The present article will be discussing what is a marketing agreement, why is it required , what are the challenges faced while drafting a marketing agreement and what are the essentials that a marketing agreement must contain.
Marketing refers to activities undertaken by a business to market its merchandise and services within the market. it’s a very necessary step that’s needed by any business because it permits a corporation to:
- Build and maintain its reputation
- Inform customers concerning the varied product and services offered, boost its sales;
- Maintaining relevance by manufacturing products and services that area units needed within the market; thereby enabling the company to make reasonable decisions.
Many times, a business hires outside contractors to spice up its marketing efforts. Such outside contractors can be individuals, marketing companies , etc. They assist an organization in making, implementing and sustaining market methods that provide a boost to its business. Once this is often done, the business enters into a marketing agreement with the merchandiser.
One of the most essential documents a merchandiser would need is a marketing agreement. It is a legally binding document which is signed by all parties involved in it and which lays down the scope of the work, duties, and expectations of the parties, remunerations, legal remedies available in case of a breach, etc. One of them is offering their goods and services in the market while the other is the one who would market or promote these goods in the market.
Illustration: ‘XYZ’ is a bank providing financial services, while ‘ABC’ is engaged in telemarketing. ‘XYZ’ enters into a contract with ‘ABC’ to market these services by making calls to various customers for 6 months.
Thus, from above illustration it can be concluded that the contract is based on a marketing agreement and it contains all terms and conditions guiding their relationship.
Need of Written Marketing Agreement
The question which arises is what is the need for a written marketing agreement. Inorder to answer this question, let us look at the importance of such an agreement:
- It permits the parties to produce a clear written clarification concerning what they expect from one another. This way, it clarifies the scope of work and ensures answerability.
- It clearly provides what is negotiated and what can’t be and helps in avoiding time wastage and confusion.
- To ensure efficiency it lays down proper deadlines that have to be followed.
- To ensure a feeling of faithfulness and trust amongst the parties it clearly provides for the procedures in which the remuneration and payments will be channelized.
- It also provides for penal provisions in case a party fails to perform or goes against the agreement.
- A good agreement additionally helps in ensuring that no party release any important information of the corporate policies to the general public and therefore eases doubts of treachery within the minds of the parties.
Challenges while Drafting Marketing Agreement
While drafting marketing agreements, several challenges can be faced. Some of them are:
The clarity in terms of employment
Marketing agreements are typically entered into for a period of 2years or more. Thus, it becomes extremely necessary for the person drafting the agreement to make sure that the terms of the contract are clear. If these terms aren’t clear a lot of time and energy of the parties is wasted.
The drafting method may be terribly difficult because the necessities of agreement differ from business to business and state to state. per se it should cater to every organization specifically.
Vagueness in Clauses
A clause in a contract will either be specific or generic. for instance, the results will either have specific provisions like return on investment, whereas a clause with general provisions will offer for things like brand building, social media awareness etc. A particular clause is often most well-liked however drafting a particular clause will be a complicated method, which needs understanding the entire company profile.
Formulating a time frame
While drafting an agreement, the inclusion of incorrect timeframe or deadline will result in huge problematic consequences. Hence, before including any date, the person drafting the contract has to have proper discussions with the parties concerned.
Unclear limitations and liabilities
A major downside that arises while drafting an agreement is putting down the liabilities that the parties need to face if the agreement is broken. This can be as a result of every party needs to guard and provides advantages to themselves. Therefore, while drafting, it has to ensure that the rights of each party are adequately protected.
Essentials of Marketing Agreement
A marketing agreement being creative in nature does not have a clearly defined structure . But there are certain essential elements that every marketing agreement must-have which are as under:
1) Parties and their relationship
The agreement should clearly mention the names and essential contact details of the parties involved. The agreement should also mention whether the employment of the marketer is on a retainer basis or a fixed-term basis .It should be mentioned whether the agreement is exclusive or not.
2) Scope of the work
The selling agreement should clearly outline the work that the parties are needed to perform because it is a record of the expectations of every party. it can specify that the marketer is supposed to prepare marketing strategy . In terms of the business, it may specify what information must be provided and what not. It can even specify however deliverables are going to be reviewed and the way approval/rejection are going to be handled and what ar the implications of not finishing the work. It ought to additionally contain a clause relating to however either party will request the opposite party to try and do work that has not been expressly mentioned within the contract.
This clause must clarify all the terms related to the overall amount to be paid to the marketer as well as the payment structure and cycle. The payment may be made regularly , or after the entire work has been completed, or it could even be on a performance basis.
This clause must be very detailed, and should also provide the actions that the marketer can undertake in case the business fails to make the payment.
4) Expenditure Clause
The agreement should tell in detail the predetermined budget as well as the terms of expenditure that each party would incur during the business. For example, it should specify who would pay for the taxes which arise during the marketing process.
5) Timeline for Completion of work
There should be a clause in the agreement containing information about the time frame for completion of the work. This time frame directs the services given by the parties.
6) Non-disclosure/ Confidentiality Clause
When a marketer and a business organization work together, they share a lot of information. Some of this information must be kept a secret. Hence, in regard to such information, confidentiality must be maintained. This clause will define what is confidential and lay down that all confidential information is to be protected on the other hand it should also state the circumstances in which disclosure is allowed.
7) Dispute Resolution
This clause answers when, where and how the disputes arising between the parties should be settled. For instance, it provides that in case of a dispute, an internal informal meeting for dispute resolution should happen. Following this, mediation or arbitration can be used for dispute resolution. The clause should clearly specify how the mediator or an arbitrator would be appointed and the rules that would be followed during this process. It can also provide for litigation and specify the court which has jurisdiction to look into this case.
8) Intellectual Property Rights
This clause of the agreement should specify how the intellectual property created as a result of marketing would be handled. It should clearly tell who owns the intellectual property created during and after the work has been performed; if owned by the marketer, this clause should specify if a license has been given to the business to use the intellectual property, for how long it is given, etc.
9) Involvement of third parties
For successful marketing, the marketer needs to take services from third parties like search engines, advertising platforms, printers, social media sites, etc. The third parties involved and to whom they are responsible should be clearly mentioned in the agreement.
10) Termination Clause
It should cover how and when can the agreement be prematurely terminated. It should be specified whether either party can terminate the agreement and the circumstances in which they can do so. It should also provide details regarding the penalty to be imposed upon the party who prematurely terminates the agreement.
A marketing agreement is clearly an essential legal document that provides clear outline what every party would do and the way they’re going to do. By setting off clear rules and expectations that every party has, it permits all the parties to run their practice peacefully and not fall into costly disputes.
While these essential clauses should be present in a marketing agreement, it can’t be unnoticed that several clauses would be fully dependant upon the laws of a selected state and business. Thus, before drafting a brand new agreement the parties should make sure that the agreement meets their desires and necessities and permits their growth.
- Meaning of Marketing agreement?
- Need a Marketing Agreement?
- Challenges faced in drafting Marketing Agreement?
- Essentials of Marketing Agreement?