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Originally Posted by Kali Yuga
They gave her an advance on a novel. As Elfwreck pointed out, the contract almost certainly grants the publisher exclusive rights.
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There is better description of the whole story at the teleread.com server.
The author has published an unrelated short stories, not the novel that she received the advance for. The publisher called her and tried to persuade and later to motivate her not to publish *anything* through Amazon.
When she refused they canceled her contract without stating the reason. Had she broken some slick clause in contract a lawyer from publisher would have called her and told her that she violated this or that clause.