Unlocking Contract Confidence: How to Read a Contract like a Pro
May 29, 2023
8 Min Read
The number one way to protect your influencer business is by reading and understanding contracts- which is up there with one of the most complicated parts of running your creator biz. Terms like indemnification, scope of services, and usage terms are enough to get you running in the other direction or signing away valuable opportunities to make more money.
So let's make sure you scoop up all the pennies your project is worth and ulock your contract reading confidence. We asked COO & Co-founder of Kaveat App, Elizabete,to give us the low down on how to read a contract like a pro. P.S. she was a legal officer for eBay before starting Kaveat, so you can say she knows her stuff!
What are the most important things to look for in a contract?
You want to look for:
Deliverables & Payment: Know what you're providing and how much you're getting paid. This should be discussed via email and reflected in the contract.
Contract Term: Understand the duration of the agreement and when you’re getting paid. Most likely will just be slung into the contract for you to pick out. Read more about contract terms here.
Termination Clause: Identify when and who can end the contract.
Breach of Contract: Understand what actions could void the contract.
What can a content creator amend in a contract?
Essentially, everything is up for negotiation, just make sure you get it amended in the final contract. An email chain is NOT a valid amendment to a contract. Why?
In each contract, there will be an agreement clause stating that the contract is the final agreement and any previous discussions don't count. Meaning if you don't get that DM or email amendment in before you sign the contract, it's too bad so sad for you because it's legally not viewed as part of the contract.
If you've read through a contract and see things you don't like such as excessive usage, long payment terms, sole indemnification and etc, then you can always ask to have those removed or reduced.
Speaking of indemnification...
What is Indemnification?
There are two types: regular indemnification and mutual indemnification.
Indemnification: It's a promise to cover any losses suffered by the other party due to your actions. Meaning you are responsible for lawsuits, damages, and etc that the brand may incur because of something you said about promoting their product. SCARY. That could be $1,000's of dollars of risk you're taking on!
Mutual Indemnification: Ideally, both the influencer and the brand should agree to cover each other's losses, ensuring shared responsibility.
If you see Indemnification in a contract, make sure that it's mutual, and if it isn't, make sure they put a liability cap on the indemnification equal to at maximum what they are paying you for the collab.
What is whitelisting? Usage?
Whitelisting is when a brand pays to use an influencer's post as their own ad. This boosts reach and benefits both parties.
Usage Rights are agreements between an influencer and a brand about the extent and duration of content usage by the brand. Types of Usage include digital rights (usage on digital platforms), global rights (worldwide usage), print usage (newspapers/billboards/ etc), and perpetual rights (indefinite usage on any platform).
Pay attention if you see the statement "Moral Rights" and whether or not you're signing those away. Moral Rights protect the influencer's right to be acknowledged as the content's creator and to object to harmful content alterations. Influencers should avoid waiving their moral rights or granting perpetual usage rights without fair compensation.
Can content creators provide their own contract?
Most of the time, you won't need to if the brand is providing the contract. They have their own internal legal teams to draft these up and protect their brand. But if you run your influencer channel like a media production with multiple people on staff, it's wise to have an attorney draft up a contract to help protect your business. Finally, if a small brand comes to you without a contract, it's probably best to have something drafted to protect both parties. Be wary of online templates from questionable sources, as they might lack sufficient legal protection. It's always best to find a lawyer to help you review the final off-the-shelf contract before using it for your business.
How to protect myself from vague contract language?
Use tools like Kaveat! These tools flag unusual or potentially harmful clauses by scanning your contract against a broad database to let you know "what the norm is".
If you're reading the contract yourself, voice them professionally through email. If you're worried about tarnishing your personal reputation, create a "fake" business assistant to respond on your behalf so you can feel more confident negotiating the business side without the emotion tied to it.
How do I quickly read a contract?
Until you're familiar with all the legal jargon and where they put it, reading a contract quickly is not the best practice. Take your time to go through it and make sure all of the items you discussed with the brand are included/ excluded.
Or if you want AI to do the first pass, check out Kaveat. Their tool will flag the contract if it's missing something like a governing law or another important clause. This empowers influencers to return to brands with these points, helping you negotiate a better rate.
Finally, what is the difference between an appendix and a service agreement?
Appendices (also referred to as exhibits or annexes), are extra materials at the end of a contract. They provide additional context and guidelines to the agreement. For example, a brands mission statement or communication guidelines may be attached as an appendix. They serve to give you a complete picture of the contract terms, not some place that will trick you into giving away rights.
A service agreement is the main contract between you (the influencer) and the brand. It outlines specific services you're providing, deliverables, payment terms, governing law, work period and usage rights. Essentially it lays out all the specifics of your working relationship with the brand.
Phew! Reading a contract is time consuming and honestly a little overwhelming, but it's important to get comfortable seeing these terms in a contract and protecting you, your business and your financial interests. It takes a little practice, and sometimes an awesome new tool like Kaveat, to help you master it.
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