Posted by Minna Boyle on 5 December 2018
What Is An Affiliate Agreement?
Sponsorship, Referral & Affiliate Agreements set out the terms and conditions on which a business provides sponsorship, refers clients or enters another sort of affiliate relationship. The contents of these agreements contract will vary depending on the commercial context. Typically, they will include provisions that provide a clear outline of the duties of both parties, details about payments, and other important protections and limitations specific to the situation.
When Do I Need It?
If you’re entering into an affiliate relationship with another business – for referral, sponsorship or otherwise – it’s a good idea to have a contract in place. It will help clarify what the role and responsibilities of you and your affiliate are and reduce the chance that a dispute will occur. It can also help to limit your liability if something goes wrong, secure your revenue streams and provide other important protections and limitations specific to your business.
How Do I Use It?
Sponsorship, Referral & Affiliate Agreements are normally negotiated between the parties involved. You will have discussions with your business affiliate about the commercial aspects of the agreement, as well as legal considerations like intellectual property ownership and confidential information. Then, each party signs the contract and becomes bound to the obligations contained in it.
Affiliate Agreement Example
Belle runs a dry cleaning business. Mikaela runs a tailor and clothing repair business. Their two shopfronts are around the corner from each other. Belle often gets customers looking for someone to make adjustments to their clothing items in addition to the dry cleaning service. Similarly, Mikaela often tailors clothing items for clients that need to be dry cleaned.
Belle and Mikaela decide to enter into a referral arrangement, where each receives 5% commission for any customers they successfully refer to the other. They record this in a Referral Agreement which they both sign.
What’s In An Affiliate Agreement?
Here are the sorts of issues that are typically covered in a Sponsorship, Referral or Affiliate Agreement.
- BUSINESS OBLIGATIONS – What is the scope of the agreement between the businesses? What happens if there are changes to the arrangement?
- PAYMENT – Is there a payment arrangement between the parties? For example, a commission on referrals, or an annual sponsorship fee?
- INTELLECTUAL PROPERTY – Who will own the intellectual property if anything is shared between the parties? For example, if the logo of a sponsor is used on marketing materials for the sponsored party.
- TERMINATION – How can either party get out of the agreement? What is the effect of termination – what happens to outstanding fees and partially completed work?
- DISPUTE RESOLUTION – What happens if there is a dispute? Is there a process that needs to be followed before the dispute is taken to court?
Need Help With A Sponsorship, Referral Or Other Affiliate Agreement?
Putting together Sponsorship, Referral & Affiliate Agreements can seem like a daunting process, as it’s hard to know what you should put in it and how to word it. It’s a good idea to invest in a lawyer to assist you with this process, as this one-off cost can help prevent disputes, misunderstandings and save you from problems and headaches in the long run.
At Sprintlaw, we have a team of experienced lawyers who can assist with your Sponsorship, Referral or Affiliate Agreement and other legals your business may need help with. Get in contact with one of our consultants for a no-obligation chat about how we can help.