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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.
Otherwise, you could have an author who signs with multiple publishers at once, and each one getting "one book each."
I don't know what the contracts say about re-releasing back catalog.
I am also guessing that communication on both sides was problematic. She should have notified the publisher of her intentions during the negotiation phase, especially since it sounds like she plans to re-issue older work -- which could easily be a nightmare for marketing. Her agent really should have head this problem off at the pass.
The publisher probably didn't handle this perfectly either; it would probably be good for her to release something this year, or at least have thoroughly reviewed timing and strategies with her, given that she was accustomed to releasing what she wanted at any time. At the same time, to them she probably looks like a loose cannon who would issue titles without informing them or with any regard to a marketing strategy.
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Exclusive rights over the item in question for the contract.
According to Teleread, which is generally a source I trust, say the publisher that was going to publish her novel, rejected the short stories. Unless her contract specifically states that she may not publish anything, through any means, other than what the would be novel publisher chooses to publish themselves, I do not see how they could be in the legal right.