Four years on, an updated IPA, ISBA, CIPS suggested form of Advertiser agency/client contract (the original of which was largely written by Osborne Clarke’s Stephen Groom) hits the streets.
Topic: Contracts
Who: The Institute of Practitioners in Advertising (“IPA”), the Incorporated Society of British Advertisers (“ISBA”) and the Chartered Institute of Purchasing and Supply (“CIPS”)
When: September 2002
Where: London
What happened:
In 1998, ISBA, the IPA and CIPS took the unprecedented step of publishing a joint suggested form of contract for the provision of advertising services by an advertising agency to its client. Marketinglaw editor and Osborne Clarke Partner, Stephen Groom played the lead role in drafting that document and mediating between the trade bodies so as to produce a form with which all parties were comfortable. Now, an updated “Full Service” version has been published, together with two separate new contracts, one solely for media services and the other solely for creative services. Most of the content remains exactly the same, whilst the format has been tinkered with slightly by locating the explanatory notes horizontally under each relevant clause as opposed to vertically, down the side of the relevant part of the page. Here are some highlights from the limited changes that have been made.
In the “Full Service” contract appears a new provision in the “Terms of Payment” clause which deals specifically with the situation where a media owner levies late copy charges. The new clause provides that “If a media owner levies late copy charges against the Agency and such charges do not result from the negligent or wilful act or omission of the Agency, the Client shall immediately reimburse the amount of such late copy charges to the Agency.”
In the “Copyright and other Intellectual Property Rights” section, the only changes are that instead of summaries of two alternative intellectual property rights clauses (one assigning up front to the client all intellectual property rights in material to be created by the Agency under the contract) the whole clause now appears.
One of the few significant changes is the inclusion of a new “Limitation of Liability” clause. This gives the parties the option of capping the agency’s maximum aggregate liability in respect of any contractual breach. It is suggested that this can be done in one or both of two ways. First of all a limit on the amount for which the agency may be liable, either by reference to the total charges payable to the agency under the contract or by reference to an alternative quoted maximum figure. Separately, the drafting seeks to ring-fence the categories of loss or damage flowing from any breach for which the agency can be liable. For instance, any anticipated loss of income or contracts flowing from the breach will not be a category of loss for which the agency can be liable.
So far as financial services are concerned, the relevant clause has been reconfigured so as to bring it into line with the new “financial promotions” regime introduced under the Financial Services and Markets Act 2000, and the force majeure clause has been amplified, for example imposing an obligation to notify the other party if an event of this kind supervenes and to take reasonable steps to try to overcome the effects of the event. The consequences of the event occurring are also set out in more detail.
Another new provision reflects recently introduced legislation by referring to the Contracts (Rights of Third Parties) Act 1999, stating that only a party who has signed the agreement can enforce it.
The “Entire Agreement” clause now goes further by providing that except in cases of fraudulent misrepresentation, there can be no claim by either party that the other is bound by any warranties or representations made in advance of the agreement being signed unless those warranties or representations are actually contained in the agreement which was executed.
A cosmetic change involves the actual inclusion in a schedule at the end of the contract of not only a list of the terms which have been defined, but also the definitions as they appear in the body of the contract.
Why this matters:
Although the ISBA/CIPS/IPA suggested form of contract has to an extent done the legal profession out of a job, it has clearly been warmly received by the industry. Research undertaken by the IPA in early 2002 indicated that 71% of respondent agency finance directors were using the document in their negotiations with clients. The success of the 1999 initiative is also evident by the fact that the changes that have now been made are extremely limited.
