Running a marketing agency can be an interesting gig, with plenty of room for creativity. However, it is important that your clients know what to expect from your services. A marketing contract can help you set out important terms and conditions on which your agency will provide its services.
This article discusses seven things that every agency should include in their marketing contracts.
1. Parties and Duration
Your agreement should identify who will be bound by the marketing contract. Include contact details such as email addresses, a physical address and a phone number. Make sure you know who your client’s main contact. These details will help you if you have any questions about the contract or if you have to send a legal notice.
Your marketing contract should also address whether they are the client’s exclusive provider of marketing services. Some clients may prefer non-exclusive agreements, so be prepared to negotiate.
Highlight if you will work on a retainer or fixed-term basis. A retainer means that your client has engaged you long-term for a fixed fee unless either party chooses to end the agreement. In contrast, a fixed-term contract has a definite start and end date to the services you will provide.
You can also allow the client to renew a fixed-term contract, or have a contract that renews on a specific date. However, you must let the client know within a reasonable time when the contract will be renewed, so they can choose to end the contract or allow for renewal. Otherwise, it could be deemed an unfair contract.
2. Scope of Work
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 that is 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 are about the scope of work. Be specific about what you will provide so that you can reduce misunderstandings and better protect your agency from costly legal disputes.
Your marketing contract should set out clear and detailed terms of payment. This will improve cashflow for your agency as your clients will know how and when to pay you for your services.
You may want to be paid regularly, or be paid on a performance basis. For example, you may want to issue a monthly invoice for any work done in the previous month to be paid within 30 days.
Alternatively, your clients may only want to pay you if you have completed work by a certain date or achieved results in a particular marketing campaign.
Your terms of payment 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 if you have not been paid within a certain number of days.
If the client still has not paid, you may want to:
- charge interest on unpaid invoices;
- engage debt collectors; or
- report bad debts to a credit reporting agency.
Sometimes clients may dispute an invoice. It is a good idea to include a clause that makes the client pay for services not in dispute, so you are still paid for some work.
4. Confidential Information
Your clients will be sharing confidential information about their business. Ensure you define what confidential information means and how you will keep the information secret.
It is not confidential information if the information is already public, or the client has let you know (usually in writing) that you can disclose that information.
Confidentiality obligations should be mutual so that your client will keep your confidential information secret. When a contract expires, both you and the client must return each other’s confidential information.
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 work, mediation is the next step. You can appoint a mediator that comes 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) created.
Examples of IP created by you include marketing templates used to plan a client’s marketing campaign or specific reports generated from a client’s business data.
You can then either assign or license your IP. Assignment means transferring your ownership of IP. For example, if you develop a monthly report for your client and will not use that report again, you can assign that report to the client. Your client now owns the report and you cannot use the report unless the client allows you.
If you license your IP, you will not pass ownership to the client. For example, if you have developed marketing templates for reports, you can give your client a license to use those reports for internal business purposes. However, you still own the templates.
You must specify when either party can choose to terminate the contract. The client should be able to terminate if you have breached the contract substantially, such as failing to perform the work to an acceptable standard.
On the other hand, you may have different reasons for terminating the contract. For example, you may want to terminate if:
- your client does not give you proper instructions;
- you feel you can no longer work with the client;
- the client gives you any intellectual property that isn’t theirs (but says that it is);
- the client rips off any of your intellectual property; or
- the client hires one of your employees.
You must consider how notice will be given (in-person, email or by phone) and what fees are payable on termination.
For example, does the client pay you for work up until the contract was terminated? Will you do a partial refund if a client pulls out before the contract is due to end?
A detailed termination clause will ensure you and your client can part ways amicably.
A marketing contract should be clear about 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, get in touch with LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.
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