Parts 1 to 3 of this series covered a majority of the commercial items that need to be considered when entering into a creative agency agreement. There are, however, several housekeeping items which also need to be considered which will be covered in the final part of this series.
Under what conditions can this agreement be terminated?
Normally, if it is an ongoing arrangement, there will be a clause setting out the notice period required if one party wants to terminate the agreement. Depending on the size of the client company, the standard notice period can range from 20 business days to 3 months. This needs to be agreed between the parties.
You may also wish to set out a number of circumstances in which one party can terminate the agreement immediately. This may include, for example:
- a material breach of a provision of the creative agency agreement;
- failure by the client to pay the creative agency’s invoices over a significant period of time;
- consistent failure by the creative agency to provide the services to the client’s satisfaction; or
- a party entering into liquidation/administration.
When there is a dispute, the last thing that the parties need is a dispute over how to resolve a dispute. To avoid this, a well-drafted agreement will have a detailed dispute resolution procedure.
A standard dispute resolution clause will usually start with requiring the party bringing the complaint to provide the other party with a dispute notice setting out all the matters in dispute. Then, if the dispute cannot be resolved after, for example, two weeks, the parties can then refer the matter to a mediator. If the parties cannot agree on a mediator, either party can request a third party to appoint a mediator – this third party is usually the relevant law society.
Most dispute resolution clauses will not allow a party to commence court proceedings until the parties have attempted to resolve the dispute through mediation. This is because court proceedings are timely and costly for both parties, and more often than not, result in an irreparable working relationship.
Throughout the agreement, there will be requirements on one party to provide the other with notice in writing. The notices clause will set out how notices are to be communicated, for example, by post, email, or fax, and when such notices are deemed to have been delivered. This is important to help the parties avoid dispute over whether or not notice was given and received.
Creative agency agreements are generally quite lengthy and complex. If you require a creative agency agreement, we recommend that you have this drafted professional by an experienced contract lawyer. Alternatively, if you are entering into a creative agency agreement, we recommend that you have this reviewed so that you understand all your rights and obligations under it. Once an agreement is signed, it is difficult to negotiate changes to the terms and you could be stuck with an agreement that is highly unfavourable to you.