A contract is a type of legal document that is legally enforceable. It underpins business relationships and transactions. Accordingly, parties can hold it up in court because it is legally enforceable. Thus, if one party to the contract breaches it, the other party can ask a court to enforce its terms. If a breach of contract causes loss, courts may award damages for the loss incurred. A contract that your business might need to utilise is a content licence agreement. This article will explain what a content licence agreement is and some key clauses to include.
When is a Contract Legally Binding?
A commercial contract is enforceable when it meets all the elements of a binding contract.
Clear Offer
For a contract to be binding, one party must send the other a clear offer that details the terms that one party wishes to contract with the other.
Unequivocal Acceptance
The party receiving the offer must then accept without any conditions. If the party receiving the offer changes the terms, this is called a counteroffer, and the original party must accept the offer. The accepting party must conduct the acceptance as prescribed in the offer.
Sufficient Consideration
An important term of a binding contract is providing consideration. This means that each party must receive a benefit or detriment for the contract to be binding. However, consideration does not have to be equal between the parties. As such, it can be nominal. The only requirement is that each party gives something in exchange for the other.
Certainty in Terms
The terms of a contract must also be certain for a contract to be binding. Certainty means the terms are unambiguous. If a term is ambiguous, a court may not enforce that term. If the term is essential to the meaning of the contract, then a court may make the whole contract unenforceable.
Intention to be Binding
Both parties must also intend the contract to be binding for it to be enforceable. This means that if one party does not believe the contract is binding, the contract is unenforceable. Furthermore, a contract may be unenforceable where one party is a minor or lacks proper mental capacity.
What is a Content Licence Agreement?
A content licence agreement is between a party that owns the content and one that wishes to licence it. It allows parties to repurpose copyrighted content. It is a common contract a business uses when they wish to make money off their content.
Our free Trade Mark Essentials in New Zealand guide explains how to register and defend your trade mark registration.
Common Terms
Fee
An important term to include in your content licence agreement is the fee between the licensee and the licensor. This could be a set rate or a sum chargeable per use. Alternatively, it could be a subscription that is paid at regular intervals. Whatever arrangement you choose, ensure you clearly outline it in the contract.
Scope of the Licence
Another useful clause in your content licence agreement is the scope of the licence. This will tell you what content you can use and what you can use it for. This should clearly state the type of content and its limits. Some licensors will not want their content used in specific industries or in conjunction with other businesses. If that is the case, the licensor must draft a clause to this effect. Often these clauses will outline what the licensee can use the content for to limit the licensee.
Termination
A termination clause outlines the process by which either party can terminate the contract. This is usually by giving notice to the other party. This clause should outline how much notice a party must give and if there are other ways to terminate the contract.
Key Takeaways
A content licence agreement is a common contract that allows a party to use another business’s content for a fee. However, it is important that your licence agreement contains all the necessary terms. Common terms you should include are a fee clause and a termination clause.
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Frequently Asked Questions
No, you can only use the content for the purpose stated in the contract.
No, you must follow the procedure in the termination clause. Otherwise, you could be in breach of contract.
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