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When working in a digital agency, you will likely need to use a digital agency contract. This is an excellent method of building trust with the customers that you are dealing with. In addition, using contracts means that your deals with your customers are legally enforceable. If you or your customer refuses to uphold the contract terms, then the other party can take you to court to legally enforce the agreement. Alternatively, the court may grant an order of damages for any loss incurred that the other party must pay. This article explains what a digital agency contract is and what its key features are.

What is a Digital Agency Contract?

Digital agencies use a digital agency contract to enable the agency to represent their client. It creates an agent-principal relationship which gives rise to fiduciary duties on behalf of the agent. A digital agency can look after anything from social media, digital marketing services to search engine advertising. Often, a business will let a digital agency deal with all digital issues on behalf of the business.

Key Features of a Digital Agency Contract

Fiduciary Duties

Entering into a digital agency contract may lead to the agent having fiduciary responsibilities with the principal business. This means that the agent must act in the best interests of the business and must always act in good faith. If an agency breaches these fiduciary duties, then it could be liable in law. The agent must also make sure that it does not divulge any confidential information relating to its principal.

Enforceability 

Another feature of a digital agency contract is its enforceability. If the parties have taken steps to satisfy all the elements of a legally binding contract, then the contract will be enforceable. Consequently, if one party breaches the agreement, the other can either enforce the contract in court or ask the court to order damages for any loss they have incurred. However, the main issue that may crop up with enforceability is whether the parties intended for the contract to be binding. 

Termination Clause

Another feature of a digital agency contract is its termination clause. A termination clause is one that allows either party to cancel the agreement in certain circumstances, such as when it is no longer viable for either party to continue performing its terms. It is vital to make sure that you have met the criteria of the termination clause before you activate it. Otherwise, you could be in breach of the contract yourself.

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Intellectual Property Considerations

If a digital agency handles all digital issues relating to a business, it will likely be privy to intellectual property. Thus, there will be a clause in the contract that specifies what they can use the intellectual property to do.

For example, it may allow the digital agency to use certain intellectual property to create advertising material for the business. However, it is important that the digital agency does not go beyond these specific uses. Otherwise, their use of the intellectual property may constitute a breach of contract

Payment Terms

Another important clause that you should consider including in your digital agency contract relates to the payment terms. This determines:

  • how the customer pays the digital agency; and
  • what terms this is on.

The payment term is an essential clause in any contract that the two parties will usually negotiate. It may cover issues such as whether there is a late fee or other additional costs.

Scope of the Agreement

Finally, you should also include a clause in your digital agency contract that relates to the scope of the agreement. The scope of the agreement will explain what type of work the digital agency will undertake under the contract.

For example, it will determine whether the digital agency is working on a one-off project or working over a certain period of time. 

Key Takeaways

As with all contracts, a digital agency contract must contain all the relevant provisions so that it can be enforced if either contracting party refuses to uphold their obligations. These provisions should cover the scope of the engagement and protect intellectual property. You should also include a termination clause in the agreement if either party wishes to cancel the contract in certain circumstances. Additionally, it should be noted that both parties must intend for the contract to be binding for it to be enforceable. 

If you need help with managing your contracts, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.

Frequently Asked Questions

Do I have to include a termination clause in my digital agency contract?

No, there is no legal requirement to include a termination clause in your digital agency contract. However, it is always a sound idea to include one in case you wish to cancel the agreement.

What happens if a digital agency misuses intellectual property?

If intellectual property is misused or misappropriated, then the principal, or client, will be able to bring an action in court for this. This can result in severe legal consequences.

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