May 25th, 2017 / Insight posted in Articles

Top 10 tips: Client contracts

We were delighted to be joined by Jo Farmer, Head of Brands & IP at law firm Lewis Silkin, at our Client Value Breakfast on 23 May. At this session, she provided a “contracts 101” session explaining the key legal clauses in client agency contracts and common mistakes that every agency makes. Here, she has summarised her top 10 tips:

  • Oral agreements can be legally binding – but are messy and uncertain for all the parties;
  • If you don’t want pitch documentation or draft contracts to be legally binding, then you must put “SUBJECT TO CONTRACT” on them;
  • In client/agency contracts, watch out for the phrase “time is of the essence”;
  • If you are being appointed on a project basis (rather than retainer), ensure you have an adequate notice period or cancellation fees payable if the client wants to cancel the project;
  • Whilst “Key Personnel” are important to clients, it may be impractical to have to agree all changes to the Key Personnel with the client (e.g. if Key Personnel leaves the agency, gets promoted, gets reassigned to a different account or goes on sick leave);
  • With non compete clauses, if you are agreeing not to do any work for a “competitor”, make sure you add a clear and unambiguous definition of what “competitor” means. In an ideal world, this could be a list appended to the contract;
  • If the contract says nothing about interest for late payment, the statutory rate for late payment of commercial debts will apply, which is 8% over the base rate of the Bank of England. However, it is unusual for agencies to use this remedy against current clients. A far more practical and useful remedy may be to have a clause entitling you to stop the services if the client is late in paying invoices;
  • Don’t forget about the client’s obligations, which will include obligations to provide the brief, give relevant information and materials about the product/campaign, and to provide approvals on time;
  • If the client operates in a highly regulated sector (such as gambling, pharmaceutical, cosmetics, HFSS food), then it may be appropriate for the client to be responsible for regulatory compliance relating to the services, not the agency;
  • Limits on liability are a thorny issue which you should expect to have to negotiate on a case by case basis. If the contract doesn’t include a cap on liability it means the agency’s liability is uncapped.