on whether the rejecting party’s claimed dissatisfaction was in good faith.

## Conclusion

The court denied the publisher’s attempt to recover its advance, holding that the publisher could not rely on a satisfaction clause to reject a timely delivered manuscript after failing to engage in a good-faith editorial process and evaluation required by the parties’ contractual relationship.


Harcourt Brace Jovanovich, Inc. v. Goldwater, 532 F. Supp. 619 (S.D.N.Y. 1982)