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Apr

13

Marketing Services Agreements – What you need to know!

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Marketing Services Agreement | Contract

Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to drafting a Marketing Services Agreement, you should seek professional assistance (e.g. make a post on Dynamic Legal Forms). You can also contact me directly.

In this blog, I’ll be discussing some of the important considerations you should be aware of when engaging a marketing services company. The bottom line is that you want an agreement with them. So how do you get there? What do you need to think about? How can you save yourself from future legal (and potentially expensive) headaches? Keep reading…

Business Requirements

So here’s the situation: you want to hire another business to provide you with marketing services. Among other things, you want to:

  • identify what services will be provided by the marketing company;
  • protect your ideas, products or services;
  • determine how the marketing company will get paid (e.g. hourly, commission based, etc.);
  • keep the relationship independent (i.e. each business carries on its activities independently of the other so that there is no employment, agent, franchise, partnership, or joint venture relationship);
  • have some control over how the services are performed;
  • be able to get out of the contract;
  • be able to get protection from the marketing services company if they do something wrong;
  • ensure that Ontario law governs the situation.

So, with these typical business requirements in mind, how do you go from a set of criteria to a fully executed contract?

Initial Consultation

The initial consultation with a lawyer will typically involve reviewing the bare bones of the agreement, and then pointing out some issues you probably didn’t think of. For example:

  • What specific services will the marketing company be providing? According to what standards (e.g. your rules, policies and procedures and relevant government laws)?
  • Will you be requiring restrictive covenants? These are clauses that prohibit or limit a party’s ability to do something (e.g. disclose confidential information, compete in the same business as you or solicit your customers or employees).
  • Will you be sharing proprietary information to the marketing company (e.g. trademarks, patents, copyrights, etc.)? This could be in the form of some software application that you provide for them to perform the services.
  • Will the marketing services company be making promises (i.e. representations and warranties) about certain past or present facts – such as their ability to enter into the agreement without violating another agreement? Do they have the capacity to enter into this agreement (i.e. internally, have they received all necessary consents and authorizations?)? What if they breach one or more of these promises?
  • Will the marketing services company agree to pay and defend (i.e. indemnify) you in case things go wrong for which they are to blame (e.g. divulging confidential information, performing the services negligently, violating government laws, misrepresenting your products or services, etc.)?
  • How can the agreement be amended (unilaterally? by mutual agreement)?
  • If one or more provisions of the agreement is held to be invalid and unenforceable by a court of competent jurisdiction, should the whole contract die with it or just that part (i.e. severance)?
  • How can the agreement be terminated (e.g. by mutual agreement, after a specific period of time, by notice being provided, by just cause where one party is to blame for some wrongdoing)?

You see, there are many other considerations that the parties should agree upon when deciding to enter into a marketing services agreement. It’s not just the initial business requirements that count, but also a plethora of legal issues that apply to virtually all commercial agreements.

Drafting Considerations

I’m a big proponent of using clear and simple language to get the point across. I believe lawyers should cut out as much legal jargon from their legal agreements as possible. That language isn’t used in everyday conversations, so why do we include it in legal agreements? I’m always trying to reduce sentences to something manageable where only a few simple ideas are expressed. If you need to calculate something or are describing a means of coming up with a number, include an example. This is always helpful. Use lots of definitions so you don’t have to repeat concepts in their entirety throughout. Watch out for formatting and style: use bold and underline sparingly to bring attention to key points. I, for example, like to write defined terms as follows: the cat that lives in Ontario (the “Cat“). So now I can simply refer to the “Cat” throughout the rest of the Agreement and everyone will know that I’m referring to the cat that lives in Ontario.

Another important consideration that clients always ask me to do – in addition to keeping things clean and simple – is to keep the Agreement SHORT. The shorter, the better. Sometimes, it’s a challenge. Standard terms, for example, may take up 2-3 pages on their own, without having added any customized terms (that address the business requirements). I can always reduce the margins and font size, but this trick won’t always make sense. You need to have a clear, complete, and meaningful Agreement. If you want it to be on 3 pages in order not to scare away the other parties, you might be doing yourself a dis-service: if anything goes wrong and your contract didn’t contemplate what happens in that situation, you may end up paying dearly for not having addressed the situation.

Negotiating

A lot of times, the client will want to directly negotiate with the marketing services company. Involving a lawyer may add additional time and cost, and it may put the marketing services company on the defensive: they may get their lawyer involved, who may want major revisions to the agreement. Because of the unpredictability of it all, lawyers will be forced to charge hourly rates for their time, which doesn’t give their client any idea as to the overall cost of the project.

Now, I’ve previously blogged about negotiating techniques, which you can read about here.

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