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As a rights and contracts lawyer, I come across a lot of contracts in my job, and the views I get from people in the Middle East about contracts never cease to amaze me. All to often people say to me, “We don’t really use contracts and just operate on a handshake. We trust each other.” Or, “If we sign a contract, we always stick it in the bottom drawer and hope it never needs to come out again.”

As in any business, the legal stuff is important. Contracts should always be involved when you agree to do something in a business context with another party, whether they do something for you or you do something for them. A contract can take the form of standard terms and conditions (the kind of things you often see on the back of invoices) through to very detailed contracts tailored to a specific situation.

Contracts are there to say who is going to do what, when, how much money is involved, and what is going to happen to any intellectual property rights (including copyright and trade marks). This last point is of enormous importance in the context of an advertising agency, for example.

A contract should be a simple, understandable, user-friendly document which sets out how the parties are going to work together to do whatever it is that they plan to do. And it has the added benefit of saying how things will be dealt with if they don't work out smoothly.

PENNY FOR YOUR THOUGHTS. So, in the marketing industry, a contract will specify what the agency is being commissioned for, how long it is going to take them, and what are they going to be paid for doing it.  It should also describe what input they will need from the client and what will happen to the intellectual property rights in the work the agency will produce.   The contract should set out, in a way that both parties understand, basically what is going to happen from day to day during the time that they are working together. So, it's definitely not something you stick in the bottom drawer.

So why can't we leave it to a handshake or a good working relationship? Why should we bother going to the trouble of actually writing down what everybody is going to do? The answer to that is simple. If you don't write it down, it's easy to forget what everybody is supposed to be doing. That is the fastest way of creating problems. One of the parties may then have different expectations about what the other is supposed to be doing.

There are lots of issues to think about in the marketing industry. What rights exist? Who owns those rights? What can the client do with whatever the agency delivers? Is what the agency proposes as part of a campaign actually okay to do? For example, is it safe to use that Nokia phone, that image of Madonna or just a couple of bars of “I Can't Get No Satisfaction”? If you get it wrong, what can happen then? Does the agency carry a potential liability to its clients? Does it infringe someone else's rights? Do you need a permission? And if you do, how will that affect the budget? These issues are ultimately all about risk assessment and management, and the contract is there to help do both.

WHAT IS THE CONTRACT ACTUALLY FOR? Is it to govern the overall working relationship between the agency and the client, for example on the basis of a general retainer? If so, you probably still need to tie in somehow what each particular job is going to be about. So you can have an overall agreement that can cover the relationship generally but then you will have specific projects from time to time. Each of these projects can sit within the overall retainer agreement.

HOW IS THE AGENCY GOING TO BE PAID? Money obviously is key. This may depend on the actual project. Very often in advertising contracts I see around in the Middle East, the pricing does not reflect the way that the client is going to use the work.
WHO IS GOING TO CHECK THAT THE ACTIVITY IS LEGAL? We have a whole range of legal and regulatory controls over what actually can and can't be done across the Middle East. Who has responsibility for checking that? Is it the agency? Probably only if you tell them it is!  But how many clients think that it is their responsibility to make sure this is okay?

WHAT ABOUT THE IP RIGHTS? Every time any creative work is done by an agency (or by a third party on their behalf), intellectual property rights (mostly copyrights and trade marks) are being created. So who owns these? Is it the client?  Often, not unless the contract says so. What can both the agency and the client do with the rights that arise? Can the client always do whatever it needs with the creative work undertaken by the agency at any point in the future? Who owns the rights if a third party was used? Again, it often won't be the client unless there is a contract with the agency that says so, and even the agency will probably not own them.

WHAT ABOUT CONFIDENTIALITY? This is a kind of two way issue in that specific provisions should be made for all briefs and other information provided by the client to be kept confidential and returned to the client on request. That way, the client will be more comfortable about disclosing sensitive commercial information to its agency. Otherwise, how can it be sure that it is safe to tell them real specifics about what it is trying to do?

WHAT IF THINGS GO WRONG? Who will be legally liable, for example, if a particular advertisement created by the agency infringes someone else's rights, such as a third party's trade mark? This is partly a matter of making sure you clear the legality of whatever you are doing before you do it. But there are also questions about whether there should be indemnities from the agency to the client or maybe, if the agency has been given materials to use (including trade marks) by the client, from the client to the agency. Again, this will only work if you put it in a contract.

A contract is not something to ignore, avoid or hideaway or stick in a bottom drawer.  It is there to make what you are doing easier. Most people don't like risks, so finding a way of assessing properly any that exist in the client-agency relationship is extremely useful. Managing those risks properly is an essential part of business here.  

How do you go about achieving this?  Simple: get a contract that says who is going to do what, when, for how much and what's going to happen to the intellectual property rights.  Remember: a contract is worth much, much more than the paper it is written on.

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