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It's probably part of the termination clause. Until she returns the advance, the book still belongs to them. So if she keeps the money, they keep the book.
Very interesting. My termination clauses never said that. I'd like to see that termination clause.
Suppose she keeps the advance and they "keep" the book. What do they do with it? The contract only grants a publishing license, not a copyright. They terminate the contract, so there is no contract, so there is no license. And she still has the copyright.
So, suppose the termination clause does not actually terminate the license one way or another. What do they do with it? Publish the book? With her name as author? What if it earns out its advance?
I'm not arguing with anyone here, or don't mean to be. I just wonder how it works.