Running a marketing agency is an exciting endeavour, offering plenty of creative opportunities. Nevertheless, it is important that you establish clear expectations with your clients to ensure a harmonious relationship and so they know what to expect from your services. A well-crafted marketing contract will set out important terms and conditions of your services. This article explores seven crucial elements every agency should incorporate into their marketing contracts.
1. Parties and Duration
Your agreement should clearly identify the parties to the marketing contract and include contact details such as:
- email addresses;
- a physical address;
- a phone number; and
- the primary contact for both parties.
These details will be invaluable for communication and legal notices.
You should also consider exclusivity, the fixed nature of the arrangement, and whether there is an option to renew the contract.
| Exclusivity | Your contract should address whether your agency will be the exclusive provider of marketing services or if the client can engage someone else as well as you to provide the services. Some clients may prefer non-exclusive agreements. As such, a degree of flexibility and a willingness to negotiate is essential to align the contract with your and the client’s preferences. Where possible, you want to reach an agreeable middle ground. |
| Retainer vs Fixed-Term | Highlight if the nature of the arrangement will be on a retainer or fixed-term basis. A retainer implies a longer-term commitment with a fixed fee and specific inclusions until either party chooses to end the agreement. In contrast, a fixed-term contract has a definite start and end date for the services you will provide. |
| Renewal | If applicable, you can provide the client with the option to renew a fixed-term contract or have a contract that renews on a specific date. However, you must let the client know in advance of when the contract will be renewed, so they can choose whether to continue or to end the contract. If you do not provide them with reasonable notice, this could make the contract unfair. Likewise, a court may deem the renewal clause void and order your business to pay a fine. |
2. Scope of Work/Services
Your marketing contract needs to specify the marketing services that you will provide to a client.
The scope of work generally covers:
- marketing strategies, goals and plans;
- creative concepts;
- deliverables for marketing campaigns; or
- timelines on when you start work, when you will complete certain tasks and when you expect to hit campaign goals.
Sometimes, a client may want additional work you have not covered in the contract. In that case, you should include details on:
- how the client can request extra work;
- whether you can choose to accept or refuse the extra work; and
- how much you can charge for the extra work.
Many conflicts regarding marketing contracts concern the scope of work. Accordingly, be specific about what you will provide to reduce misunderstandings and better protect your agency from costly legal disputes.
Continue reading this article below the form3. Payment Terms
Your marketing contract should set out clear and detailed terms of payment. This will improve cash flow for your agency as your clients will know how and when to pay you for your services.
Some common options for payment terms include:
- regular payment – for example, you may want to issue a monthly invoice for any work done in the previous month to be paid within 14 days;
- milestone-based – meaning you will only be paid if you have completed a particular deliverable or stage of the work; or
- upfront deposit and the remainder upon completion – where a percentage of the total price is paid before you commence the services, and the rest is paid once the project is complete and to the client’s satisfaction.
Your payment terms must include actions you will take if the client fails to pay for your services. For example, you may want to reserve the right to stop work or charge interest if your client fails to pay you within a certain number of days.
If the client still has not paid, you may want to engage debt collectors and recoup the fees of the debt collector or legal fees from your client.
In some instances, clients may dispute an invoice. It is a good idea to include a clause that makes the client pay for the services that are not in dispute, so you are still paid for the portion of the work that is uncontested.
4. Confidential Information and Non-Disclosure
When you provide marketing services, your clients will often share confidential information about their business with you. Ensure you clearly define confidential information in the agreement. Likewise, outline how you will store, handle and protect the information.
Confidentiality obligations should be mutual so your client will keep your confidential information secret. In your contract, you should also include what happens when a contract is terminated. You and the client often return or destroy each other’s confidential information, subject to any legal requirements.
5. Dispute Resolution
Disputes can be costly for marketing agencies. It is important to have a dispute resolution clause that sets out what both parties can do when a dispute arises.
Preferably, this should start with an informal meeting between both parties to resolve the dispute internally. If that does not resolve the matter, mediation is usually the next step, and you can appoint a mediator from your state or territory. If possible, avoid going to court. Litigation is expensive, stressful and the results are not guaranteed to be in your favour.
6. Intellectual Property
Your marketing agreement should specify how you will handle the intellectual property (IP) you create as part of your services, and who will own this. Examples of IP you might create include marketing templates used to plan a client’s marketing campaign or specific reports generated from a client’s business data.
You can either assign or licence IP. Assignment means transferring your ownership of IP to the client so that they own all rights to it. For example, if you develop a monthly report for your client and assign it to them, your client now owns it. You cannot use the report unless the client allows you to do so.
If you licence your IP, you will not pass ownership to the client. Instead, they have a right to use the IP, subject to certain conditions that you can impose. For example, if you have developed marketing templates for reports, you can give your client a licence to use those reports for internal business purposes. However, you still own the templates, and any use of the templates will need your consent.
7. Term and Termination
The agreement must specify when either party can choose to terminate the arrangement. The client should be able to terminate if you have substantially breached the contract, for example, if you fail to perform the work to an acceptable standard.
On the other hand, you may have different reasons for terminating the contract. For example, if the client:
- fails to give you proper instructions;
- gives you any intellectual property that is not theirs (but says that it is);
- rips off any of your intellectual property;
- hires one of your employees; or
- if you feel like you can no longer work with the client.
A detailed termination clause will ensure you and your client can part ways smoothly and amicably without escalating the matter to a dispute.
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Key Takeaways
A marketing contract should clearly state how you will provide your services. This will allow you to run your agency with peace of mind without getting caught up in costly disputes.
If you have any questions about how to draft or review your marketing contract, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
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