iLegal – Balancing Your Contracts
I’ve advised this before, but it’s worth saying again; whether you’re a large or small organization, a multi-division company or a solo affiliate, you must read and understand all of the contracts you sign.
Often when I’m negotiating a contract with a manager, executive or counsel for a client or publisher, and I object to a clause in a contract, I’m met with a response something like, "gosh, most people have no problem agreeing to that." Don’t be intimidated into accepting something you don’t like because of that reaction. If you don’t like it, negotiate it out of the agreement.
The truth is that counsel will often draft contracts that are exceptionally unbalanced, and biased against those they do business with. The more leverage a company has, the more likely their contracts are to be one sided. That’s the right a large and successful company has earned. Being large and successful has its advantages, and legal and bargaining leverage fall in that category. But that doesn’t mean you have to accept whatever someone with leverage puts in their contracts.
The following are several areas that are common in contracts in this industry where you should check for reciprocity. In other words, your rights and their rights should legitimately be equal.
Indemnity Clauses – We’ve discussed this before. You have the right to the same indemnity assurances as the other party.
– We’ve discussed this before. You have the right to the same indemnity assurances as the other party.
Non-Solicitation Clauses – These clauses are intended to prevent a party from stealing employees from the other. If you’re prohibited from stealing their employees, they should be prohibited from stealing yours. Again, this is a very reasonable request. If a company won’t make this clause mutual, you might want to ponder the reason why.
– – These clauses are intended to prevent a party from stealing employees from the other. If you’re prohibited from stealing their employees, they should be prohibited from stealing yours. Again, this is a very reasonable request. If a company won’t make this clause mutual, you might want to ponder the reason why.
Non-Circumvent Clauses – These clauses are written to prevent one party from going around the other to steal direct relationships with advertisers or publishers. Again, what’s good for one is good for the other, and if requested, most companies will make this clause mutual.
– These clauses are written to prevent one party from going around the other to steal direct relationships with advertisers or publishers. Again, what’s good for one is good for the other, and if requested, most companies will make this clause mutual.
Compliance Clauses – This is a broad class of clauses that deal with compliance issues such as CAN SPAM, state and federal laws, rules and regulations, etc. Read these clauses carefully, and make sure that both parties carry a burden that is appropriate to their role in the relationship. Don’t take on more liability than is reasonable.
– This is a broad class of clauses that deal with compliance issues such as CAN SPAM, state and federal laws, rules and regulations, etc. Read these clauses carefully, and make sure that both parties carry a burden that is appropriate to their role in the relationship. Don’t take on more liability than is reasonable.
For example, it’s very difficult for a network to warranty that all websites run by all of its affiliates are in compliance and operated within the law. Yet I often see that warranty in form contracts. While you certainly have a responsibility to do your due diligence, such an agreement creates a burden that is far greater than the actual due diligence that is possible. Do you really believe that you know everything that is being done on every website run by every one of your affiliates? If not, don’t agree to vouch for them.
On a general note, if it doesn’t seem "fair" to you, it probably isn’t. Don’t think that because you’re not a lawyer, you’re not capable of reading, understanding and properly negotiating a fair and reasonable deal for all concerned.
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Come back to the iLegal column every week as we get specific about the rules, regulations, laws and trends that affect the online advertising industry. Each week we discuss important legal issues, talk about how to avoid the pitfalls, and cover the breaking legal and regulatory advertising industry news.
Legal Disclaimer: Information conveyed in this column is provided for informational purposes only and does not constitute legal advice. These materials do not necessarily reflect the opinions of Digital Moses, and is not guaranteed to be complete, correct, or up-to-date. The column is provided for "information purposes" only and should not be relied upon as "legal advice." This information is not intended to substitute for obtaining legal advice from an attorney. No person should act or rely on any information in this column without seeking the advice of an attorney.
Mark Meckler is the General Counsel for UniqueLeads.com, Inc., and Unique Lists, Inc.
Copyright 2007 Mark J. Meckler
