Carefully negotiated agreements are key to minimizing risk and uncertainty in any business venture, and especially in agent-service provider relationships. Agents are often all too eager to hastily enter into a contract without carefully considering the potential pitfalls that may lie ahead. Executing an agent agreement and “closing the deal” may seem like an exciting start to a business relationship, but agents need to understand that in order to make the relationship prosperous and lasting, careful analysis and attention to detail must be invested in the courtship process. In short, all aspects of an agent agreement need to be thoroughly reviewed and thoughtfully negotiated with an eye towards the future.
Signing a contract is the first step in establishing a framework that will determine how all aspects of the relationship play out. Issues and concerns about payments, penalties, commissions, disputes, renewals and terminations, among others, undoubtedly will arise, and a carefully negotiated agent agreement will prove to be an authoritative guide down the road. More importantly, a well drafted agreement will define the rights and responsibilities of the parties involved, so as to minimize the risks that come from uncertainty and misunderstandings. Major service providers understand these issues, rights and responsibilities intimately, and will often employ teams of specialized attorneys to customize template agent agreements to their benefit. Agents must invest adequate time and care into the process, and at a minimum have a thorough understanding of how key contract provisions will affect their business.
Counsel
The issues identified below are merely a sampling of the key considerations involved with the typical agent agreement. Numerous other standard issues will exist in any agent agreement, and there will certainly exist a multitude of other unique issues depending on the particular agreement and service provider involved. Given the importance of these agreements to an agent’s business model, prudence would dictate that adequate time and resources be allocated to ensuring that the agreements are sound. Working with experienced communications counsel to draft and negotiate these agreements can help to achieve these goals.
Basics
Clarity. There are probably very few people in this world who can honestly say that they enjoy reading through contracts. Complex contractual terms can make reading through an agreement, not to mention understanding it, a terrible chore. Confusing and complex contract provisions are often deliberately inserted (by service providers) to heavily favor the party that drafted the agreement. Thus, an important first step to reviewing an agent agreement is to ensure readability and understandability. Clear, well drafted provisions will allow an agent to identify the rights and responsibilities that are part of the agreement, which can prevent costly breaches of the contract terms as well help ensure enforcement of the agreement should violations occur.
