Hi. I'm looking at my first publishing contract. I'm a real greenie, here. It has these words:
"In all instances in which the Author shall have received an overpayment of monies under the terms hereof, the Publisher may deduct such overpayment from any further sums payable to the Author in respect to the Work."
I don't understand. Under what conditions would I be overpaid? And would I ever have to refund royalties to the publisher?
When a publisher sells to a bookstore, the bookstore then tries to sell the book. If they can't, they can return the book to the publisher. The publisher may have already paid you royalties on that sale. If they have, they deduct it from what's due in your next batch of royalties.
If the returned books are still in good condition, the publisher can resell them and you'll get the royalty on that second sale. But if they're beat up, they may have to be written off as a loss, or sold as "scratch & dent"—in which case, you probably would not get a royalty.
If more books are returned than are sold (hopefully that won't happen to your book), some publishers may require you to return royalties. (Yes, I've seen it in some contracts.) I think that is a stinky policy and would refuse to sign a contract with that in it.
In your case, since it isn't spelled out, I'd ask your publisher what would happen if returns overbalanced sales, and have them spell it out in the contract along the lines of, "in no case shall author have to return paid royalties".
*Clarification: I think returning royalties that have already been paid is a stinky policy. The part about subtracting returns from future payments is fair. This situation is one of the reasons why many publishers only pay royalties twice a year.