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Basic Advertising Agreements

Introduction, Objectives & Drafting.
An advertising is a written agreement between a person who wants to place an ad and a company that offers its advertising space. It can be an agreement between two bloggers, an organization and a billboard company, etc.

Making an offer is the first step of forming a contract. While offers can come in many forms, an advertisement is usually not considered an offer to enter into a contract. Announcements, brochures, and catalogs also do not reach the level of an offer.

In most scenarios, an advertisement is not considered an offer. They are considered an invitation to begin negotiations. The reason for this is because if a contract was formed, no one could ever advertise without fear of being sued. Imagine placing an advertisement for delectable tomatoes.

In simpler terms, the parties involved are:
  1. The Advertiser who would be engaged in the manufacture, sale, marketing and distribution of goods and services in different categories such as xxx.
  2. The Ad Agency who would be engaged in the business of providing advisory services, brand communication and solutions, buying and planning of media spots for advertising and other ancillary activities.
  3. The Broadcaster who would be engaged in the business of broadcasting, phishing operations through its network of TV/ media channels.

While drafting the Advertising Agreement, following important points must be taken care of:
  • Under the scope of work - Why agencies always need a contract.
  • Names and addresses of agency and client.
  • Outline the contract's duration.
  • Payment schedule.
  • Conditions to avoid scope slink.
  • When the contract is terminated.
  • Outline what happens with a breach of contract.
  • Include a confidentiality and indemnity clause.

Basic Advertising Agreement
An advertising agency agreement is used by an advertiser when retaining the services of an advertising agency. It includes provisions on the scope of advertising and marketing services and ownership of creative work product and intellectual property. Although drafted in favor of the advertiser, this agreement contains integrated drafting notes and negotiating tips that also address the interests of the advertising agency and the broadcaster.

Advertising Agency Agreement is a legal document that defines the relationship between an advertiser, its advertising agency and broadcaster. An advertising agency is a person or company that places advertisements in order to target customers.

For example: An Advertising Agreement is a document that is signed and executed between an Individual/ Corporation/Company who wants to promote their products on the one side and the Advertiser, the Company/Corporation/Individual who would advertise their product and help them in reaching the masses on the other side.

WHEREAS the company is manufacturer of various plastic and fiber products like Office Stationeries, Furniture, kitchen utensils, electronic gadget cabinets etc. hereinafter referred to as "the said products" and desirous to engage the services of an advertising agency for the purpose of advertisement of their products in India and abroad.

  1. The company appoints the Agency to advertise the said products in the newspapers, magazines, journals, cinema slides, video magazines, radio, television or public hoardings as may be determined by the parties.
  2. The Agency shall submit the estimate of cost and method and period of the advertisement to the company and after the said estimate and methods of advertisements is approved by the company in writing, the advertisements will be released to the concerned newspapers, magazines, television centre, etc.
  3. The Agency shall be responsible for preparing all the material for advertising, publicity including art work, photography, cinematography, documentary films, drawing, engraving, advertising writing, preparation of video films for T.V. advertisements and video magazines and if the said works are got done by the Agency at its own office with the help of its employees, the company shall pay for the same at the market rates and settled between the parties. If the said works are got done through outside agencies, the company shall pay all expenses incurred by the Agency for getting the work done through outside agencies.
  4.  The company shall pay to the Agency . .................per cent above the cost and other expenses incurred by the Agency in this behalf as its commission.
  5. The Agency will be responsible for advertising the said products in India and other countries of the world, wherever the said products are exported or the company proposes to export its products.
  6. Whenever the company manufactures any new product and launches the same in the market for sale, the Agency shall undertake special advertisement campaign for the said new product in consultation with the company.
  7. The Agency will not act as Advertisement Agent of any company/person, who is manufacturing similar products and who are competitors of the company.
  8. The Agency shall observe the laws applicable and the rules or code of conduct of advertisers associations, association of newspapers or rules prescribed by television and radio.
  9. The Agency shall submit a weekly report to the company showing in detail the advertisements given regarding each of the said products separately and showing the dates, the timing or appearance of the advertisements, the names of newspapers/channel of TV given during the previous week. The report shall also accompany the cutting of newspapers/journals/magazines/clippings of T.V. Programme published/broadcast of the products.
  10. The Agency will not infringe any copyright of any person/company while displaying or publishing any advertisement of the company.
  11. The Agency shall indemnify and keep indemnified the company against any loss, claims, demands, actions, proceedings, damages, costs, charges and expenses which may be made or brought or commenced against the company for any act contrary to the provisions of this Agreement or due to or resulting from the breach of any agreement between the Agency and any newspaper/T.V. or any other person relating to the advertisement of the products of the company.
  12. The company shall indemnify and keep indemnified the Agency against any loss, claims, demands, actions, proceedings, losses, damages, costs, charges and expenses which may be made or brought or commenced against the Agency for the publication of any advertisement of the company, which has been prepared on the basis of the material furnished by the company.
  13. The company's budget for advertisement is Rs . .................crores per year, and the company agrees and undertakes that it shall get the advertising of its products done through the Agency.
  14. This agreement shall be for a period of one year from the date of these presents. However, any party may terminate this agreement before the period of one year by giving two months notice in advance to the other party. In case the Agency commits a breach of any covenant herein contained, the company is entitled to terminate the agreement by giving one week's notice.
  15. On the termination of the agreement, all the advertisement material in the possession of the Agency will be returned to the company forthwith and will not be used by the Agency for any other purpose or persons.
  16. The Agency shall submit bill to the company every month for the expenses incurred by it in advertising and the company shall pay the bill within a period of 10 days of the submission of the bill there for. The commission payable to the Agency shall be payable on the gross value of the work done or undertaken on behalf of the company and shall be paid along with the payment of bill of cost and expenses submitted by the Agency.
  17. The Agency shall also charge service tax on their bills at the rates applicable from time to time.
  18. The Agency shall advise the company of the most up to date, decent and profitable mode of advertisements at moderate.
  19. The company shall Endeavour to keep the agency with sufficient funds to pay the expected charges for advertisement.
  20. All disputes between the parties hereto arising out of this Agreement or in relation thereto or regarding the interpretation of this Agreement, shall be referred to an arbitrator appointed by the Indian Council of Arbitration, New Delhi and the provisions of the Indian Arbitration and Conciliation Act, 1996 or any statutory modification thereof shall be applicable to such reference.

End Titles

IN WITNESS WHEREOF the parties hereto have signed this Agreement on the day and year first above written.


1 The Company

For ..................... Ltd.



2. The Agency




Drafting Clauses
Booking and scheduling
Under this clause, the adviser agrees to authorize Broadcaster in connection with the advertisement of the products and/or services of Advertiser for a term ("Term") as hereinafter provided. Your scope of work is the one place that can land you in all sorts of trouble if you're not careful.

Consideration and payment terms.
Nobody likes hammering a payer for a late payment or an overdue invoice. It's frustrating and can affect the parties' relationship.

The best way to avoid this is to have a clear payment schedule outlined from the moment advertiser starts working with the agency and broadcaster. This part of your contract must outline the total amount you will be paid, how they will make payment, and if the payment is refundable:

Changes in agency.
Set out a clear process if the Advertiser requests a scope of work amendment or to change the agency. Any amendments shall be clearly communicated to other party of this contract and must specify the effects of changes on the rights and entitlements of each party to the contract.

Warranties, obligations and undertakings.
The Parties warrant and undertake that throughout the Term each of them has and will continue to have full authority to enter into this Agreement and to undertake each and all of the particular obligations on their respective parts contained herein.

Intellectual property and trademarks.
For the term of this Agreement, the ADVERTISER grants to the BROADCASTER a royalty-free, non-transferable license (with no right to sub-license) to those of its patents and design rights (and the patents and design rights of its Affiliates) with claims that cover the Products or any of them, solely for the limited purpose of permitting the BROADCASTER to market and advertise the products or services.

Subject to the following provisions, this Agreement shall commence on the Commencement Date and shall continue thereafter unless terminated by either party giving the other at any time not less than one month's prior written notice to expire on or at any time after the end of a one (1) year period following the Commencement Date.

if the other party commits a breach of any term or conditions of this Agreement.

VII. Consequence of termination.
If for any reason this Agreement shall be terminated or expire.The termination or expiry of this Agreement shall not of itself give rise to any liability on the part of the ADVERTISER to pay any compensation to the BROADCASTER for loss of profits or goodwill.

VIII. Indemnity.
The BROADCASTER shall indemnify the ADVERTISER against all losses or damages (whether direct or indirect, consequential or otherwise, including loss of profit), together with all costs, expenses and liabilities (including without limitation, legal and other professional costs) incurred, suffered or awarded against the ADVERTISER as a consequence of any breach by the Distributor of the Distributor's obligations under this agreement or that arise as a result of the action of the Distributor, including, but not limited to BROADCASTER's management and distribution of the Products.

IX. Confidentiality.
The ad agency and advertiser should agree to a non-compete clause in the contract to protect both parties from revealing trademarked or proprietary information to competitors.

Advertisement is one of the most important factors in the success of a product and involves a lot of money to advertise a product. Therefore, to safeguard the interest of all the stakeholders, the company must always try to enter into a written agreement with the advertiser wherein all the rights and responsibility, terms and conditions of the advertising agreement would be set out.

While doing so, the parties must keep in mind the terms used in the agreement because, at the time of conflict/dispute/disagreement between the parties, the adjudicating agency or court of law would refer to the written agreement.

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