Dedicated

with love to our children Katie, David, William, George and Peter.
Preface

Benefits of Contract and Copyright Drafting Skills:

• This book is designed to improve your knowledge of contract clauses and

develop your drafting skills.

• We focus on 56 main headings for contract clauses which are set out in the
content list and look at each topic in detail.

• You will be able to understand the meaning and scope and purpose of the
subject heading of that contract clause and the issues which relate to it.

• Actual clauses from The A-Z of Contract Clauses Sixth Edition are
reproduced in full in this book. References in this book to the A-Z are to text
from that edition. You can use this book on its own or in conjunction with
the A-Z.

• You will also find cross references to other main clause headings in the A-Z.
The aim of this is to highlight other topics that you may need to consider.

• When drafting contracts and agreements you should not consider them as
unchangeable and static with only one correct way of drafting them.

• Every precedent which you draft can be improved as your skills develop and
also be adapted to take account of new forms of exploitation.

• Our aim is to provide you with a solid foundation to develop your own style
and technique for drafting, reviewing and amending agreements in any
jurisdiction in the world.

• Whether you are completely new to the world of contracts and copyright, or
have acquired some skill at drafting and are at an intermediate level, this
book will improve and advance your understanding so that you can deal with
a wide variety of types of agreements across many industries.

• It will enable you to analyse and assess individual clauses in an agreement

 and to edit and change those sections which are too broad or too narrow.

• It will also encourage you to remove clauses from an agreement and to

substitute others which are more suited to your long term strategy.

• It will improve your ability to understand how and why clauses have been
drafted in a certain way and what the consequences might be if they were
accepted without any changes.

• It will increase your ability to adapt and edit clauses to your commercial
advantage.

• You will gain the confidence to suggest new clauses which you have already
drafted which you want added to an agreement.

• It will allow you to be able to review contracts quickly and deal with an agent
or supplier with greater insight and scrutiny.

• If increasing the revenue streams from the exploitation of copyright and other
intellectual property rights is your goal then this book will help you achieve
that aim.

• You will be able to understand the distinction between an exclusive licence

and an assignment.

• You will also be able to consider and weigh up the different financial impact
of a high percentage royalty of net receipts as opposed to a low percentage of
gross receipts.

• It should help you comprehend not only the significance of different types of
contract clauses but also how they impact on each other in an agreement.

• This book is not about legislation, case law or any of the issues you usually
find when looking at a book on contracts. It is about the skill of drafting and
how to create clauses which reflect accurately what the parties have agreed
in principle.

• It will also show you how to go beyond the often rather limited original terms
which the parties have discussed which may form the brief outline of the
agreement.
• You will recognise the stages of negotiation; drafting and issuing the
agreement is a key stage where you are provided with the opportunity to add
some terms and conditions which have not been discussed between the
parties.

• You will be made aware of clauses which protect your interests and limit
your liability.

• Such clauses may include for example the title and ownership of rights and
material and the potential to gain additional revenue in the future based on
the way rights are defined or how royalties are calculated.

• If you are providing services to a company then you will appreciate the need
to retain and own both the existing copyright and intellectual property rights
in your work as well as new rights and material which may be created as a
consequence of the agreement.

• If you are a commercial company it will encourage you to ensure that you
acquire copyright and intellectual property rights as part of any project as
well as those in any adaptations which you may license to third parties.

• The breadth of the subjects covered in this book will enable you to evaluate
and review contracts more efficiently and to be more aware of the potential
cost and budget implications of a project.

• The failure to cover effectively the issue of copyright clearance and costs and
payments due to collecting societies in an agreement is not unusual.

• You may use the contract clause headings to remind yourself of subjects
which may be missing from an agreement and need to be added.

• Although we do not cover every subject and contract clause which may arise
in relation to all agreements and licences or assignments this book will
increase your ability to deal with a wider variety of agreements across more
industries.

• As you experience the difficulties, problems and issues that arise in the day-
to-day operation and management of a business it becomes clearer which
clauses need to be included in a contract. Either to avoid problems you have
had in the past or to make clear how matters will be dealt with if there is a
 problem or dispute in the future.

Basic Drafting Principles and Guidance

• We set out just some of the concepts and strategies which you need to know
when drafting any type of agreement and addressing copyright ownership,
clearance or licensing or transfer of rights by assignment. Further matters are
raised under each section.

• It is important to realise that many different industries come at contracts from

different angles, may have very contrasting terms and conditions and may
also prioritise completely different aspects of the terms and conditions. Some
may even seek to propose and issue completely unreadable, badly drafted
and nonsensical agreements in a preprinted format in order to give the
impression that the terms are fixed, non-negotiable and cannot be changed.

• Many companies have an archive of previous agreements, templates and

documents either in paper form or as part of a central software programme.
These are then often used for many years without being updated, amended or
adapted to suit the technologically developing world in which we live.

• When you are learning these drafting skills in a business environment many
agreements are routinely issued based on a previous existing templates that
have been used in the past as a quick and easy way to deal with a matter.
This is often done without sufficient regard as to whether that old template is
actually relevant in the current climate and deals with all the issue and
problems that may arise.

• Drafting an effective contract is a skill distinct from being aware of the

background of case law, statutes or trade practices. There are many people
who have mastered those skills but cannot translate and accumulate that
knowledge and apply it to starting from a blank page and creating a
completely new document based on a new business collaboration and licence
or to acquire rights to store as a company asset for the future.

• When looking at case law we look at what lesson can be drawn from that
issue to avoid such a dispute happening again. What could have been
included in the agreement which would have meant that the parties had
already discussed and agreed that potential issue at the time of concluding
 the agreement?

• Or if a problem does arise in the future there should be a procedure and

structure set out in the agreement which endeavours to provide a pathway for
discussions and settlement – avoiding costly litigation.

• Documents are often drafted in a work or business environment where there

is only a limited time to agree, draft and conclude the agreement so that it
can be signed and payments made as required.

• You may be expected to create and draft documents based on only part of the
story as to the relationship and terms between the parties.

• You may have only been supplied with five or six key facts or bullet points
and be expected to make your own judgement as to which other terms should
be added and how they should be applied.

• Do not assume that all the facts you have been supplied with to create the
agreement are necessarily accurate, comprehensive or conclusive as to the
type of contract needed.

• It is important to conduct your own background research on the parties to the

agreement so that you understand the scope and depth of their business; what
they actually produce, sell and exploit and how and where they do so. Are
they acting through third parties such as sub-licensees and distributors?

• Research the website of the business and any company reports and accounts,
press releases as well as the corporate and investor section of their site and
their marketing and sales.

• There may be a history between the parties to an agreement so that there are
precedents and templates of documents and also expectations for the future.

• You may have a Chief Executive Officer who has not in fact negotiated the
best terms or even seen the full view of the situation but who has agreed
skeleton terms with the expectation that you will create and draft a suitable
agreement.

• On that basis you are expected to take the agreement forward into draft form.
The Chief Executive Officer or another senior executive may, as part of your
 corporate structure, review or approve the draft agreement before it is issued
or be one of a few named signatories for agreements.

• That is not always the case however and it is now increasingly common that
quite junior personnel in many departments are authorised to issue and
conclude pro forma precedents or to conclude agreements within financial
limits.

• This corporate practice may result in a failure to safeguard and acquire

copyright and intellectual property rights as part of a corporate strategy.
Often companies only find out they do not own material when they try to
exploit it at some later date.

• There may not even be a formalised document, but an exchange of emails.

This approach has many pitfalls not least the failure to keep proper long term
records which may be needed for due diligence if a company is sold on. Also
such an approach often results in the failure to acquire copyright and other
intellectual property rights which can be used to create an asset base for
future exploitation.

• No contract will ever be perfect – neither will it ever cover all the potential
situations that may arise. For example – you are in a new job and there is a
large file on the business dealings with a company. Terms and conditions are
basically repeated historically over a long period. If, after reviewing the
background, you believe that replicating those terms is not the best way
forward or the most advantageous, do not just rush ahead creating a
completely new agreement. First, discuss the matter with the Chief Executive
Officer and Finance Director and try and explain the need for a revised or
totally new agreement. Summarise in note form the essence of the new
agreement and the advantages or errors and omissions in the previous format.
You need to get the management on board to support your actions to create a
completely new or revised agreement.

• You may try and incorporate some elements in the new agreement which
were covered before which in your view do not cause any problems and may
even at first sight appear unnecessary or not important.

• In any agreement always consider adding a significant number of clauses

which do not really matter to you which the other party may ask to delete,
 amend or add to. These clauses, when amended or deleted, give the
impression to the other party that they have gained some advantage. In
reality these were not terms which had any weight for you except as
negotiating tools to provide some concessions to the other party.

• This book is not about drafting the longest agreement possible. Most
businesses do not want months of delay before an agreement is concluded.

• You should aim to get the deal done within the timescale permitted for the
benefit of the company. The impact of this may mean that it is not the best
agreement that could have been reached if you had six months to agree
terms. It is however the best within the pressures imposed to allow the
company to receive payment once the contract is signed or to be able to
promote the conclusion of the agreement or to formalise an ongoing process
which has in fact already started.

• There are key factors which matter whatever the type of agreement you are
negotiating. Take into account the cost implications or planned budgeted
expenditure to your company.

• Try and decide what the potential profit position would be to your company
and how this is being calculated and achieved. Is there any way that the
potential profit position can be improved?

• What services or products are you getting or supplying? Is there any way the
use of services from third parties can be improved so that you get more?

• What material is created in the process? How is it reproduced and exploited

and who owns it in each of the forms in which it is created and reproduced
and exploited?

• The subject headings of the contract clauses may apply to one or both parties
in an agreement.

• The clauses can be a mirror image or be very different. There may be

different aspects of the same issue that need to be set out in a clause.

• A clause may not only be about what you are granting but also what is not
being covered by the agreement and what is not permitted. You may
specifically exclude certain copyright, intellectual property rights or uses.
• You also need to ensure that you consider rights and material that may be
created in the future by either of the parties or a third party.

• The essence of any good agreement is in the detail of the descriptions and the
definitions. You must always remember that this document will be relied on
in the future as evidence of what the parties agreed and so the more specific
you are the better.

• You will find that there are a number of commons expressions which are
useful tools. Such as:

– ‘for the avoidance of doubt’

– ‘expressly reserved’

– ‘including but not limited to’

– ‘subject to prior written approval’

– ‘such approval not be unreasonably withheld or delayed’

• There is no rule that you cannot adopt clauses from other industries and that
is why the A-Z provides a wider picture so that you are able to examine
clauses across a variety of industries.

• It is always important to have clauses which set a standard for the quality
which is expected under an agreement and in particular the content. There
may be many stages of review and assessment of prototypes, samples and the
final version before production commences. The quality control provisions
should be linked to clauses relating to rejection or termination.

• You may also want to obtain draft copies of packaging, marketing and
promotional material for review. So that a licence complies with all the
necessary copyright notices, trade marks and other obligations.

Jurisdiction

• References to legislation are to the United Kingdom but the clauses in this
book from the A-Z have been used by companies worldwide. The
jurisdiction of this book includes the United Kingdom, Europe, the
 Commonwealth and worldwide.

• The short references to legislation in this book are reproduced and licensed
under Open Government Licence v3.0 at
www.nationalarchives.gov.uk/doc/open-government-licence/version/3/.

• The Crown copyright in the text of the legislation is held by Her Majesty’s
Stationery Office in the United Kingdom. You may find some but not all of
the legislation at www.legislation.gov.uk which is managed by The National
Archives.

About the authors

• Deborah Fosbrook is a Barrister of the Honourable Society of Gray’s Inn.

Her experience includes Thorn EMI, Business Affairs Programme
Acquisition at the BBC and Head of Legal and Business Affairs and
Company Secretary at TVam plc and all its subsidiaries. As part of the senior
management team which turned the company into a financial success, she
was appointed Company Secretary to manage the legal and business affairs
aspects of the flotation on the Stock Exchange. Deborah Fosbrook is a
consultant and author.

• Adrian C Laing is a Barrister of the Honourable Society of the Inner Temple

and was enrolled as a Solicitor of the Supreme Court in 2003. Adrian Laing
first practised as a tenant in Chambers (2 Pump Court) and then embarked on
a career as a commercial lawyer and consultant working for the IBA (later
the ITC) as Assistant Head of Licensing during the Channel 3 franchise
round. Subsequent appointments included: Consultant to the Chief Executive
of Thames Television plc; Senior Broadcasting Lawyer at Hammonds,
Solicitors; Director of Legal Affairs and Company Secretary to Harper
Collins Publishers; Company Director Harper Collins (India) and Proprietor,
Laing & Co (2004–2015). Adrian Laing currently acts as a private consultant
and lawyer to a number of companies and organisations in addition to being
a director of a film production company.

• Deborah Fosbrook and Adrian C Laing are co-authors of The A-Z of

Contract Clauses Sixth Edition and The Media and Business Contracts
Handbooks Fifth Edition both of which are published by Bloomsbury
Professional.
Deborah Fosbrook and Adrian C Laing
March 2016
Contents
The main contract clause headings

1 Absence
2 Acceptance
3 Access
4 Accounting Period
5 Accounting Provisions
6 Act of God
7 Adaptation
8 Advertising
9 Agency
10 Amendments
11 Assignment
12 Assignment Fee
13 Assignment Period
14 Cancellation
15 Confidentiality
16 Copyright Clearance
17 Copyright Notice
18 Copyright Warnings
19 Credits
20 Damages
21 Defamation
22 Delivery
23 Disclaimer
24 Editorial Control
25 Exclusivity
26 Force Majeure
27 Format
28 Gross Receipts
29 Indemnity
30 Jurisdiction
31 Legal Proceedings
32 Liability
33 Licence Area
34 Licence Fee
35 Licence Period
36 Logo
37 Marketing
38 Material
39 Mediation
40 Moral Rights
41 Net Receipts
42 Novation
43 Option
44 Payment
45 Rejection
46 Rights
47 Royalties
48 Set-Off
49 Settlement
50 Software
51 Sub-Licence
52 Termination
53 Territory
54 Third Party Transfer
55 Title
56 Trade Marks
 ABSENCE

• This section is from A-Z A.001 to A-Z A.050 in the A-Z.

It can also be cross referenced with other application main subject headings
such as Bank Holidays, Death, Gardening Leave, Health, Holidays,
Invalidity, Medical Report, Policies and Termination.

• Absences of all different types can have an impact on both the work
completed and the consequences within a contract. The exact wording of a
clause regarding absence may allow you to terminate an agreement with
confidence as a person has not complied with that term.

• Or you may avoid having a notice served upon you personally for breach of a
clause due to absence if it was not authorised in advance. If the clause within
the contract allows you to notify the company as soon as possible after the
event has started which resulted in you being absent without prior agreed
notice.

• There are different types of absences which may or may not apply and the
clauses are adjusted accordingly depending on whether you are drafting very
strictly and do not want someone to be away without a significant reason or
whether you are being more liberal and accepting that there may be
circumstances which are unplanned where a person’s absence may arise, but
that does not mean that it should necessarily follow that notice is served to
terminate the contract.

• There is obviously a connection between absence and whether or not any

payment of fees should be made for those days taken away. Payment may be
adjusted over a period of time to take account of the actual reason for
absence and the verification of the facts whether it be in the form of a
medical certificate, a personal note or some other evidence.

• Some of the information required may be set out in the staff handbook which
 is a separate document quite often supplied after the agreement is signed and
not actually referred to in the main agreement. It then becomes arguable as to
whether it formed any part of the terms of the original agreement. If it was
not seen by the other party until after terms were agreed then there is a very
strong argument that it cannot form part of the terms even if it was referred
to in the contract.

• The better route is to include any significant document or brochure which

forms part of the agreement either in the main body of the contract in the text
or as an attachment to the main agreement which is specifically referred to as
forming part of the main agreement as in A-Z A.002 in Employment below.

• The employee will only get those payments due for injury or ill health set out
in the staff handbook if a medical certificate or other evidence is provided in
accordance with the timescales set out. The payments will only apply after
the employee has completed a minimum number of months work.

A-Z A.002
In the event of the inability of the [Employee] to work for the [Employer]
due to the [Employee’s] illness or injury after the first [number] months.
Then the [Employee] shall be entitled to the sickness or injury benefits in
accordance with the [Employer’s] staff handbook in existence at that time
provided that medical certificates and/or a detailed medical report are
supplied to the [Employer] upon request within the stipulated deadlines.
The [Employer] will ensure that its obligation to pay statutory sick pay to
the [Employee] in accordance with all statutory provisions in force at the
time in the [United Kingdom] are fulfilled. The [Employee] acknowledges
receipt of the staff handbook dated [date] which forms part of this
Agreement.

• There are two aspects to this: firstly the precise hours and detail of the type of
work the person or company is expected to provide; and secondly,
clarification as to what constitutes an absence and what the consequences are
of this fact. In A-Z A.008 in Employment the Executive is working on a full
time basis and the days and hours are specified.

A-Z A.008
The [Executive] shall provide his/her exclusive services to the best of their
skill and ability on a full-time basis and normal working days shall be
 [specify days/hours/breaks]. The [Executive] shall perform all his/her
duties in a professional and diligent manner and shall not supply services
of the same or similar nature to the job description under this Agreement to
any third party without the prior written consent of the [Company].

• Absence and payment are also linked and so payment may be made only for
certain days or not at all dependent on the terms drafted. In A-Z A.009 in
Employment the Executive is required to have given notice of the reason for
his or her absence as soon as he or she can.

A-Z A.009
In the event of absence from work the [Executive] may notify the
[Company] as soon as possible, in person wherever possible or by the best
available means at his/her disposal in the circumstances. In any event the
[Executive] agrees to provide the [Company] with as much notice as
possible in the event that the [Executive] is unable whether as a result of
sickness or general circumstances beyond the control of the [Executive] to
perform any of his/her obligations under this Agreement.

• Failure to comply with the requirement in A-Z A.009 will mean that the
company can then activate the clause relating to withhold payment for each
unauthorised absence as set out in A-Z A.010 in Employment and to
consider whether disciplinary action may be taken. You will see that in this
clause the document or policy for disciplinary procedure has been attached
as a schedule to the original contract with the Executive.

A-Z A.010
If the [Executive] is absent from duty without permission and without a
reason acceptable to the [Company]. The [Company] reserves the right to
withhold payment or deduct from the [Executive’s] salary a day’s pay for
each day of unauthorised absence. Disciplinary action may also be taken in
accordance with the Disciplinary Procedure in Schedule [–].

• As policies and procedures for absence change over time it is also worth
having a regular review as to which contracts require amendments to
incorporate new material. For senior executives and more personal
agreements such as those for presenters, authors, senior retail management
rather than more junior or temporary staff then this would require agreement
 by both parties.

• Alternatively, the agreement may not refer to immediate disciplinary action

for unauthorised absence. The company may arrange a meeting to discuss the
unauthorised absences with the intention of specifying what in future is
expected of the person in terms of attendance and absences. The company
may decide if it so wishes if the problem does not improve to terminate the
agreement as set out in A-Z A.011 in Employment.

A-Z A.011
In the event that there is repeated unauthorised absence for all or part of the
day when the [Employee] is expected to be at the office of the [Company].
Then the [Company] shall arrange for a meeting to discuss the matter with
the [Employee]. Where the situation does not improve and the absences
continue then the [Company] shall be entitled to give written notice of the
termination of the contract of employment.

• Absence and holidays in employment related clauses must of course factor in

existing legislation in the relevant jurisdiction. However that does not
prevent a company being more generous than the minimum limits set by the
legislation.

• Nor does it prevent an employee or executive asking for clauses to permit

additional absences which are either taken without notice due to an
emergency or for some other reasons as set out in A-Z A.005 in
Employment. This clause would mean that the Company would not
automatically be entitled to send some form of written notice or warning as a
precursor to ending the agreement. This type of clause is not usual at the
moment but it is worth asking for it to be included.

A-Z A.005
The [Company] accepts and agrees that there may be occasions when the
[Employee] may be absent due to domestic, family, dental, health,
transport, weather conditions or due to some unforeseen emergency. The
[Company] agrees that failure to give advance notice shall not in those
circumstances be sufficient grounds to give a written warning regarding
absence. Provided that the [Employee] contacts the [Company] as soon as
reasonably possible to advise them of the position and unless the whole
[Company] is affected and closed the [Employee] shall either substitute
 alternative hours at a later date or allocate the absence as part of their
annual leave.

• This clause can be contrasted with that for a part-time temporary worker in
A-Z A.003 in Employment where, if they are absent, there is no pay and no
alternative work.

A-Z A.003
[Name] agrees that their position as [specify] is part-time temporary work
and that in the event that they are absent for any reason they shall not be
entitled to receive any payment of any nature or alternative work in
substitution.

• In A-Z A.014 in Employment there is another clause which is not usual

which can be asked for particularly where the employee’s or executive’s
employment has a very high value attached to it. Here it is accepted by both
parties that there is not an automatic right to consider unauthorised absence a
breach of the agreement where it is a genuine emergency, delay and/or
failure to attend. In this clause the scope of the clause extends not only to
immediate family but the extended family as well. That, for up to an agreed
number of days, it is sufficient that the person provides a note and reason
when they come back to work but it is however accepted that no payment is
due for those dates. In the event on any such occasion an agreed number of
days is to be exceeded the company may notify the person of a date by which
they must return to work and that if they do not comply then the agreement
may or will be terminated on the notified date. This is a clause which works
in being both realistic about a work and life balance but also aims to avoid
the usual termination provisions being triggered for relatively short periods
of absence.

A-Z A.014
It is agreed by both parties that any unnotified leave of absence shall not be
deemed a breach of this agreement where it is due to a genuine emergency,
delay and/or failure to attend arising from a matter relating to the
[Employee], his/her family, immediate grandparents and/or brothers and/or
sisters which does not relate to ill health or death of the [Employee].
Provided that upon return to work the [Employee] provides an explanation
in writing and agrees not to be paid for those dates where the [Employee] is
 absent. In the event that the period of absence on any one occasion is more
than [number] days then the parties agree that the [Company] shall be
entitled to notify the [Employee] of a date by which the [Employee] must
return to work as per the agreement otherwise it will be terminated on that
date.

• In A-Z A.012 in Employment where a temporary employee or someone on a

fixed term contract is away and absent for more than a certain number of
days in any week. Then the enterprise has the right to give them written
notice to end the agreement with immediate effect and shall only be liable to
pay for actual work completed by a person. This clause also excludes the
right to claim compensation.

A-Z A.012
If the event that a temporary person or someone who is on a fixed term
contract is unable for any reason (whether through illness, family
problems, loss of a close relative, and/or a hospital, dentist, eye or other
appointment relating to their health or an immediate family member which
they are required to attend) does not attend work to fulfil their duties under
this agreement for more than [–] days in any week of the agreement. Then
the [Enterprise] shall be entitled but no obliged to give written notice of
termination of the agreement which shall have immediate effect. No
compensation for loss of any nature shall be due and the liability of the
[Enterprise] shall only be for those days of work completed to the date of
termination.

• The usual absence clauses relating to an employee relate to absence for ill
health or paternity or maternity leave. The procedures are set out for the
employee to provide notice of absence and this is then linked to the statutory
payments that may be made dependent on the arrangements agreed.
Evidence may also be required in the form of medical certificates and other
supporting documents. Failure to provide the medical certificates required
may result in non-payment for those days of absence. The legislative detail
of this is outside the scope of this book.

• In A-Z A.001 in Employment the clause applies to any absence which is not
approved by an employer which lasts more than three consecutive days.
 A-Z A.001
If without the prior approval of the [Employer] any absence by the
[Employee] lasts for three consecutive working days or more the
[Employee] must provide a letter to the [Employer] on the third day or as
soon as reasonably practicable thereafter. The letter should set out the
reason for the absence and the date by which the [Employee] expects to be
able to return to work. On the eighth consecutive working day and at
weekly intervals thereafter a medical certificate from the [Employee’s]
own medical practice signed by a qualified Doctor must be provided to the
[Employer] stating the full reason and when a full recovery is expected.
The [Employee] shall bear all costs of obtaining any such certificates.

• In A-Z A.04 in Employment the clause covers the issue of a person taking
random days off work without any reason and which has not been agreed in
advance or authorised as holiday leave. Where these days accumulate in any
three-month period and exceed the number of days agreed. Then the
company has the choice and ability to issue a written warning notice and to
arrange a meeting to discuss the fact on a formal basis and to specify the
steps they expect the person to take to improve. This then allows the
company to summarily dismiss the person if they continue to ignore the
warning provided that the person has only been employed by the company
for less than a specified period. The company would still be obliged to pay
all the sums due until the date of termination for work which has been
completed.

A-Z A.004
Where a [person] is absent on more than [–] working days in a [three-
month] period which is not agreed in advance or taken as holiday leave or
for which no valid explanation is provided which is accepted by the
[Company]. The [Company] may decide at its absolute discretion that the
[person] be sent a written warning notice from an authorised officer of the
[Company]. The warning letter shall set out the full detailed grounds,
provide the conditions which the [Company] wishes to be fulfilled and
suggest a meeting to resolve the matter with the [human resources
department]. In the event that the attendance of the [person] shall not
improve as specified by the [Company] in order to fulfil the [person’s]
contract of employment. Then the [Company] shall be entitled to
summarily dismiss the [person] without further notice provided that the
 [person] shall have been engaged or employed by the [Company] for less
than [–]. In such event the [Company] shall pay all sums due or owing up
to the date that the [person] ceases to work for the [Company].

• In A-Z A.006 Employment where the senior employee or executive has had
long term ill health and incapacity for a fixed number of days which have not
been continuous over a year. This clause then permits the company to
terminate the agreement. Clearly regard must be had to basic legislation that
may apply so that there is no clash, but where the role is pivotal in the
success of a company then termination may be the only way forward. The
clause seeks to entitle the employee to payment up to the date of termination,
but no sums for other reasons such as damage to reputation or other financial
losses arising from it. Obviously where there were share options or other
executive benefits such as health insurance and life insurance then agreement
may be reached to compensate for those losses if it is relevant within the
terms of the agreement. Otherwise the right to the benefits may just end on
termination of the contract.

A-Z A.006
If the [Employee] is absent from work due to sickness, ill-health or
incapacity for [specify days] in any [12-month] period (whether continuous
or not). The [Company] shall have the right to decide that it can no longer
continue to make the position available to the [Employee] and shall have
the right to terminate the contract by notice in writing. The [Company]
shall only be liable to pay any salary due to the date of termination of the
contract. The [Employee] agrees that there shall be no sums due as
compensation for loss of the position, damage to reputation or other
financial loss which may arise. The [Company] shall provide a reference to
the [Employee] which shall explain that the contract ended due to
[health/other] reasons and was not connected to their standard of work in
that position.

• A-Z A.013 in Employment is not a clause which is currently used in

agreements, but it is intended to reflect the reality of working practice, it is
intended to be more liberal and provide a clear statement in favour of the
employee. There will be absences which are not holiday leave and this clause
puts in place a procedure to deal with it by notice to a line manager by email.
The employee is therefore not at immediate risk of notice of termination and
 can also decide at a later date how to adjust the time taken off by working
extra hours or allocating it as holiday or bank holiday leave.

A-Z A.013
The Company agrees that the [Employee] shall be able to take such leave
for dental, hospital, school and such other personal and family
commitments which may be required during normal working hours
provided that the [Employee] as far as possible notifies the Line Manager
in advance by email exceptions are made for emergencies. Provided that
the [Employee] ensures that the time is recompensed by either working
additional hours and/or deducted from any holiday and/or bank leave due.

• Under other clauses there is a different sort of focus – it may be that the
contractor is not performing the work and is absent from the site and you
want to be able to terminate the agreement as in A-Z A.015 in General
Business and Commercial.

A-Z A.015
The [Company] shall have the right to terminate this Agreement
immediately by notice in writing to the [Contractor] in the event that the
[Contractor] is unable or unwilling in any period of [six months] to
perform the Agreement as required for more than [twenty days] in total
whether consecutive or not.

• In the case of an expert in A-Z A.016 in General Business and Commercial

you may need them for a very specific project and do not want any absence
or conflict of work to be permitted. Here you may specify the service, the
hours to be worked and the location and state that absence is not permitted
except under very limited circumstances. The expert is specifically agreeing
to these terms which you have set out as a crucial requirement.

A-Z A.016
The [Specialist] agrees that he shall attend and appear as an [expert] in the
case on the following dates and times at the specified location [–] for the
purpose of providing written and oral evidence of [–]. The [Specialist]
accepts that it is vital that he is not absent for any reason unless prevented
by an emergency, serious medical grounds, death or an Act of God.
• It is important to set out how and when notice is to be provided of any
absence so that a procedure is agreed in advance. It is not usual but you may
request a clause which sets a specified number of days which may be taken
as unpaid leave of absence which are not holiday leave or public holidays or
for medical reasons within any one year period. In A-Z A.019 in General
Business and Commercial the unpaid absence is for public duties, union
work, academic research and training, but that it may cover any topic.

A-Z A.019
The [Company] agrees that in any one-year period the [person] shall be
entitled to take [five days’] unpaid leave of absence in additional to their
annual holiday to carry out public duties, union work, academic research
and training.

• Many businesses have a provision in their terms of trading that once an

appointment is booked all the fees agreed must be paid whether the person
attends or not, as in A-Z A.020 in General Business and Commercial unless
they have been informed of the cancellation at least 24 hours or three days in
advance.

A-Z A.020
The [Client] agrees that once the [booking/appointment] has been
confirmed and a date and time agreed. That the [Company] shall be entitled
to be paid whether or not the [Client] attends the [booking/appointment]
unless at least [three days] prior notice is given to the [Company].

• A clause may also deal with the fact that there will be no refund or
reimbursement or substitution of a workshop of seminar which is not
attended as in A-Z A.021 in General Business and Commercial.

A-Z A.021
Absence or failure to attend all or any part of the [seminars/workshops] at
the specified dates and times agreed between the [Company] and the
[Client] shall not entitle the [Client] to any refund, reimbursement or
otherwise of the fees paid.

• There may be a clause which prevents the company from automatically

 terminating an agreement for any absence or failure to attend of a person and
which prevents them from withholding money from work which has been
completed. As in clause A-Z A.022 in General Business and Commercial
where the person has the opportunity, within the stated period they have been
allocated in the agreement, to resolve the matter. Only after that allocated
period has lapsed can the company take steps to end the agreement if they
wish.

A-Z A.022
Any absence or failure to attend on the dates specified in the Agreement
shall not automatically entitle the [Company] to terminate the Agreement
and/or to withhold any sums which may be due for other work which has
been completed. The [Company] agrees that the [Person] shall be provided
with the opportunity to rectify the matter within an additional period of
[specify] days. Failure to do so shall mean that the [Company] shall have
the right to take such steps as it thinks fit in the circumstances.

• The absence of a consultant or expert may be dealt with by it being agreed in

advance that a person of similar expertise and knowledge can be substituted
by the consultant company if such a situation arises. There will only be a
breach if the consultant company fails to provide a substitute as in A-Z
A.023 in General Business and Commercial.

A-Z A.023
Where the [Consultant] is absent and/or out of [country] for more than
[number] days for any reason whether due to holidays, health or otherwise.
He/she shall ensure that there is a nominated contact at the [Consultant
Company] at all times who has the same level of expertise and knowledge
who is able to advise the [Enterprise]. Failure to provide this alternative
shall be deemed a breach of this agreement.

• Conversely in A-Z A.026 in Merchandising the absence of key personnel

does not give any licensor the right to terminate an agreement. If the licensee
can ensure that quality, marketing and sales are not affected.

A-Z A.026
The absence of any key personnel involved in the development,
production, marketing and distribution of the [Product] shall not entitle the
 [Licensor] to cancel, terminate and/or amend the Agreement. Provided that
the [Licensee] can ensure and is able to establish that the quality, content,
promotion and sales of the [Product] shall not be damaged, harmed and/or
diminished in any way.

• It may be that a company has entered into an agreement because of their

relationship with the Managing Director and management as in A-Z A.025 in
Merchandising. It is possible to draft a clause which means that the
agreement can be terminated if that person is no longer at the company so
that all rights then revert back to the author. This may be the case where it is
a small merchandising or publishing company.

A-Z A.025
The [Company] shall be obliged to notify the [Agent/Author] in the event
that there is to be a change of management and/or the [Managing Director]
of the [Company] is or will be absent for more than [specify] months. It is
an important condition of this Agreement that the [Managing Director] be
available and involved with the production, distribution and marketing of
the [Product]. Where there is a change of management and/or the
[Managing Director] is no longer employed by the [Company] and/or is to
be absent for long periods. Then the [Author/Agent] shall have the right to
terminate the Agreement and to ensure that all rights under the Agreement
shall revert to the [Author/Agent].

• In A-Z A.027 in Merchandising where an author or other creator is unable to

attend some booked events to promote their products. Then the company has
accepted and is not entitled to end the agreement or able to rely on this fact
to delay or reduce any payments due to the author. Nor shall the company be
able to seek compensation for such non attendance. The parties have to seek
to find other alternative suitable dates.

A-Z A.027
Where the [Author/Assignor] is unable to attend any of the [dates/events]
under the Agreement and/or is absent for any reason such as ill health,
bereavement, transport delays, and prior commitments to their employee
and/or publisher. Then such failure to attend shall not be considered
reasonable grounds for reducing and/or delaying any payments and/or
termination of the Agreement. Where feasible both parties shall endeavour
 to agree alternative [dates/events] upon the same and/or similar terms.
Further no sums shall be due in compensation for any such absence and/or
failure to attend at any time by the [Author/Assignor] to the [Assignee].

• In A-Z A.028 in Merchandising where there are a series of bookings for work
where if a certain percentage are not fulfilled the licensee can retain a fixed
sum for each event that is cancelled due to the absence of a named person to
be provided by the licensor.

A-Z A.028
Where the [Licensor] is unable to fulfil all and/or any substantial part
(namely more than [number] per cent of the appearances, promotions and
marketing) of the terms of the licence granted to the [Licensee] due to the
absence and/or failure of [name] to attend for any reason whatsoever. Then
the [Licensor] agrees that, for each date and/or event, the [Licensee] shall
be entitled to retain [number] [currency] from the sums due to the
[Licensor] under this agreement.

• All the individuals and companies and their job roles and functions may be
set out as part of the main agreement where the project requires many
suitably qualified contributors. The companies who are supplying all these
particular people, techniques or processes must confirm that they have
engaged their services exclusively for the project and it may be stated that no
substitutions may take place. Each of the key personnel must be available to
carry out their roles on the dates required and at the locations set out. This
may also include availability for a later contingency period of work where
there are delays for any reason. These type of clauses can apply to an
engineering project, a film or a festival or a major software development
programme. The principle is to set out a commitment which makes it clear
who is working on the project from the start. The clauses may also specify
that no sub-contracting is permitted, but this is not dealt with in this section.

• Wording on the provision of any services or work can be drafted in such a

way as to directly address potential absences. This may be particularly
important where no absence is wanted and a consultant or company is
providing a key service which is vital to a project. The more specific the
drafting as to the work required and the person who is to provide it and the
question of availability the better rather than leaving it unresolved. Different
 styles are illustrated in A-Z A.030, A-Z A.031, A-Z A.032 in Services.

A-Z A.030
The [Consultant] agrees that he/she shall provide his/her services for the
[Project] [specify days/hours] from [date] to [date] and shall not be entitled
to any period of absence during that time except for short breaks or real
emergencies. The [Consultant] agrees to be available at all other times to
be contacted by mobile or email.

A-Z A.031
The [Presenter] shall be required to attend at the studios to prepare, present,
and promote the [Programme] in accordance with the hours and days
specified in the Work Schedule. There shall be no obligation to attend at
the location on days or dates not specified unless agreed at least [7 days] in
advance by the parties and the [Company] shall take account of the pre-
existing work commitments of the [Presenter].

A-Z A.032
The [Artist] shall provide his/her services to the best of their technical and
artistic skill and ability and perform his/her services to a standard and in a
manner which is required to ensure the completion of the [Project]. The
[Artist] shall only be required to attend on such days as may be scheduled
from [date] to [date] and at the times specified by the [Company].

• It is just as important to establish the expectation of access to a person and

availability outside of their normal working hours. There is growing pressure
with the internet and technology for everyone to be responsive to contact
without limit 24 hours a day. There is nothing wrong with being quite blunt
that that will not be the case.

• The reason for being very detailed as to the work and location at which it is
to take place is that this lays the grounds for notice of termination to be
served if it is not complied with. If you do not want to go in that direction
then you set out what you want the other party to accept as permissible and
provide a route to resolving matters.

• There may also be circumstances where you want to make sure that alteration
of work dates or a schedule will not result in non-payment or termination of
 the agreement. In A-Z A.038 in Sponsorship the sportsperson is paid his or
her sponsorship fee even if they are absent provided they can provide
medical evidence.

A-Z A.038
The [Sponsor] acknowledges that the Sponsorship Fee shall be paid to the
[Sportsperson] notwithstanding that the [Sportsperson] may be unable to
provide his/her services under this Agreement due to illness, injury or other
cause which is supported by a medical certificate from a qualified medical
practitioner.

• Whereas in A-Z A.039 in Sponsorship the clause is much wider and covers
absence from any part of the work schedule and broadens the issues to not
only ill health or injury but also a family related matter or a sports event
which arises. Payments under that agreement to the sports personality are not
affected and will not be withheld unless there is no genuine reason. Even
then the steps to be taken are not termination of the agreement but
discussions to agree additional work dates or a reduction of any sums due.

A-Z A.039
In the event that [Name] is absent from any of the scheduled races,
promotions or meetings set out in the Work Schedule. This shall not affect
any of the sums due under this Agreement where it is caused by genuine
medical or family reasons. Nor shall it be affected where absence is due to
sporting commitments which were not known at the time of concluding this
Agreement. However where [Name] fails to attend for no genuine reason
which is acceptable to the [Company] then the parties shall enter into
negotiations to agree either alternative work to compensate and/or a
reduction in the sums due to [Name].

• In A-Z A.044 in Sponsorship the clause is intended to protect the company

where a major celebrity or other person cancels their appearance planned for
a festival or programme. So that this clause prevents the sponsor as a result
trying to pay less money or to seek a refund of some sort as a result of the
adjusted schedule.

A-Z A.044
The absence for any reason of any major
 [Celebrity/Performer/Sportsperson] from the final schedule for the
[Event/Programme] shall not entitle the [Sponsor] to have any reduction of
and/or repayment of any part of the agreed payments under this
Agreement.

• In contrast to A-Z A.045 in Sponsorship the aim is to set a specific price

which does not have to be paid by the sponsor if any particular artist or
performer does not complete the work set out on the agreed programme for
the event. This avoids an argument afterwards as to whether all the
sponsorship fees due should be withheld.

A-Z A.045
It has been agreed between the parties that the persons who are to
participate, appear and perform at the [Event/Programme] are set out in
Schedule [A]. In the event that any of those persons are absent and do not
attend. Then the [Company] agrees that the [Sponsor] shall be entitled to
withhold and shall not be liable to pay [number/currency] of [Sponsorship
Fee] for each such person who is absent and does not attend the complete
[Event/Programme].
 ACCEPTANCE

• This section is from A-Z A.051 to A-Z A.130 in the A-Z.

• It can also be cross referenced with other main headings such as Adverse
Change, Cancellation, Copyright Clearance, Delivery, Editorial Control,
Material, Rejection, Termination and Title in the A-Z.

What do we mean by acceptance and why does it matter?

• First make a distinction between delivery of a product or material and actual

acceptance of it by a company. They do not have to take place at the same
time and most often do not if there are clauses in an agreement to that effect.
It is also necessary to recognise the point at which the liability and risk
relating to the products passes from one party to the other. If at some stage
products are damaged in a fire or lost, then who bears the cost? Delivery and
Risk are other main clause headings in the A-Z which are relevant to this
subject.

• The point at which a person or company has accepted a consignment of

products to their premises or received delivery of some master material may
or may not be the point in time at which ownership and title of the actual
physical material passes to them. There may be acceptance in the context
that material has arrived; or the acceptance may also be the point of change
of ownership of that material; or acceptance may be subject to checking the
quality of the material delivered. In addition acceptance and transfer of
ownership and risk may be subject to payment being made in full for the
stipulated price of the products or material delivered plus delivery, taxes and
other costs incurred.

• The transfer of ownership of the physical products and material is not to be

confused with the completely separate issue of the transfer and ownership of
the copyright, trade mark and intellectual property rights in a product or
 master material. When looking at any contract you must make a list of the
physical and technological material created which is completely separate
from the rights side.

• Both are important and must be addressed within the terms of the agreement.
It is often the case that it is either not dealt with or the two areas are assumed
to be the same. Failure to effect transfer of ownership of the physical
material can result in a distributor having the right to claim it back if no
payment is received. When you buy an item off the shelf you are buying the
physical ownership of the material – nothing else. In these clauses you need
to make this distinction between title, ownership and possession of material
as opposed to copyright, intellectual property rights. Copyright ownership is
under the main clause heading of Title in the A-Z.

Different types of acceptance

• The key with acceptance is to either make it an automatic and informal matter
whereby it is almost a foregone conclusion that there is nothing wrong and
content will be suitable. Or to take the polar opposite position and to create a
delay and procedure for a true analysis or inspection to take place and
consequently to delay any payments.

• Acceptance as a mechanism for testing the content and quality of material

supplied can be very useful. It is important to set out time limits during
which material may be examined and then approved as suitable. As well as
the detail of the method and process of rejection of any such material.

• A time period may be set out within which a product or material must be
accepted or rejected. This time limit can be from 24 hours to months – there
is no restriction.

• Clearly a business would want to make this period as short as possible where
they are making the delivery. A company accepting delivery should argue to
have a longer period so that they count the stock and examine it. There are
also clauses in the section on Quality Control of the A-Z which would be
helpful.

• If any product, material or service is to be rejected then the reasons for

rejection will usually be required to be specified – unless the parties agree
 that no reason is required.

• It should also be set out who will bear cost of delivery of the rejected
products or material.

• The company making the delivery of the product or material may be

permitted to make a substitution and deliver another item.

• A product or material may be stated to be deemed to have been accepted

where the packaging has been removed or a person has started using the
service.

• A clause may specify that acceptance may be deemed to have taken place as
soon as a product has been delivered.

• Acceptance of the terms and conditions may be linked to signature of the

agreement. The agreement may allow a cooling off period of a number of
days within which it is still possible to cancel the agreement.

• In A-Z A.060 in Film and Television the clause specifically states that
delivery is not linked to acceptance of material for use by the company. The
company has an agreed number of days to view and assess the material. Then
the company has the choice whether to accept and use all or only part of the
material. The company notifies the other party of their proposed terms of use
and the proposed fee which can then be accepted or declined.

A-Z A.060
Where [Material] is submitted to any department of the [Company] then it
shall not be deemed to be accepted at the point of delivery. The [Company]
shall have a period of [number] days within which to view and assess the
[Material] and to decide whether it is suitable for exploitation and use by
the [Company]. The [Company] shall notify the [Agency] that all and/or
part of the [Material] has been accepted and offer the terms of use required
and the fee proposed. The [Agency] may then accept and/or decline the
offer by the [Company] which shall be in accordance with [specify
document] of the [Company].

• It may be that there are a series of approvals or acceptances and consultations

that must take place for a project to be successful. The clause therefore
 addresses the procedures to be put in place to ensure that there are no
unnecessary delays as in A-Z A.056 in Film and Television.

A-Z A.056
The [Company] shall endeavour to ensure that all subjects that may require
approval and/or acceptance shall be carried out as quickly as possible and
shall not delay the [Project]. The parties shall operate by allowing each
other at least [–] working days to respond to any request. All requests of
any nature shall be sent for the attention of [–] and copied to [–].

• In A-Z A.051 in DVD, Video and Discs the licensee is given one month to
accept or reject the material delivered. The licensee may email the reasons
for rejection and must allow the licensor to provide a substitute master copy.

A-Z A.051
The [Licensee] agrees to reject or accept the [Master Material/other] within
[one month] of delivery. In the event that the material is not acceptable
then the reasons shall be set out by email or letter and the [Licensor]
provided with the opportunity to provide a substitute. Material which is not
accepted shall be collected by the [Licensor] or returned at the [Licensor’s]
expense.

• In A-Z A.052 in DVD, Video and Discs acceptance is deemed to take place
on delivery and is subject to the payment having been made for the disc. If
the wrong product has been delivered then it may only be returned if the
packaging has not been removed. This restriction would only be reasonable
if the content could clearly be seen with the packaging around it.

A-Z A.052
The [Company] shall deliver the [DVD/Disc] subject to receipt and
clearance of the payment. The [Client] shall be deemed to have accepted
the [DVD/Disc] once it is delivered and shall not be entitled to return the
[DVD/Disc] once opened from the packaging unless there is a defect or
damage to the [DVD/Disc]. Where the wrong order has been delivered then
the [DVD/Disc] should be returned unopened and unused to the [Supplier].
[None of these conditions are considered by the [Company] to supersede
your statutory legal rights as a consumer.]
• In A-Z A.058 in Film and Television the material is deemed to have been
accepted if no notice of rejection is received based on technical or quality
grounds within a fixed number of days. This clause also makes clear that
there is no transfer of ownership of the material until payment has been
received in full by the licensor. The distributor must bear the cost of any
damage or loss from the time of delivery of the material despite the fact that
payment may not have been made in full and no ownership has passed.

A-Z A.058
The [Distributor] shall be deemed to have accepted the [Material] if no
notice of rejection on quality and/or technical grounds is received by the
[Licensor] within [number] days of delivery. The ownership of the physical
material shall not be transferred to the [Distributor] until payment in full
has been received by the [Licensor]. All risks shall pass to the [Distributor]
upon delivery in respect of the loss, damage and/or destruction of the
[Material] and the [Distributor] agrees to reimburse the [Licensor] in
respect of the full cost of any replacement that may be necessary.

• Acceptance of terms and conditions and the making of a booking for

anything are inextricably linked to payment of any sums due and whether or
not any money can be claimed back if the agreement is then cancelled by a
client.

• The refund or payment which may be made if, after acceptance of the
agreement, it is cancelled may be all the money or it may be graded
percentages or none at all.

• If it is a business which cancels a booking after it has been made for any
reason and not the customer then the company may offer a full refund or
seek to get the client to consider an alternative date for an event or course or
holiday.

• In A-Z A.062 in General Business and Commercial the client has accepted
the quote but the company then cancels. Although an alternative may be
offered by the company the client is not obliged to accept it and is entitled to
a full refund of all sums paid.

A-Z A.062
The [Client] is deemed to have accepted the [quote/written offer/brochure
 details] when they agree to pay the sums specified by the [Company]. In
the event that for any reason the contract cannot be fulfilled by the
[Company] then an alternative equivalent standard booking shall be offered
or where this is not accepted by the [Client] a full refund shall be made by
the [Company].

• In A-Z A.063 in General Business and Commercial it is made quite clear that
completion of the work, delivery of the goods and signature of the receipt
form do not constitute acceptance of the goods, work or services under this
agreement. If it is not clearly stated in an agreement in this form then it is
still open to argument to put the case otherwise that acceptance did take
place at an earlier time. Either through the mere fact of the completion of the
work or the delivery of products or material to a notified address or because
of a clause in a receipt which was signed at the point of delivery. The clause
A-Z A.063 provides the client with 28 days to accept or reject the goods,
service or work. In this case any material to be returned is then stated to be at
the company’s cost not the client.

A-Z A.063
Completion of the work, delivery of the goods or signature of a receipt
form shall not constitute acceptance under this Agreement. The [Client]
shall have a period of [28 days] in which to inspect the
[Goods/Services/Work] and to provide written confirmation by email, fax
or letter of acceptance or where material is not accepted to advise the
[Company] to arrange collection or post it at the [Company’s] cost.

The importance of the words – acceptance subject to contract

• Even before a formal contract is drawn up by one party and sent to the other
there may be an extensive exchange of documents, quotes and emails
between the parties. It is not unknown for one party to later rely on these
discussions to claim that a fully binding agreement has been reached and that
the other party is bound to pay for the work.

• A-Z A.064 in General Business and Commercial makes it clear that a quote
or tender or exchange of emails with a third party company does not
constitute acceptance by a business or government department of their
proposed terms to provide goods, work or a service. It confirms that all
 proposals are subject to an approval process, in this case the Board or the
Chief Executive, and must adhere to the company’s policies and usual
practices. It goes even further to state that any email or other document sent
to the company that has provided the quote or tender is only an acceptance in
principle of working with the company and is subject to a final contract
being concluded. This means that if no agreement is actually finalised there
is no obligation to the company. Without these words the company providing
the work or service may seek to argue that a binding agreement was reached
at the point the quote or tender was accepted.

A-Z A.064
Any tender, quotation or exchange of letters setting out the proposed terms
in respect of [Goods/Work/Services/other] to be provided to the
[Company/Government Department] shall not be deemed and should not
be considered a contractual acceptance by the [Company/Government
Department]. All proposals must be approved by the [Board of
Directors/Chief Executive] and adhere to the [Company’s] policies and
practices. Any letter, email or other document is an acceptance in principle
and as such is subject to contract and conditional upon the signature and
conclusion of a formal document setting out in detail all the rights and
obligations of the parties.

Acceptance of terms for access to a website, app, stored material

or software

• In relation to the internet and accessing websites, apps and audio material as
well as downloading material. The general principle is to state the terms and
conditions of use on the site either directly as you enter the site or by a link
at the bottom of the first page or on the relevant section. The same principle
applies to accessing films, DVDs, CDs and other formats although more
commonly the terms of use are on the packaging and the copy of the format
itself. You are either asking a person to confirm their agreement to the terms
and conditions or stating that, by the mere access to and use of the site, they
are bound by the terms of use which have been set out. Basically the strategy
is do not access and use the site if you do not agree with the terms and
conditions which have been set out within the site.

• You can use something quite simple as in A-Z A.066, A-Z A.067 and A-Z
 A.068 in Internets and Websites. Acceptance in this context is of the terms
and conditions which you have set out for access and use. You may also
want to look at the main clause heading in the A-Z of Downloading and
Access.

A-Z A.066
Any person who would like to use this [Website] must agree to be bound
by the terms and conditions of the [Company] and you are deemed to have
accepted such terms when you access and use the [Website].

A-Z A.067
I agree that by ticking the box [and logging my details] that I have
confirmed my acceptance that I will access, order products and use the
[Website] in accordance with those terms and conditions specified in the
[Terms and Conditions] pdf set out below. That I agree that I shall not be
entitled to continue to use the [Website] if I no longer wish to be bound by
such terms and conditions. Provided that I shall still be obliged to pay any
sums that may be due or owing to the [Company] and the [Company] shall
deliver any products that may have been ordered.

A-Z A.068
Important – please read this document carefully before [using this
website/breaking the seal to release the disc as by doing so you are
agreeing to be bound by the following conditions [–].

Conditions which may be imposed

• The fact that any access granted is solely on the basis that it is for personal
home use and not for commercial exploitation or use for access by multiple
persons or a business.

• A warning about posting material where copyright, trade marks or other

intellectual property rights are owned by a third party.

• The person using the website or app must provide an indemnity in respect of
any text, image or other material which they post or reproduce which results
in a settlement having to be made as a result of a legal claim against the
 companies which own or control the website. The exact basis of the
indemnity can vary and you should look at the main clause heading in the A-
Z of Indemnity.

• The company or companies who own and control the website, app or content
or supply the data may disclaim any responsibility for any losses or damages
which may arise based on any information and material.

• A company may require any person or business that uses the website or app
to do so entirely at their own risk and cost and accept responsibility for any
losses or damages that arise.

• A company may include a clause that they shall have the right at any time to
refuse access for any reason. The terms can also be widely drafted to avoid
liability for both any direct and indirect losses that may occur as a result of
accessing the site. A clause may also limit the total liability to a fixed sum.
For Liability, Losses and Disclaimers clauses look at the main clause
headings under that subject heading in the A-Z.

• Again there is no actual signature to any of the terms in A-Z A.072 in

Internet and Websites. Here a disc or USB is being loaded onto a laptop or
other machine for use by an individual and the terms are accepted by loading
it for use.

A-Z A.072
By installing the software which is on the [Disc/USB] into your computer
you accept that you will be required to fulfil and be bound by the terms and
conditions of the Licence Agreement which sets out the terms of trading
and supply of the [Company]. If you do not wish to accept these terms then
do not install or load the [Disc/USB/other].

• Similarly, where software is downloaded from a site, the same principle can
apply as in A-Z A.074 in Internet and Websites.

A-Z A.074
The use and access to the software is subject to the [User] agreeing to the
terms and conditions displayed on this [Website] [reference] and the [User]
will be deemed to have accepted and entered into agreement with the
[Company] by downloading the software from the [Website].
• There are websites and apps where the whole essence of their enterprise is for
persons using the site to share and exchange and send on material to others
on the site and elsewhere. So the owners who control it are not so concerned
with controlling usage and the supply of material to other persons using the
site. They may however be more concerned with controlling the content of
what is posted and restricting access to those who cross the boundaries which
they set as acceptable content. There will also be an emphasis on ensuring
that a person does not display any material which belongs to third party
which would result in a potential legal action. This however does not mean
that a person who is supplied with any content would automatically have the
right to commercially exploit such material from the site. An example of the
clause is in A-Z A.073 in Internet and Websites.

A-Z A.073
There are no contractual terms and conditions which you must accept to
use this [Website]. However we expect you to recognise and respect that
material is displayed which is owned by other people. if you wish to use
any of it for private home use and/or educational research and reports then
you must provide a proper credit of their name and our [Website] as the
source on which you found it. No authorisation is provided for any
commercial use of any nature and prior written consent of the copyright
owner is required in each case. Any person who acts in an unreasonable
manner and/or is defamatory and/or is in breach of the rights of any nature
of a third party and/or the [Company] may be excluded by the [Company]
from the [Website]. The [Company] may also seek to be indemnified for all
costs and expenses incurred and/or sums paid in settlement and/or as a
result of legal proceedings. Further the [Company] shall have the right to
recover all its own legal, in-house management and other professional
experts’ costs and legal expenses that may be incurred as well as a claim
for damages, interest, and to recover all sums incurred.

• Conversely many websites want very strict terms of access, usage and
exploitation of any data, material and content posted, displayed and
developed on its site. Trade mark, copyright and other intellectual property
ownership and protection of all elements of a website are crucial to the
success of a business. It is vital that from an early stage these are owned and
controlled by the business.
• You need to be clear what terms a person is actually accepting to use the
website and whether a person accessing the site has to click a section to
proceed as confirmation of their acceptance or whether access and use of the
site without this is enough.

• You need to be certain as to the manner in which you are permitting access
and use of the site. If they cannot reproduce and copy material and all
commercial exploitation is prohibited. Then this needs to be set out. There
are two lists: what is allowed and what is not. Both lists, however short, need
to be done to be effective.

• In A-Z A.076 in Internet and Websites the purpose of the clause is to permit
access to and viewing of a commercial website to watch material for a short
period of time. There is no long term right to store, reproduce or supply to a
third party any of the material which is accessed on the site. This is very
difficult to enforce and is mainly aimed at any person or company who seeks
to abuse their use of the website for commercial gain.

A-Z A.076
This is a commercial [Website] which is owned and controlled by
[Company]. All trademarks, logos, videos, films, images, text, databases,
photographs, graphics, audio material, blogs, downloads, uploads,
podcasts, music and any other material in any other format whether
television, radio, DVDs, mobile phone content, and/or interactive games on
this [Website] are owned, controlled and/or licensed from the copyright
owner by the [Company]. You accept by your use and access to this
[Website] that you agree to be bound by the following terms and
conditions:

1.1 That as a visitor to this [Website] you have no right to copy, store, and
retrieve, reproduce, supply, transfer and/or authorise the use of any
such material by a third party.

1.2 That any copies made by you on your laptop, computer, and/or any
storage and/or retrieval and/or interactive device such as a USB,
mobile phone, gadget, disc or otherwise shall be temporary and only
for your own personal use for no more than [number] hours.

1.3 That you agree after that period to delete all copies of any material.
 You agree that failure to do so could result in the threat of legal
proceedings and/or a claim by the [Company] against you personally
for damages and costs and/or any other remedy and/or any other
copyright owner of any material at any time.

• A very strong area of concern is where people post or distribute material

which is obscene, illegal, offensive and abusive and otherwise not
acceptable. The acceptance of the terms and conditions for access may have
long term consequences for the operation and content of a website or app for
a company.

• There are three layers of reasons as to why this should be addressed. First to
avoid the possibility of the website or app company being sued for a criminal
or civil matter or reported to an ombudsman or other government authority.
Clearly this risk will vary in each country of the world. Secondly, as a
business, you need to have your own moral and ethical code as to what is
acceptable. One company may not operate the same policy of vetting
material as another in a different market. Thirdly there needs to be a
procedure in place and a system for removing material which the company
has decided should not be on their site. You may decide that a blanket right
to remove material is the most effective system without any prior notice and
no need to engage in any justification of the reasons.

• In A-Z A.077 in Internet and Websites the website company is informing the
person or company which accesses the website that they are responsible and
legally liable for the consequences of any material they submit or supply or
post through the site. This may include costs, damages, fines and other
expenses that may arise from a legal action against them.

A-Z A.077
Access and use of this website is subject to the laws of the country in
which you are living as well as where this site is used. Acceptance by the
[Company] of your use of this site does not absolve you from a personal
legal liability for the material and content that you submit and/or display
and/or supply to third parties. The [Company] does not accept any
responsibility for any costs, damages, fines, expenses and/or otherwise that
you may incur through a criminal and/or civil action against you by any
person, body or other local, government and/or national entity.
• Where access to the website or app involves downloading some form of
software or other material linked to the site or where a book has an
accompanying CD or DVD. Then the company is also likely to grant not
only terms and conditions for access to the website but also a separate list of
terms and conditions for each of the other types of formats of other content
they are providing access by a person. This would usually be in the form of a
limited non-exclusive licence which is specifically limited to personal use
and which prohibits commercial use.

• When drafting clauses relating to the purchase and supply of products,

merchandising or for the supply of a service. If you are the company who is
delivering the products or service then the aim is to get the other business to
agree that the products or service provided are acceptable as soon as
possible. Acceptance is linked to payment and you want this to take place
quickly if you are the distributor or supplier. The aim would be to get some
or all of the payment in advance prior to delivery or the start of any service.
Also avoid any delaying process for acceptance which would cause any
products or service to be rejected.

• Acceptance could take place at the point of delivery or when the invoice is
signed by the purchaser as in A-Z A.102 in Purchase and Supply of
Products.

A-Z A.102
Signature of the invoice by the [Purchaser] shall be acceptance of the
[Product] [and the terms and conditions of the invoice].

• Acceptance of the products or service could be deemed to take place at the

point of delivery as in A-Z A.104 in Purchase and Supply of Products.

A-Z A.104
The delivery of the [Products] to the [Company] shall constitute acceptance
unless upon receipt of the [Products] the [Company] specifies the grounds
of rejection or dissatisfaction.

• If you are the company receiving the products or service you want to build
into the contract a delay in final acceptance which provides you with the
chance to examine, inspect, test and evaluate what has been provided before
 making any first payment or additional payments if one has been made on
account. To then be able to choose whether to reject any products or services
supplied, terminate the contract and be entitled to a full refund. Any products
would have to be returned in the state they were delivered and undamaged
unless it was agreed otherwise.

• In A-Z A.100 in Purchase and Supply of Products the company agrees to

accept or reject the goods and pay the sum due in full provided that a clear
list of conditions have been be complied with.

A-Z A.100
The [Company] agrees to accept or reject the [Goods] and pay the sum due
in full provided that they are delivered as follows:

1.1 Delivery date [–].

1.2 Type of Goods [–].

1.3 Quantity [–].

1.4 All [Goods] shall be of premium quality in accordance with the

[Sample Prototype] and shall not be damaged or otherwise not fit or
suited to the specified purpose.

1.5 Specified purpose of the [Goods] [–].

1.6 All [Goods] are to bear the words, logo or image specified in the
[Sample/Prototype] and packaging as set out in the attached Schedule
[–].

• In A-Z A.105 in Purchase and Supply of Products there is an agreed period to

inspect the goods and packaging from delivery. It is agreed that the company
shall be able to accept the goods or reject them on the grounds of quality,
content and fitness provided that a written document to that effect is sent
during the review inspection period. Failure to do so will mean that the
goods will have been accepted by default and payment will be due.
Ownership of the goods shall only pass when payment has been received.

A-Z A.105
 The [Company] shall be given a period of [number] [weeks/months] from
receipt of the [Goods] in which to inspect the products and associated
packaging. During that period the [Company] shall be entitled to accept or
reject the [Goods] for any reason which is due to the quality and/or content
and/or fitness for purpose. At the end of that review period unless the
[Supplier] has received a written response in any form rejecting the
[Goods] then they shall have been accepted by the [Company] and subject
to payment of the sums due become the property of the [Company].

• Where a third party is supplying a service of any type it is useful to have a

clause in the agreement which allows you to view and assess the service
before it is finally accepted. This allows you to check that the quality and
content match the standard which you believed you had ordered.

• As it is likely that acceptance of the service by your company will result in

additional contractual payments to the third party which may continue for
many years. The delay and assessment of the service allows you to be in a
position of strength when negotiating. There would also be other clauses
which would be added regarding quality and content which are in the main
clause heading Quality Control in the A-Z expected for the service which is
a main clause heading in the A-Z.

• Where the product or service is not accepted there should be subsequent

termination or cancellation clauses which can be relied upon in the
agreement. Termination and Cancellation are both main clause headings in
the A-Z.

• Different criteria may be applied when dealing with a distributor or company

as opposed to a consumer or individual where different legislation will often
apply dependent on whether the item or service has been bought in a shop or
on-line or through direct delivery or via an overseas supplier.

• It should be appreciated that any company may decide to provide to a

purchaser of their products or services additional options as a matter of
company policy which is much greater than the minimum legal
requirements. Here again it is a business making a policy decision which
affects their terms and conditions of trading.

• In merchandising which involves the creation of illustrations, artwork and

 designs there is acceptance by a distributor in respect of the original material
which is delivered by the author and artist in a range of formats. There is also
acceptance of editorial changes to that work by someone else at a later date
which the author and artist may approve or reject. Where the artist has
assigned all the rights in his or her work to the author then any approval or
rejection will be limited to the author. The distributor may agree that the
delivered work cannot be changed without the approval or consent of the
author. Alternatively the author may agree that the distributor shall have the
right to change the commissioned illustrations and artwork as they think fit
including characters, colours and layout and to permit third parties to do so.
There are additional clauses relating to this in Editorial Control and
Consultation in the A-Z.

• In A-Z A.083 in Merchandising both the artist and the author agree that the
distributor may market merchandise based on the book or script and may
change the names, text and storylines. This is a very wide clause and
basically relinquishes control to the distributor. The author and artist may
still have approval mechanisms in place for being consulted and approving
or rejecting material.

A-Z A.083
The [Author/Artist] accept and agree that the [Distributor] shall be entitled
to develop, adapt, produce, distribute and market toys, food related
products, clothes, stationery, audiotapes, computer games, DVDs, a
programme or series for television, and any other item or product based on
the [Book/Script]. The [Author/Artist] accept and agree that the artwork,
text, names, and storylines may be different and not necessarily an accurate
reflection of the [Book/Script].

• Factor in a prototype or sample which must be accepted or rejected of the

merchandise or service as part of the agreement.

• There may be a prototype or sample made of the proposed product such as a

children’s dressing up costume or a lunch box or toy or the branding
reproduced on the packaging of a food or the words reproduced with lyrics
and music for a recording. For a service there may be an online sample
supplied as an example or a pilot developed as part of the service for a
project. If, as a company, you are supplied with a prototype or pilot at an
early stage which you can view, examine and test and then accept or reject
 you may also have a clause which allows the company to terminate the
whole agreement. This may save your company a serious amount of money
for a project which is not on the right path and considerably reduce risk and
losses. There are many companies who have entered into software supply
and website development agreements which could have avoided significant
losses, costs and expenses if there has been an exit route factored into the
contracts.

• A clause may set out that the prototype or sample shall be delivered in
accordance with specifications that have been agreed. These specifications
should be clearly described in as much detail as possible and images, sizes
and content listed in documents which are attached to the agreement.

• Once notification has been provided that prototype or sample is accepted by

the client then the company can be authorised to proceed to create the final
versions. The acceptance is not only of the colour, dimensions and shape, but
the type of material used to create it and also any packaging.

• In A-Z A.085 in Merchandising the material being delivered must be in

accordance with the sample products. Where this is the case then the
merchandising material will be accepted the same day as delivery and also
payment made of the fee. However if there is any error or omission and the
material delivered does not match the sample and order then the client may
reject all the order. In which case any money paid shall be refunded by the
company.

A-Z A.085
Provided that the merchandising material supplied by the [Company] is in
exact accordance with the sample products. Then the merchandising
material shall be accepted by the [Client] on the day of delivery and the fee
paid for the balance on the same day. Where there is an error or omission
in the design, quality, number and/or any other reason why the
merchandising material fails to match the sample and order. Then the
[Client] may reject all the order and request a full refund to be paid
immediately.

• In contrast in A-Z A.086 in Merchandising it is accepted that there may be

variations in the samples provided before manufacture and the finished
product. In this case the manufacturer has agreed to provide a new sample
 where there are changes so that the company can decide whether to go ahead
with production. In any event there is a clear statement that the company
shall not be obliged to accept delivery unless it is in accordance with the
agreed samples. This may apply to toys, food, household items and any
goods where the content or appearance may vary.

A-Z A.086
The parties agree that there may be colour, technical, material and layout
variations between the samples provided before manufacture and the
finished product. The [Manufacturer] agrees to notify the [Company] of
any discrepancies and to provide a new sample on each occasion so that the
[Company] can decide whether to proceed with the production. The
[Company] shall not be bound to accept delivery of the order unless it is in
accordance with any such agreed samples.

• In a publishing agreement the author wants to limit the grounds for the
rejection of the manuscript and any title, character names, logos,
illustrations, photographs and images which are created and developed by
the author or which the author has sourced and put together from third
parties who own the material.

• The author will only want the publisher to reject the book within a defined
period such as one month after delivery. If the work is not accepted or
rejected within that period then the clause may state that it is deemed
accepted as in A-Z A.089 in Publishing. This type of clause in not common
in publishing agreements.

A-Z A.089
In the event that the [Author] shall deliver the [Work] by the specified
delivery date [and in the form and content agreed between the parties] the
[Publisher] shall be allowed [–] days to provide written confirmation of the
acceptance or rejection of the [Work]. In the event that there is no such
confirmation then [–] days after the specified delivery date the [Work] shall
be deemed to have been accepted by the [Publisher].

• The author will only want the work rejected on as limited grounds as possible
namely that the manuscript was not submitted by the delivery date; or that
the work did not meet the description set out in the synopsis. Whereas the
 publisher would wish to rely on a more general ground as well that the work
was not of the quality and standard required to be suitable for publication.
This last ground is a subjective assessment by the publisher as to the content.

• When drafting clauses relating to the proposed content of the book it helps
the author to try to establish and describe in the agreement or attached
synopsis exactly what is expected by the publisher.

• Many publishing contracts do not have the synopsis which has been
submitted attached and just set out the basic facts of the author, proposed
title, subject matter and A4 page length and format in which the work is to be
delivered.

• It is a fact that many books do vary to some extent from the original synopsis
and develop in a direction which does not exactly match the original
proposal. This will not become a contractual issue if, at an early stage, draft
material is submitted and discussed and agreed between the parties.

• The publisher will have two aims: one to get the work completed and
delivered, proofed and packaged as soon as possible; two, to ensure the
author adheres to the delivery date and that any delay does not impact on the
planned publication date.

• In A-Z A.088 in Publishing the publisher has only a limited agreed period to
reject the work and accepts that the two grounds on which to do so are: the
quality of the writing and the failure to comply with the synopsis.

A-Z A.088
The [Publisher] agrees to accept or provide written reasons for its rejection
of the [Work] within [–] of delivery. The [Publisher] agrees that any
rejection of the [Work] shall be limited to the following grounds namely
failure by the [Author] to meet the required professional writing standards
agreed and/or failure to comply with the specifics of the summary
synopsis.

The [Publisher] agrees that it shall accept the [Book] for publication
provided it is delivered in complete form by the [date] and is a true
reflection of the agreed summary in both content and style.
• In A-Z A.091 in Publishing the clause tries to avoid the problems that arise
where the work is not delivered on time. Where the publisher would
normally serve notice to terminate the agreement on that ground unless an
extension is agreed. This clause allows the author to have an additional
three-month period for valid reasons before the publisher may terminate the
agreement. If it is terminated then a repayment schedule for the advance is in
place. This clause then avoids the usual problem of a demand from the
publisher for any advance which is returnable that it be paid in full
immediately. This clause is not common in publishing agreements.

A-Z A.091
The [Publisher] shall not be entitled to refuse to accept the [Book] if the
reason for the delay in delivering the manuscript is due to ill-health or
injury of the [Author]. Provided that the delivery date shall only be
extended by a maximum of [three calendar months], after that date the
[Publishers] may terminate the agreement by notice in writing at any time.
It is agreed that the parties shall resolve the issue of repayment of the sums
due by negotiation and that in any event the [Author] shall be entitled to a
repayment period scheduled over at least [–] years.

• In A-Z A.094 in Publishing there are no limitations as to the grounds on

which the publisher may reject the work. There is simply a notification as to
whether it is accepted or rejected. Here the publisher accepts that upon
acceptance by them any sums due on delivery must be paid quickly.

A-Z A.094
After the complete manuscript has been delivered to the [Publisher] in the
agreed format. The [Publishers] agree that within [ten days] excluding
weekends that they shall notify the [Author] as to whether they accept or
reject the [Work]. If the [Work] is accepted then the [Publisher] shall
immediately arrange for payment of any sums due on delivery without
delay.

• In A-Z A.095 in Publishing the publisher agrees to set out its reason if a work
is not accepted, but is agreeing to negotiate the work being resubmitted with
amendments. This allows a second chance for acceptance of the work. In the
last part the final rejection is linked to an agreement that all rights held by
the publisher shall then revert to the author. The publisher also agrees that no
 repayment is required of any sums paid to the author to date. This clause is
not common in publishing agreements.

A-Z A.095
In the event that the [Work] is not accepted then the [Publisher] shall
specify the reasons in writing by letter. The [Publisher] agrees that it shall
enter into negotiations with the [Author] to permit the [Author] to have the
opportunity to resubmit the manuscript after it has been amended based on
the grounds of rejection specified by the [Publisher]. In the event that the
[Work] is not accepted after it is resubmitted. The [Publisher] agrees to
ensure that all rights in the [Work] of any nature shall revert to the
[Author] and that the [Author] shall not be obliged to repay any sums paid
prior to delivery of the manuscript.
 ACCESS

• This section in the A-Z is from A-Z A.131 to A-Z A.185.

• This subject can also be cross referenced with other main clause headings
such as Copyright Notice, Cancellation, Copyright Warnings,
Disclaimer, Downloading, Error, Facility Access, Insurance, Liability,
Location Access, Loss, Omission, Rights, Risk, Termination and Title in
the A-Z.

• Access to land or premises by an employee or contractor and the terms on

which they may enter or may be denied access or made to leave without
notice as in A-Z A.131 in Employment.

A-Z A.131
There is no automatic right of access to the premises and land owned or
controlled by the [Company]. You are only entitled to enter the building
specified in your contract of employment during your normal hours of
work. No access is permitted at other times without the prior consent of
[Name]. The [Company] reserves the right to deny access at any time for
any reason. The [Company] reserves the right to request that you leave the
building, premises or land whether during your normal working day or not
and may require that you be escorted by a representative from security.

• Access may be unrestricted or very limited and may only be permitted for a
specified role or purpose as in A-Z A.133 in Employment.

A-Z A.133
The [Employee] shall have access at any time to the premises of the
[Company] for the sole purpose of fulfilling the duties and responsibilities
set out in the job description. There is no right to use the facilities,
premises and/or resources for any other purpose, nor to enter the premises
outside the hours of [specify].
• The terms of access may also specify any health and safety warnings, security
requirements, noise levels and other policies of the company. This is also
dealt with in main clause headings Facility Access and Location Access in
the A-Z.

• In A-Z A.146 in General Business and Commercial the clause basically

provides a warning that you use the site at your own risk and must adhere to
warning signs. This clause does not permit the company to exclude liability
for personal injury and death.

A-Z A.146
Access to and use of this [location/activity] is entirely at your own risk and
we expect you to take all reasonable precautions to protect your property
and to act in a reasonable manner. There are health and safety signs and
warnings displayed for your guidance which relate to age, height,
equipment and conduct which you are advised to follow.

• The company which owns the freehold or lease for the premises would want
to try to ensure that they are only potentially liable for a claim from a third
party for personal injury or death caused by the negligence of the company
or its employees or its sub-contractors on the premises. Other main clause
heading sections which deal with related issues are Disclaimer, Liability
and Risk in the A-Z.

• A clause may also require that the person must not damage the premises,
remove any items, material or even data if relevant. The institute or
university may also have an automatic right to refuse or withdraw the right to
enter the premises. The institute or university will also ensure that it is not
liable for any losses, damages, costs and expenses incurred as a result of
such a decision as set out in A-Z A.183 in University, Library and
Educational.

A-Z A.183
1.1 Access to the [Collection/Archive] shall be entirely at the sole
discretion of the [Institute] and there shall be no automatic right of
entry and/or use of all and/or any part any of the material in the
[Collection/Archive].
 1.2 The [Institute] reserves the right to deny, withdraw and/or refuse entry
and/or to request that any person leave the premises for any reason and
without providing any grounds and/or justification for doing so. Whilst
the [Institute] has terms and conditions for access that must be adhered
to by any visitors, researchers and/or any other person.

1.3 The [Institute] reserves the right to amend and/or alter these terms and
conditions at any time without notice. No liability is accepted by the
[Institute] for any losses, damages, costs, expenses and/or any other
sums that may arise directly and/or indirectly as a consequence of there
being no access to the [Collection/Archive] at any time for any
commercial, academic and/or other projects.

1.4 Access to the [Collection/Archive] shall be entirely at the person

and/or companies own risk except where any personal injury and/or
death is directly caused by the negligence of the [Institute].

• Access to a person or company may state in a clause that this does not
authorise them to provide access to other unauthorised third parties.

• There is the right to have access to, and to remove, stock or documents or
even data under an agreement. This is useful where accounting and payment
has not taken place or one party wishes to verify the information. It also
assists to have a contractual term to rely upon to claim back master material
and stock when a distributor is in financial difficulties.

• A-Z A.139 in DVD Video and Discs provides a company with the right to
access to the premises of a distributor to remove the master material, stock,
marketing material and packaging. Where the distributor has failed to
account for royalties from a film and the company owns the material.

A-Z A.139
In the event that the [Distributor]:

1.1 Fails to account for any royalties and/or make payments for any sums
due to the [Company] for the exploitation of the rights in the
[Film/Game] granted under this Agreement.

1.2 Operates where financially insolvent and/or is likely to be placed in

 receivership, administration and/or is unable to meet its financial
commitments.

Then the [Distributor] agrees that the [Company] shall have the right to
enter the premises, offices and warehouses [without prior written
notice/with [number] hours prior written notice] and to recover and remove
all master material relating to the [Film/Game], all packaging, marketing
and stock which either belong to the [Company] and/or compensate for the
value of the sums which are due and have not been paid to the [Company].

• In A-Z A.141 in Film and Television the access is to a specific section of the
site for agreed dates and times. The company which is being permitted
access is bound to reinstate the site to its original condition and to meet all
the costs and expenses of drainage, gas, electricity and water, rates and other
charges and cost which arise from its use of the site. This type of clause
would be used for location access for a film or a festival. Here site maps and
schedules are attached to the main contract.

A-Z A.141
The [Company] shall not be allowed unlimited access to the [Premises] and
shall have no automatic right of entry. The [Company] shall only be
permitted to use the locations marked in red specified on the attached Site
Map in [Appendix A] and in accordance with the Time and Date Schedule
in [Appendix B]. In addition to the Licence Fee charged for access from
[date] to [date] the [Company] shall also be liable to pay to the [Licensor]
additional electricity, gas, water, rates, drainage, sewer and other charges
and expenses that arise and/or become due as a result of the [Company’s]
access to and/or use of the [Premises] and any loss and/or damage. The
[Licensor] shall be entitled to reinstate the [Premises] to the condition it
was in prior to the access and/or use by the [Company]. Where it is
necessary to replace old with new as the old version cannot be repaired
then [Company] shall be responsible for the additional cost.

• In A-Z A.143 in Film and Television access to the premises is not limited by
the owner. However the company has agreed to pay the owner for any
damages, costs, expenses, fees and liability that may arise either directly or
indirectly from their access and use of the site. There is no limit set on the
total liability by the company. Normally you would not want to be
 responsible for unquantifiable indirect costs and expenses. There is no
requirement to provide receipts or other evidence for any claim by the owner
nor is there any time limit within which the sums must be paid by the
company.

A-Z A.143
The [Company] shall be permitted unlimited access to and use of the
[Premises] at any time and may store, park, film and use the [Premises] in
such manner as it thinks fit for the purpose of making the [Film]. The
[Company] agrees that it shall be obliged to pay the [Owner] for any
damages, costs, expenses, fees and liability that may arise as a direct and/or
indirect result of its access to and use of the [Premises].

• In A-Z A.144 this clause addresses the access route to a site and the fact that
it must be kept clear. It also sets noise levels which must be complied with
by the company.

A-Z A.144
Access to the location by the crew, actors, transport, lighting, catering and
other personnel engaged in the [Film] shall be in accordance with the
route/markings in Schedule [–]. The [Company] agree that they shall
ensure that noise levels do not exceed [number] decibels after [time] each
day and that no access route shall be blocked and/or obstructed at any time.

• Standards of behaviour may be set for persons using office premises or a site.
This may apply to an employment contract or for a contractor or for an
event.

• In A-Z A.145 this is a widely drafted clause where a company reserves the
right to exclude a person from the premises. There is also no obligation to
provide a refund or fees; nor to carry out a more detailed investigation, but
the company may decide to report the matter to the police. This clause would
be relevant to a club or festival and is really a statement of policy as well as a
term of the contract.

A-Z A.145
The [Company] reserves the right to withdraw the right of entry, exclude,
expel, remove and/or suspend any person who in their reasonable opinion
 is using offensive or threatening language, acts and/or behaves in a manner
which is unacceptable and/or is believed to be drunk, on illegal drugs or
other substances or carrying an offensive weapon or an item which is
considered a danger to the safety of others and/or who has been warned
that their conduct on previous occasions is unacceptable. The decision of
the [Company] is final. There shall be no obligation to refund any sums
paid for membership, or in fees, to carry out any further investigations or to
disclose confidential sources. The [Company] reserve the right to report
any matter to the [police/other].

• In A-Z A.178 in Sponsorship the sponsor has no right to authorise access to

the event or festival unless valid tickets have been issued. The sponsor must
abide by the rules of access to the site and the company reserves the right to
expel any person whose conduct is unacceptable. The sponsor would not be
entitled to a refund.

A-Z A.178
The [Sponsor] shall not be entitled to authorise and/or grant access to the
[Event/Festival] to any third parties unless it is through the use and/or
purchase of valid tickets specified in clause [–]. Where the [Sponsor] is
setting up a stand to give away and/or sell its products then the [Sponsor]
must abide by the same rules of access as any other vendor. The
[Company] reserves the right to withdraw the right of entry, exclude, expel,
remove or suspend any person who in their opinion behaves in a manner
which is unacceptable. The decision of the [Company] is final. There shall
be no obligation to refund any sums paid for sponsorship.

• There is also the concept of access to an app, website or software or other

technology and data and research material. Any such type of access requires
that terms and conditions are set out as to copyright and other intellectual
property ownership; the type of use and purpose permitted by the access;
credits and moral rights and what that third party may do if anything with the
material which they have viewed or obtained as a result of the access to the
original material.

• In A-Z A.161 in Internet and Websites the clause is for personal use for
access to a website and there is no right to copy material and store it except
in relation to a purchase order. There is no right to commercially exploit or
 reproduce in any form material from the website. A company would not be
able to monitor this against each individual that uses their website but it is a
clause which could be used against those who actively seek to benefit from
the site commercially without authority.

A-Z A.161
You may access and view the contents of this [Website] for your own
personal use for research, to order goods, participate in games, and use its
facilities. You shall have no right to copy, download, reproduce, store
and/or retrieve material whether text, logos, images, slogans, news feeds,
databases, formats, music, sounds and graphics on your laptop, computer,
gadget or other device or system except for your own private personal use
at home while you are using the [Website]. Once you have left the
[Website] then no copies should be stored of any material which you have
viewed except a purchase order of products purchased. All copies should
be destroyed, deleted, or erased unless you have been given specific
authority under a non-exclusive licence by the [Company]. Nor shall you
be entitled to supply, distribute, market or commercially exploit all or any
part of the [Website] and its content to any other person, business or third
party whether on the internet, in printed form or any other media unless the
prior authorisation and consent of the [Company] has been obtained.

• In A-Z A.163 in Internets and Websites access is permitted for three months
for free use of the website; after that period the person is required to pay a
subscription fee or cease using the website and to remove any copies of the
software from their personal computer or other gadget.

A-Z A.163
The [User] has been permitted access to the services and facilities on this
[Website] for a free trial period of [three months] in such case all standard
terms and conditions shall still apply except those as to payment of
subscription fees. At the end of the trial period the [User] shall be required
to subscribe or shall cease to use the service and facilities [and remove,
delete or erase the software from their computer and any discs or back up
material in any format].

• If all reproduction and downloading of any material from a website or app is

not permitted under any circumstances. The prohibition may cover personal
 home use as well as commercial use but also stipulate that research,
education and use by universities and charities are also not allowed.

• In A-Z A.168 in Internet and Websites access to the disc supplied is on a

non-exclusive basis for the purchaser. The licence is directly with that
person; there is no right to make copies except one copy on the hard drive
and one back up copy. There is no right to supply a copy to a third party
except in the manner in which the content on the disc was intended to be
used. There are no rights granted to commercially exploit the content of the
disc. This type of licence would apply to a disc supplied with a book where
agreement to the terms of access and use are made by the purchaser loading
it on their computer or laptop.

A-Z A.168
This [Disc] is supplied to you the [Purchaser] by the
[Distributor/Company] based on the following terms and conditions which
you must agree to before you remove the seal and install the [Disc] [and
load the software].

1.1 That the [Purchaser] is granted a non-exclusive and non-transferable

licence by the [Distributor/Company] to use the [Disc] for the purpose
which it is intended in conjunction with the [Work] namely [specify
purpose, the method and the type of use]. This right is personal to you
the [Purchaser] and shall also permit you to make a copy of the files on
the hard drive of your computer/laptop and one back up copy of the
[Disc].

1.2 There is no right granted to copy the [Disc] whether directly and/or
indirectly in any format and/or medium for supply to third parties in
whole and/or part at any time. All such third parties should be advised
to purchase their own disc as a licence is required.

1.3 There is no right to make additional copies and/or to reproduce the

[Work] for any other reason and/or to add the [Disc] and/or [Work] to
any centralised database, library and/or storage and retrieval system.

1.4 You shall not have the right to develop further works based upon the
[Work] and/or [Disc]. Nor to display, supply, transmit, reproduce,
licence, exploit, adapt, translate, create a new format and/or other
 version for use on the internet.

• The use of cookies to track the behaviour of a person must now be either
actively agreed to by that person – which is why pop ups appear on screen
requesting permission – or accepted as part of the terms of access. In any
event the fact that it may or may not happen must now be actively disclosed
and not hidden. There is a main clause heading on the subject of Cookies in
the A-Z.

• In A-Z A.171 in Merchandising the clause relates to a licensee having the

right to access the factory of the licensor to tour premises, view the working
conditions, look at samples and finished products. As well as inspect and
make copies of a wide range of documents such as test results, marketing
material and insurance policies.

A-Z A.171
The [Licensee] shall ensure that the [Licensor] shall be able with prior
notice to access, tour, inspect and/or be provided with copies of:

1.1 The prototype, samples, unfinished and finished products relating to

the [Work/Product] licensed under this Agreement at the offices of the
Licensee and any factory, manufacturing and packaging process,
warehouse and/or premises and/or location that may be used at any
time.

1.2 Any associated advertising, marketing, film, music, and/or any other
medium.

1.3 Any supporting documents, licences, contracts, surveys, test results,

health and safety reports, insurance or otherwise that may relate to the
[Work/Product].

• In A-Z A.175 in Purchase and Supply of Products there is no right of access

or inspections to a list of locations. In the event that there are any health and
safety issues or other matters or legal proceedings which arise in respect of
the locations which effect production, delivery or supply of the products. The
company is obliged to provide a regular report to the copyright owner. There
is no timescale for delivery of the report. There is no right of inspection of
 documents.

A-Z A.175
There is no right granted which permits and/or authorises access and/or
inspect the following locations under this Agreement [specify addresses].
These locations shall remain and continue to be the sole and exclusive
responsibility of the [Distributor/Company]. In the event that any health
and safety and/or other issue arises in respect of the locations which
materially effects the production, delivery and/or supply of the [Products].
The [Distributor/Company] shall provide regular reports by [method/email]
to the [Copyright Owner] assessing the impact if any and details of any
legal notices and/or proceedings.

• Access is closely linked with Inspection of Accounts and Records which is

a separate main clause heading in the A-Z. Access and inspection may be
limited to a number of agreed dates during each year with the right to take
samples by an independent expert as well as be supplied with access to
original documents and to make copies as in A-Z A.176 in Purchase and
Supply of Products

A-Z A.176
1.1 The [Supplier] shall ensure that the [Purchaser] shall be able to access
and inspect all the analysis, processes, production, manufacture and
packaging involved at the [factory/land/warehouse] of the [Products]
on no less than [number] occasions [in each year] during the
continuance of this Agreement.

1.2 The [Purchaser] shall be entitled to have a qualified expert in

attendance to carry out an independent study who may take samples if
the circumstances permit.

1.3 The [Supplier] shall upon request by the independent expert and/or the
[Purchaser] also make available for inspection and supply copies of all
original documents and certificates in order to ensure compliance with
all legislation that may be applicable to the [Products] and packaging.

• A-Z A.177 is in contrast drafted very widely to allow a licensee access to the
premises of a distributor and supplier for a wide range of reasons and for a
 long period of time before and after production. This clause may be useful in
order to seek original evidence where there is a legal action against the
company which originates from the products supplied by the distributor.

A-Z A.177
Where the [Company] notifies the [Manufacturer/Distributor] that they
have concerns as to the source of the materials and/or water and/or energy,
content, packaging, employee health and safety and/or any part of any of
the [Products] and/or any associated person and /or factor of any nature.
Then the [Manufacturer/Distributor] shall be obliged to provide unlimited
access to any professional and expert advisors and/or executives of the
[Company] that the [Company] may stipulate in order to investigate any
concerns and/or allegations which may arise at any time. Whether this shall
arise before, during and/or after delivery of any [Products] and/or
completion of any order by the [Company] up to a period of
[number/months/years] thereafter.
 ACCOUNTING PERIOD

• This section is from A-Z A.201 to A-Z A.384 in the A-Z.

• This subject can also be cross referenced with the main clause headings of
Accounting Provisions, Inspection of Accounts and Records, Payment,
Royalties in the A-Z.

What does accounting period mean and why is it important?

• If you as an individual or a company are going to be due to be paid money

under an agreement. Then the other party will have to provide a report and
statement whether it is a basic royalty statement with not much detail or a
very detailed report of what has been sold in each country and what sums
have been received and when. In either case the distributor providing the
report would usually provide a report of the figures based on a period of
time.

• Whatever the basis for the accounting period there should be clarity as to the
start and end date of the period and when the first accounting period begins.

• Accounting clauses are often referred to in a generic manner but they contain
a number of specific elements. It has become common for companies to
adopt their own practices to set the start and end of each accounting period in
relation to company statements and reports and any consequent later
payments in accordance with their in house financial software they use to
make payments and to facilitate their own corporate cash-flow arrangements.

• The accounting period is historically geared towards the annual calendar from
1 January to 31 December or the financial years from 1 April to 31 March or
the relevant taxation periods set by a government.

• The accounting period can in fact be any period of time it: could even
theoretically be hours rather than days.
• The accounting period could be one year with a start date 1 January and end
date 31 December or any other 12 month period.

• Alternatively it could be four quarterly periods: 1 January to 31 March, 1

April to 30 June, 1 July to 30 September, 1 October to 31 December as in A-
Z A.202 in General Business and Commercial.

A-Z A.202
‘The Accounting Period’ shall mean each calendar year from [date] until
[date] and shall be treated as comprising of four quarterly three month
periods ending with 31 March, 30 June, 30 September and 31 December
and shall continue until the expiry, or termination of the Agreement or the
date upon which all manufacture, sale, rental, disposal or otherwise of the
[Units] is accounted for to the [Licensor] whichever is the later.

• An accounting period could also be two six-month periods from 1 January to

30 June and 1 July to 31 December in each year. It is also possible for it to
be monthly as in A-Z A.201 in General Business and Commercial.

A-Z A.201
The Accounting Period’ shall mean each period of a calendar month for the
full duration of the Licence Term. Provided that the first Accounting
Period shall commence on [date] and end on the final day of that calendar
month.

• Although the statements and reports for accounts by a distributor may be for
fixed periods over a year. The actual payments tend to be made in arrears up
to three or six months later. This may seem an unnecessary delay in the age
of electronic banking but it is an established practice in some industries
which is arguably based on the need to make adjustments in the reports for
unsold stock, refunds, damages and losses. The delay will of course allow
interest on the funds to be accrued and most account payments do not
incorporate this fact unless there is an excessive delay after the payment
date. Other main clause headings in the A-Z which may assist include
Remainder, Set Off and Interest as well as Payment and Royalty.

• Monthly payment in arrears is also popular but companies – smaller ones in

particular – tend to adopt whatever practices suit them and are acceptable to
 their suppliers.

• Every major company will always try and build into its financial procedures a
system whereby they receive and hold any payments in their account for as
long as possible before they in turn distribute it to third parties who may
require some share of the sums received. They will certainly normally only
expect to pay sums from money which has been paid and cleared from a
third party. No payment would usually be made based on an accounting
statement and report, where no actual payment had been received by the
company.

• When you are due to be paid money by a distributor or organiser of an event

and they supply you with an accounting statement for a specific accounting
period. You need to ensure that any arrangement you conclude with a person
who is due funds as a copyright owner of part of the project is not due to be
paid by you before you have been paid by the distributor.

• A good example of a more irregular accounting practice is in A-Z A.207

which anticipates a regular direct debit form of payment. It is agreed that the
period of accounting statements may vary but will not be less than a fixed
period. There is an additional adjustment to account more frequently if the
product sells well. Note this clause does not state that the company will pay
the creator more frequently.

A-Z A.207
The [Company] agrees that it shall provide a statement to the [Creator] of
the [App/Product] and pay any sums due in full by direct debit on a regular
basis which shall be not less than once every [number/weeks/months].
Where there have been no sums received then the [Company] shall still
provide a statement to that effect. Where the [App/Product] is very
successful and the [App/Product] sells more than [number] then the
[Company] agrees to account to the [Creator] more frequently namely once
every [number/weeks/months].

• Another example where the parties have agreed a more flexible accounting
period and more frequent payments as in A-Z A.203.

A-Z A.203
The Accounting Period’ shall be as follows:
 1.1 Start date [–].

1.2 End date [–] or such earlier or later date that shall be agreed between
the parties in writing, but in any event until all units and sums due have
been reported and paid.

1.3 Regular weekly period of accounts beginning Monday and ending

Sunday. Statement to be provided at the end of each seven-day period.

1.4 Payment to be made every four weeks to the [Licensee].

• Therefore the point to always bear in mind is that despite industry practices
or company policies and procedures that may exist at any time. There is far
more flexibility in this area than most people realise and it is one which is
worth exploring in detail by creating a timeline of statements, reports and
payments. Other relevant main clause headings in the A-Z include Rates of
Exchange, Parties to the Agreement, Sub-Licence and Third Party
Transfer. You need to know whether the companies or distributors or
suppliers providing the statements, reports and payments are shell
companies, affiliates, subsidiaries or parent companies. You may then decide
to have additional companies added as parties to the terms of the agreement
if this would result in more protection and financial security.

• You could ask for template examples of accounting scenarios for similar
types of products for which the distributor has accounted. So that you can
assess how much detail they would provide for any accounting period. You
may also review how the funds are held and where and what costs are
incurred through currency changes, commission, agents fees and any other
additional sums.
 ACCOUNTING PROVISIONS

• In the A-Z there are 165 clauses relating specifically to Accounting

Provisions in clauses A-Z A.210 to A-Z A.385.

• This section can also be cross-referenced with other relevant main clause
headings in the A-Z of Accounting Period, Budget, Costs, Data, Database,
Disclaimer, Expenses, Group Accounts, Indemnity, Inspection of
Accounts and Records, Interest, Liability, Payment, Rates of Exchange,
Risk, Royalties, Sell-Off Period, Set Off and Sub-Licence.

• This section should in particular be read in close conjunction with the main
clause headings Accounting Period, Royalties, Payments and Inspection
of Records and Accounts as the subjects are intrinsically linked.

What is the purpose of accounting provisions in an agreement?

• There are many different functions for which accounting provisions can be
used. The principal function of an accounting provision is to ensure that the
correct money has been accounted for and is paid by one party to the other
under an agreement. However the payment itself is to be calculated, as a
starting point you want true and accurate records of: how much money has
been made; when the sums were received; in which country the sums were
received; and by which person or company. So that there is a complete
picture and specific breakdown in respect of the products sold, the sums
received and any costs, expenses and taxes deducted.

• In many agreements the accounting provisions and the inspection of the

accounts and record clauses and the payments clauses are not given
sufficient attention. It is not uncommon for there to be accounting provisions
in an agreement when none are actually required or an absence of accounting
provisions when they are critical to the circumstances.
• Enormous focus is given to the advance and royalty percentages but not to
the long term procedures to be agreed which provide a supply of complete
information in relation to the exploitation of a product or film or book and
the right to seek to examine the records if necessary through inspection.

• The accounting provisions required under an agreement can be non-existent,

very basic or very detailed whatever the project. Historically certain styles of
drafting these clauses have been used, but in many agreements they existed
before the internet and digital technology.

• For details on the frequency of accounting statements please look at

Accounting Period in this book and in the A-Z where there are additional
clauses.

• Accounting provisions can be used by a distributor to ensure that they

provide the least amount of information in a very narrow summary to the
licensor concerning the sales and also to restrict payments. These figures
may be based on the sums received by the distributor and not relate to the
retail and wholesale price and the number sold. There may be no requirement
to supply any figures relating to losses, damages and free copies provided of
a product.

• You therefore need to understand at which price levels a product or service is

being exploited or the formats in which intellectual property rights are being
produced, used and exploited. Further to appreciate that a value and price is
relevant to each in turn.

• So try to establish how much money will be received in relation to the

different types of methods used. The distributor will try to attribute one type
of use and one price as a norm. This is not often the case and by agreeing to
one fixed price or value you may lose money from the deal.

• You will therefore see in accounting clauses some which use only the word
sale. Whereas others will extend to rental, supply, distribution, transfer or
reproduction and exploitation in any format in any medium. The difference
in wording will affect whether or not you receive money from each of these
methods.

• The figures in the accounts may also only relate to sums received by the sub-
licensees and agents and not the retail or wholesale price.
• Some accounts provision clauses may permit deductions from the figures for
commission, production, reproduction and manufacturing costs, taxes,
transport and delivery costs, customs duties, packaging costs, marketing
costs and expenses for the telephone and mobile costs, as well as staff
salaries and travel costs, and other costs for operating the office. There is no
limit on what can actually be deducted if the clause is drafted in a very broad
way.

• The accounts provisions clauses can be drafted so widely that no money is

ever received by the licensor or creator. There have been many films made
which have made very large sums at the box office, but for which, by the
time the sums have been distilled through the accounts, very small payments
have been received.

• It is quite possible within the accounting provisions for a party to put in a

whole list of deductions which appear quite innocuous at the time of
signature of the agreement but which later have very dire consequences.

• Unless the clause requires that the distributor sets out the sales figures in
respect of each country of the world, and the number produced in the factory
and the number supplied to each outlet, as well as the retail price and
wholesale price and the sums received and any costs and other sums incurred
and deducted. As well as the figures for products lost, damaged and given
away for free. It is extremely unlikely that this information will be supplied
after the agreement has been signed.

• Familiar excuses which are provided as a reason not to provide sales figures
in full with names of the clients include data protection, confidentiality and
the fact that the records are not held in that form. Most of these grounds are
not relevant in the context and are misunderstood and are not valid reasons.
There is extreme reluctance on many companies to provide additional
information outside of their standard statement. So it is important to include
contract clauses with an obligation and burden that they must fulfil so that
you get provided with the whole story of the exploitation of your rights or
product.

• If you cannot get clauses in the agreement to that effect then seek to have
regular marketing and sales updates and copies of promotional material
which has been distributed for which there should be no charge.
• A distributor may seek to limit the accounts to the total number of products
sold for which the distributor has received payment from the agents and sub-
licensees. If a sub-licensee in Europe has received payment for their sales of
a product but not sent it on to the distributor then these sums will not appear
in the accounts report provided by the distributor to you if it is based on
sums received.

• Accounts clauses may state that the distributor is not liable to pay royalties on
sums which they never receive because the sub-licensee has gone out of
business or has refused to make the payment.

• Alternatively a clause may make the distributor liable in any event for sums
which accrue to a third party sub-licensee, but which are never received.
These sums would have to be disclosed in the account report to you and the
distributor would have to pay the sum due to you despite the fact they never
received it themselves.

• Further a distributor or licensee may seek to limit the accounts to only those
sums that have been sent to the country of the main business of the
distributor or licensee and converted into their currency and in their bank
account. So if the distributor or licensee has the sums held with a third party
agent or has not yet exchanged, for example, euros into sterling or sterling
into dollars then those sums may not appear in the accounts.

• The exchange rate and cost of transfer of sums between countries is relevant
to accounting provisions. The distributor will seek to be able to deduct any
such costs from the sums due to the licensee. In order to avoid this problem it
must be stated clearly who is to pay such costs. For other clauses refer to the
section on Rates of Exchange in the A-Z.

• In order to avoid detailed accounts and reporting the parties may agree a
fixed total sum as a one off payment and a buy-out of all the rights entirely.
More clauses on this topic are in the main clause heading Buy-Out in the A-
Z.

• There are different elements in accounting provision clauses which should be

recognised. One element is the nature and extent of the records to be kept
and the distinction between the three words accounts, records and statements.
There is a completely separate issue of the right of inspection of the accounts
 and any records. also the issue of whether the licensee can hold a reserve
against returns.

The extent and ambit of accounts

• The payments which are to be made to the licensor or creator, which are
usually described as royalties, are predicated and calculated based on a
number of elements. It is therefore a matter of common sense that the
accounting provisions should ensure that all such elements are defined to
provide clarity and certainty if a licensor wishes to ensure that they
maximize the revenue that they receive.

Definitions are the source of the calculation of the funds due

• The definitions and the drafting of any words relating to money to be paid,
retained or deducted are crucial. As these definitions or clauses create the
right to the funds and the payment which you will receive.

• There is a main clause heading for Gross Receipts in the A-Z. This
definition can be drafted to exclude any deductions or permit an enormous
amount of unlimited deductions or to only apply to one product and any sales
related to it or any format in any medium at anytime. Just because a heading
in an agreement states that the definition is gross means that it is when you
actually read the words and understand the consequences.

• There is a main clause heading for Net Receipts in the A-Z. Many clause are
deliberately drafted widely and in general terms so that a long list of costs
and expenses can be deducted without limit as there is no maximum figure
stated for deductions either in any one accounting period or in total.

• There are main clause headings for Assignment Fee, Licence Fee, Payment,
Bonus, Expenses, Costs, Budget, Escalator, Penalty, Royalty, Set-Off and
Sell-Off Period in the A-Z which may assist. Advances are dealt with under
Payment.

• The definitions may be defined not only in relation to an existing product or

service but intellectual property rights, trade marks and computer software
which are being developed and a wide range of new games, apps, books,
merchandising or a commercial venture to create a global brand.
• How these rights are described and which countries are covered and the term
of the agreement is crucial. The definitions may or may not include new
rights and material created in the future all these factors will affect how
much money gets paid to the licensor under the agreement.

• In A-Z A.230 in Film and Television the calculation and payment to the
licensor is based on the actual final figures for the Net Receipts. The royalty
payments of the fees and recoupment of any advance are based on the sums
defined as Net Receipts. The Net Receipts are calculated by deduction of the
Distribution Expenses from the Gross Receipts. The Net Receipts are defined
in the agreement as a definition clause. Gross Receipts are also defined in the
agreement as a definition clause. The Distribution Expenses’ are defined in
the agreement as a definition clause. The drafting definition of each part
therefore effects the final payment of the royalty or sum due to the licensor
or creator.

• There is also an additional definition clause for the Licensors Commission

and the Royalties in A-Z A.230. Note that here the licensee is accepting
responsibility for the accounts provisions of the sub-licensees and sub-
agents. The licensee should seek to mirror his obligations to the licensor with
the same or more draconian obligations by the sub-licensees and sub-agents
to the licensee.

A-Z A.230
The [Licensee] agrees and undertakes that it and its sub-agents and sub-
licensees shall keep full and accurate accounting records, statements, costs
and contracts which shall clearly establish and identify the Gross Receipts,
the Distribution Expenses, the Net Receipts, any taxes, exchange rate
conversions, and government levies and set out the calculation and final
figures of the [Licensee’s] Commission and the [Licensor’s] Royalties in
respect of the exploitation of the [Series] under this Agreement.

• Where a licensee or company is accounting to you. You should as far as

possible ensure that they also accept responsibility for the detail and
accuracy of the records that any manufacturer, sub-licensee or sub-agent may
keep and provide to the licensee. As well as how the sums are held by them
before they are transferred to the licensee. There needs to be a consideration
of an element of due diligence as to how the financial systems operate.
However not all these aspects will be necessarily be included in clauses in
 the agreement.

• The accounting provisions may extend to not just accounts in a narrow sense,
ie pure financial and numerical detail. The accounts records may include
paper, software and hard drives, data stored on computers and mobiles,
databases, stock, master material, letters, contracts, licences and other
agreements, inventories, invoices, receipts, and monthly corporate reports.
There is no limit as to either how wide or how narrow you can draft any
clauses.

• There may also be a requirement that the accounts have been or are audited
by professional accountants at the licensees cost as set out in A-Z A.381 in
University Library and Educational.

• In A-Z A.381 the remit for keeping the accounts extends to any parent
company, subsidiary, associated companies, sub-agent, sub-licensee,
distributor or joint venture partner. It is very important to find out who a
company works with for their overseas operation and to understand the legal
connections if any between the parties. Major companies may have a series
of complex organisations which are interrelated. Examine how long the
entity with which you are entering into a contract has been in business and
look at their report and accounts to assess the level of risk involved in doing
business with them. If the company is a new shell business – even if it has
been set up by a very successful related parent business you may need to get
the parent company to be party to the agreement to offer more financial
security.

A-Z A.381
The [Licensee] undertakes that:

1.1 It shall provide the [Institute] with thorough and accurate financial
reports and accounts audited by an accredited professional firm of
accountants once in each calendar year during the Term of this
Agreement and thereafter at the end of each three month period until
all sums are received and verified.

1.2 It shall keep full and accurate financial records, receipts, invoices,
contracts, letter agreements, databases, data, and storage and retrieval
systems on computers, hardware, software, discs and gadgets and any
 other method of recording showing all sums received by or credited to
the [Licensee] and/or its parent company and/or subsidiaries and/or
any associated companies and any sub-agents, sub-licensees,
distributors or joint venture partners. That all such material shall be
preserved and kept secure by the [Licensee] for a minimum of [six
years] after the expiry or termination of the Agreement or in the event
there is a dispute between the parties for such longer period as may be
necessary until it is resolved. In any event any such material shall not
be destroyed without prior written notice to the [Institute] of the
[Licensee’s] intention to do so and the opportunity for the [Institute] to
collect and retain the material.

• There may be no definition clauses concerning gross receipts, net receipts

and expenses anywhere in the agreement but an accounting provision which
sets out the payments due.

• In A-Z A.226 the clause is drafted widely and covers all sums not only
received by but also credited or benefited to the licensee. The payment is in
respect of any form of exploitation of the film and not limited to a specific
format. The payment is any sum received at any time and not limited to the
term of the agreement or a start and end date. The obligation also continues
after the agreement has expired or been terminated.

A-Z A.226
The [Licensee] agrees that it shall be obliged to report, account, verify and
pay to the [Licensor] all the sums which may be due which have been
received by, credited to and/or benefited the [Licensee] in any form from
the exploitation of the [Film] by the [Licensee], and any persons or third
parties which they have appointed or requested to exploit the [Film] at any
time. This obligation shall continue after the expiry, or termination of this
Agreement until such time as all sums due have been reported, accounted
for and paid by the [Licensee]. The [Licensee] agrees to comply with the
following conditions:

1.1 That all royalty and advance statements shall be full and
comprehensive and disclose all relevant information including the
contract reference, the date the sums were received by the [Licensee],
any exchange rates which were applied and how they were calculated.
Together with the calculation of the royalties or advances due to the
 [Licensor].

1.2 That the [Licensee] shall include in the accounting statement details of
all sums of any nature which have been withheld, discounted, set off or
written off or deducted and the specific reasons.

1.3 That the [Licensor] shall be entitled to receive copies of all contracts,
agreements and terms of engagement, order forms, invoices, computer
and manual records, bank statements, stock and other assets of the
[Licensee] at the [Licensees] expense for each such period for up to
[three/six years] after the date of receipt of the accounting statement by
the [Licensor] relating to the [Film] in any form.

1.4 That the [Licensee] shall ensure that all third parties to be appointed or
engaged by the [Licensee] to supply, produce, distribute, market or
otherwise be involved in the exploitation of the [Film] under this
Agreement shall be of good financial standing and shall agree to pay,
account and report to the [Licensee] in sufficient detail for the
[Licensee] to fulfil its obligations to the [Licensor].

• In A-Z A.288 in Merchandising the clause is drafted very narrowly and only
relates to the number of the licensed articles sold by the licensee during the
term of the agreement.

A-Z A.288
The Statement of Accounts rendered to the [Company] by the [Licensee]
shall be in the form of a statement stipulated from time to time during the
Term by the [Company] by notice in writing and shall give the details
requested which shall include details of opening stock numbers, [Licensed
Articles] manufactured, number of sales of [Licensed Articles], closing
stock, sale price of each category of [Licensed Articles] sold and a
calculation of all royalties due to the [Company].

Right to inspect accounts

• Inspection arises in the clauses in accounting provisions and there is a

separate main clause heading of Inspection of Accounts and Records in the
A-Z. An inspection is not the same as an audit of yearly, quarterly or
 monthly accounts. Nor does inspection of documents, software and stock in
respect of a specific product or project mean the same as inspecting all the
corporate records which may exist for a distributor or company.

• In legal theory an obligation to permit inspection of the accounts may arise

during the course of the disclosure process of litigation. Prior to litigation the
other party may resist this request and refuse access and the right of
inspection as unnecessary and onerous. It is much easier to verify the sums
paid and how they have been calculated if there are specific contractual
clauses which impose an obligation on the licensee.

• In other words if the request to inspect the accounts is challenged, then it is

best to be able to point out a specific clause as the basis of the right to
inspection as set out in A-Z A.232 in Film and Television.

A-Z A.232
The [Licensee] shall provide a detailed report to the [Licensor] by [date]
and [date] in each year with a full breakdown of the exploitation of the
[Series] together with copies of all relevant documents and records for any
sum in excess of [figure/currency]. The [Licensee] agrees that the
[Licensor] shall be entitled to arrange for an audit at any time to inspect
and make copies of the accounts records in any format, stock and any other
material in order to verify the sums due to the [Licensor] within [–] of
receipt of each report. Such audit to be at the [Licensor’s] cost and by such
reputable advisor as the [Licensor] may decide.

• You do not have to provide rights of inspection in an agreement and if you do

you may want to make them very limited as to the documents and material
that can be viewed.

• In A-Z A.251 in Film and Television the accounts are to be provided once in
each year by an agreed date. There is not a detailed breakdown of how the
sums are calculated and the most basic information is provided which could
be the number of unit sales and the sum due to the company from the
distributor. The company must dispute any accounting statement within six
months. There is no automatic right to an internal audit of the distributor.
However the parties have agreed that inspection of the relevant documents
and records can be take place. Note there is no right here to take copies.
 A-Z A.251
The [Distributor] shall send to the [Company] an accounting statement and
payments for the sums due under this Agreement by [date] in each year
during the term of this Agreement. The statement shall specify how the
sums due are calculated, but there shall be no obligation to provide further
details in the statement. In the event that the [Company] wishes to dispute
the statement or payment and believes for any reason that it has been
underpaid. Then the [Company] shall notify the [Distributor] as soon as
reasonably possible, but in any event within [six months] of receipt of the
statement. The [Distributor] shall disclose such evidence and documents as
may be relevant to satisfy the [Company] that the statement is accurate.
There shall be no obligation to permit the [Company] to carry out an
internal audit of the [Distributor]. The parties shall agree a suitable venue
for all the documents and records that are relevant to be displayed and
inspected. In the event that the matter cannot be resolved then no part of
this clause is intended to prejudice the [Company’s] right to take legal
action for breach of contract and non-payment and to request a full audit
nor to apply where there is fraud, false accounting by the [Distributor] or
any of its sub-agents or sub-licensees or other third parties.

• It is possible to limit inspection and access to only professional legal advisors

and accountants whose costs and expenses must be paid for by the person
who has engaged them to carry out the work.

• The right to inspect, dispute or seek additional payments in respect of any

accounting statement may be limited to six months or a year after receipt of
the statement and payments.

• If you have a right of inspection you will also want to include the right to
make copies or images of any documents, computer databases and other
material.

• There is an important distinction between an audit and a physical inspection;

the latter being what it means: a physical viewing of the relevant paperwork,
software and other records. The parties may agree in some detail as to how
an inspection is to take place and in what circumstances. Therefore the
practicalities of going through with an inspection needed to be considered.

• Notice may be required before an inspection can place. In A-Z A.310 in

 Merchandising 30 days’ notice by the licensor to the licensee is required
before any inspection can take place. There is no advance right to make any
copies by the licensor with its own equipment. The licensee is charging the
licensor a fee for any copies that it decides that it will provide its consent to
make for the licensee to retain.

A-Z A.310
Such inspection shall be made at the main premises of the [Licensee] on a
minimum of [thirty days] written notice and during normal business hours
on such dates to be agreed with the [Licensee]. The [Licensor] shall not be
entitled to take any copies without the prior consent of the [Licensee] and
all copies shall be charged for at [amount per copy].

Cost of the inspection

• Usually an inspection would only take place because it is suspected that

funds have been withheld, stock has not been accounted for or that sums
have been deducted before the royalties were calculated and paid which were
excessive or not permitted within the terms of the agreement.

• It is possible for a person to carry out their own inspection without

professional advisors or at least to seek additional documents and
information from a distributor or licensee which clarifies the market sales
worldwide. However a full scale inspection and audit with advisors can be
very expensive and time consuming process. The company or licensee who
have provided the statements of account and whose records have been
inspected will want to avoid paying the cost of any inspection. The licensor
or author will want to seek to get the licensee or company to pay all the costs
and expenses of the inspection if there are errors or omissions which are
disclosed. They may also seek to be paid interest on the sums which they
should have been paid.

• The most common formula used in such circumstances is for the parties to
agree that if the original calculations reveal an error of a specific percentage
or more. Then the costs of such inspection and audit will be paid for by the
other party. The precise percentage of error can be any figure and is open to
negotiation. Some industry percentages vary from ten to fifteen per cent.

• In A-Z A.284 in Merchandising the figure is a ten per cent error or omissions
 of the original sum that was accounted for by the company. So if they
accounted for £100 but if there was an error of £10 or more due. The
distributor will have to pay the reasonable costs of the company that are
invoiced plus an additional rate of interest. Provided that if the distributors’
own auditor confirms the error. In this clause the auditor could be replaced
by the Finance Director. The company must have disputed any statement
within one year of when it was received or no claim can be made. There is a
twist in this clause as the distributor agrees to pay immediately to the
company any sums due which have been underpaid. If there is an
overpayment then the company must also refund the sums immediately to
the distributor.

A-Z A.284
The [Distributor] and the [Company] agree that the following terms shall
apply in respect of payment and accounting:

1.1 In the event that any inspection discloses that the total amount which
should have been accounted for by the [Distributor] exceeds by [10 per
cent] or more the total amount that was so accounted for by during
such period. Then if the [Distributor’s] auditor will certify that such
error or omission exists then the [Distributor] shall upon invoice
reimburse the [Company] for the reasonable costs of the [Company’s]
inspection as well as paying the sum due [plus interest at [number] per
cent].

1.2 If the [Company] shall not have disputed the accuracy or completeness
of any accounts or payment within [one year] from the date of receipt
by the [Company] then it shall be deemed complete and accurate.

1.3 If any inspection reveals that the [Distributor] has underreported the
amount payable to the [Company] the [Distributor] agrees to make
immediate payment to the [Company] of the proper amount due. If any
inspection reveals that the [Distributor] has miscalculated and paid
more than the amount due to the [Company] then the [Company] shall
make an immediate refund of such sum to the [Distributor].

• An alternative formula is not to rely on a percentage figure but a specific

amount as set out in A-Z A.356 in Services. Here the sportsperson can
arrange for an audit and inspect the financial records, contracts and other
 relevant material not only of his or her manager but also any associated
businesses. Where there is an error or omission due to the sportsperson of the
agreed fixed figure such as £5,000. Then the manager will pay the legal and
accountancy costs incurred. Note that these sums must be reasonable. The
manager will also pay interest on the payment due which has been
discovered. The interest is at a fixed agreed rate. There is however no detail
in relation to when the interest calculation shall start. It will normally be
from the date at which sums discovered not to have been paid would have
been originally due to the sportsperson.

A-Z A.356
The [Manager] agrees that the [Sportsperson] shall be entitled to arrange
for an audit for each accounting period to inspect and take copies of the
[Managers] and any associated companies or businesses’ financial and
accounting records, contracts, licences and other relevant material in order
to verify the sums due under this Agreement. In the event that in any audit
there is an error or omission to the [Sportsperson] in excess of
[figure/currency] then the [Manager] shall pay all reasonable legal and
accountancy costs and fees in respect of such audit and immediately pay
the sums due together with interest at [figure per cent] for late payment.

• It should be noted that some agents and managers may not keep such detailed
and organised financial records and software as do major corporations. There
have also been many celebrities in the past who have lost substantial sums of
money because the funds received by the agent or manager are held in a
general account and mixed with other money from other sources. So the
issue of how and where money is held and retained can be very important
and in whose name those funds are held.

What is meant by ‘statement’?

• The word statement is open to interpretation and can have a wide variety of
meanings dependent on the context of the drafting. There is no special
definition afforded to the word and it can mean something quite specific or
general. If you do not specify the information required then it will be open to
the licensee or company providing the information to make a decision as to
what they want to supply based on their usual practices.
• For example a routine statement in the context of royalties would by
definition be a royalty statement and should be referred to as such as in A-Z
A.301 in Merchandising. In this clause the royalty statements are supplied 60
days after each quarter. It could be much less and be within 30 days or even
on the last day of each quarter. Detailed information is requested from the
licensee but it does not specify the detail required. Where there are no
receipts from the exploitation of the units by the licensee then no royalty
statement is provided. Payment of the sums due which are shown on the
royalty statement is to be made at the same time that the royalty statement is
due.

A-Z A.301
The [Licensee] shall supply to the [Licensor] a quarterly written royalty
statement no later than [sixty days] following the end of each quarter. Such
quarters shall end on [31 March, 30 June, 30 September and 31 December]
of each year. Each statement shall show the latest information received by
the [Licensee] during each such period as to:

1.1 The number of [Units] rented supplied and sold by the [Licensee].

1.2 Full details of all royalties due and/or payable to the [Licensor].

1.3 Full details of all receipts from the [Units].

The statement shall be accompanied by a remittance for the full amount

shown to be due to the [Licensor]. In the event that in any one quarter there
are no receipts the [Licensee] shall not be under any obligation to supply a
full statement to the [Licensor], but shall merely confirm this fact by letter.
The [Licensee] shall continue to provide such statements during the
Licence Period and thereafter until such time as all [Units] rented, supplied
and sold whether for free or for a charge are accounted for by the
[Licensee] to the [Licensor].

Annual financial statement as opposed to royalty statement

• However not all statements are necessarily intended to be royalty statements.

Statements may be wider in intention such as in A-Z A.242 in Film and
Television where the statement is intended to be an annual financial
statement which is broader in its ambit than a royalty statement.
• In A-Z A.242 the licensee is supplying an annual financial statement to the
licensor in respect of the exploitation of the film by it in any media. The
report will include not only information and data regarding the licensee but
also any details of agents, sub-licensees and any other person acting on its
behalf. The figures shall include not only sums received from the
exploitation of any nature but also any costs and expenses, sums set off,
discounts provided and losses incurred. Some of this information would be
provided in a normal royalty statement.

A-Z A.242
The [Licensee] confirms that all sums received, credited to, or any other
benefits or sums paid or benefits provided to a third party by the [Licensee]
or any sub-agent, sub-licensee or any other person or company acting on
behalf of the [Licensee] relating to the exploitation of the [Film] or any part
in any media shall be disclosed to the [Licensor] in full in the [annual
financial statement] including any content, music, products, books, CD-
Roms, CDs, DVDs, mobile phones, subscription, pay per view or free
broadband internet service, wireless, digital, cable or terrestrial television,
merchandising:

1.1 Receipts, advances, royalties, and any other sums.

1.2 All expenses, costs, collecting society fees, copyright clearance,

reproduction and supply of material, all discounts, losses, credits,
refunds or setoffs.

Annual report

• There is a distinction between a report and a statement. It can be seen that the
concept of a report can be drafted so that it anticipates the supply of more
detailed information, data and records. Whereas a statement may be a very
limited summary relating to payments due to a person and no other
breakdown or information.

• In A-Z A.218 in DVD, Video and Discs the assignee is to provide a detailed
report of the exploitation of the discs in each three-month period. This report
may be in addition to any royalty statement. Note that this report goes
beyond the sales figures and the number sold. It is however open to
interpretation that it is limited to those matters for which payment is received
 in the form of gross receipts by the assignee. It would depend on how gross
receipts was drafted. There are further clauses for Gross Receipts in the A-
Z.

A-Z A.218
On the first day of [March, June, September and December] in each year
the [Assignee] shall provide a detailed report to the [Assignor] with a full
breakdown of the exploitation of the [Series of Discs/DVDs] setting out the
Gross Receipts and the [Assignor’s] Royalties together with copies of all
significant documentation to support the accounts. Where any sum is
withheld or converted or otherwise not received when due then a side letter
should set out the background information and reasons.

Copies of documents with report or accounts

• In A-Z A.218 above and in A-Z A.221 in DVD, Video and Discs copies of
significant documents must also be provided with the report. This is not
common in many contracts, but permits access to major documents before
inspection. In A-Z A.221 this shall only apply to any documents and records
for any sum in excess of an agreed figure.

A-Z A.221
The [Licensee] agrees that the accounting report shall provide copies of
supporting documents and records to substantiate the figures for any
payment or expense in excess of [figure/currency].

Internet, Website and App related report

• In this context the report may need to include data relating to the number of
users or subscribers to a website or app. Accounts and reports in the field are
largely based on electronic databases and are dependent on the software and
technology payment systems used by the company. There is a tendency for
website and app companies to be minimalistic in the information they
provide to third parties when in fact more information is now available far
more easily than ever before due to the way records, documents, and data are
stored and communicated.

• A-Z A.274 in Internet and Websites provides a further example of the way in
 which the detail of a report can be tailored to the circumstances. It is
ambiguous here whether any personal data regarding those who accessed the
pages will be supplied. There is only a one-off annual payment and no
escalating rate to increase the fee if larger numbers than expected access the
web pages. There is also no payment date or period specified. There is a
presumption that it will be made at the same time as the report.

A-Z A.274
The [Company] shall provide an annual report to [Name] which sets out
details of the amount of [users/subscribers] in that period and who clicked
on or accessed the pages on the [Website] relating to [Name]. The
[Company] shall pay [Name] the sum of [figure/currency] if more than
[number] click on or access the pages. Where the [Company] has ceased to
display the webpages relating to [Name] then no report or payment shall be
due to [Name].

• In A-Z A.313 the report covers the number sold at full retail price, those sold
at a discount or destroyed and lost as well as the marketing expenditure and
marketing plans.

A-Z A.313
The [Licensee] shall not be obliged to provide any business, commercial or
other details relating to the distribution and sales of the
[Product/Character/Logo] except those set out below which shall be shown
in each accounting statement and supplied to the [Licensee] together with
payment for any sums due:

1.1 The number of items sold at full retail price in each [country/market].

1.2 The number of items sold at a discount, less commission and/or agents
fees in each [country/market] together with the reduced price.

1.3 The number of items destroyed, lost, given away, loaned, damaged,
rejected as below standard, refunded or disposed of below manufacture
cost price.

1.4 The value of total expenditure on marketing and promotion to that

date.
 1.5 Copies of all reviews, criticisms, marketing material, promotions,
items sold in any country, and packaging.

1.6 Business and marketing plans for exploitation and sales the following
year.

The actual payment is a completely separate issue from the supply

of accounts

• It may appear obvious until challenged that a responsibility to provide

accounts is not the same as the obligation to make an actual payment.
Although this may appear a pedantic point and tends not to be an issue where
both parties are acting in a mutually constructive manner and in good faith, it
should always be remembered that it is preferable to state an obligation
specifically to make a payment and not just provide information. There is a
main clause heading of Payment in the A-Z.

• In A-Z A.380 in University, Library and Educational the accounts are due to
be supplied within 28 days of the end of each six-month period. The
accounts must be comprehensive and professional but no detail is specified.
Any sum due must also be paid at the same time to the institute if it exceeds
ten pounds. The rights of inspection of the Institute are wide and provide a
right to inspect the accounts in any medium it is not limited to paper and
computer software records. The scope of the wording is broad to include all
exploitation of the work by the company and is not limited to a particular
product or service.

A-Z A.380
1.1 The [Company] shall ensure that comprehensive and professional
accounts are created and recorded in each [six month] period from 1
January to 30 June and from 1 July to 31 December. That within [28
days] after each of those dates the accounts shall be supplied to the
[Institute] and any sum due shall be paid which is over [ten pounds
sterling]. If it is less, then that sum shall be carried forward to the next
accounting date unless specifically requested by the [Institute].

1.2 The [Institute] shall be entitled to appoint a representative from the

management, board and/or legal and/or financial advisors to examine
 the accounting records in any medium of the [Company] in respect of
the exploitation of the [Work]. Any such inspection shall be at the
[Institute’s] sole cost upon written notice to the [Company] and shall
take place no more than twice a year. Where an error is established the
[Company] shall be obliged to pay the interest on the sum from the
date it should have been paid at [figure] per cent above base rate.

Reserves against returns

• There is a long standing accounting tool in accounting provisions where a

clause is included to permit the company to have a reserve against returns.
This provision is used in circumstances where there is a possibility that
products or articles may be sent back as unsold, damaged, unfit for purpose
or some other reason.

• Despite this type of clause existing you are not obliged to agree that any sums
should be held back from payment by the company. There is a strong
argument that this is just another way of making a bit of extra money and
that the company should bear the cost and risk entirely. As if the project or
sales are successful they would already be accruing funds which they are
holding to pay to the licensee in the next set of accounts.

• Withholding payments due under the auspices of a reserve against returns

may seem an outdated commercial arrangement in this digital and automated
supply chain age. The practice of sale or return is still however very much in
practice in bookshops and in some online web based businesses.

• In a consignment arrangement a product is sold by party A the manufacturer

to party B the supplier and distributor and then to party C the retailer. The
retailer party C bears the risk of the product or article not being purchased
dependent on the drafting of the clauses in the supply chain between each
party. However there may be many links in the distribution chain and the
high risk is where the product relies on the ultimate consumer – the end
purchaser buying the product. If that end deal with the consumer is not done
the retailer is left with a product that is going to be returned or otherwise
disposed of. The consumer may purchase the product and then return it as
unfit for purpose, damaged or unwanted in accordance with the retailers
returns policy. There are additional main clause headings relating to Risk
 and Product Liability in the A-Z which are relevant to this topic.

• There are good reasons for businesses to agree all manner of terms which do
or expressly do not involve the possibility of returning products. Sometimes
by their perishable nature products cannot be returned after a period of time.
Also by their nature the product may have what might be called an obvious
sensitivity to not being accepted as a for example, on hygiene or health and
safety grounds.

• There has been an industry practice between publishers and authors to

facilitate a degree of returns. Therefore the reserve against return clause
seeks to protect the publisher from taking a large loss in circumstances where
retailers may have been over optimistic in the size of their orders.

• Although modern real time tracking technology has improved the access to
data, orders, and control over the delivery and return methods and dates.
Many publishing and retail contracts still tend to contain reserve against
return provisions.

• Debates often occur as to whether the reserve against return clause is

unnecessarily high. The reserve percentage figure which the publisher may
wish to retain may vary anywhere between 10% and 30%. The opposite
argument is that no reserve or a very low one would be more appropriate.

• In A-Z A.383 in University Library and Educational there is no percentage

figure set for a reserve against returns and an even wide clause which allows
the institute to make reasonable reserves against anticipated returns. Note the
sums received for refunds or credits are not included in the Gross Receipts or
the sums can be deducted at a later date. No payments will be due for any
material lost or stolen or money not actually received by the institute.

A-Z A.383
1.1 The [Institute] undertakes that it [and its sub-agents, and sub-licensees]
shall keep full and accurate books of account, records and contracts
showing the [Gross Receipts/sums received] and the calculation of the
[Licensor’s] Royalties.

1.2 The [Institute] agrees to account to the [Licensor] and pay the
[Licensor’s] Royalties by [date] in each year during the Term of this
 Agreement and thereafter within [–] of receipt of payment until all
sums due or owing are accounted for to the [Licensor].

1.3 The [Institute] may withhold from amounts otherwise due reasonable
reserves against anticipated returns. No monies paid to the [Institute]
and thereafter refunded or credited shall be included in the Gross
Receipts or if included the amount thereof shall be deducted from
subsequent Gross Receipts. No payments shall be due for any lost,
damaged, stolen, and/or for which the monies due are not received
from a third party.

• If the reserve against returns clause can be challenged in negotiations due to

the impact of faster delivery, data and software records and more careful
planning of production and stock. If the parties agree that there is no reserve
then it is better to state that fact as in A-Z A.363 in Services.

A-Z A.363
The [Company] shall not be entitled to:

1.1 Withhold any sums due to the [Artiste] for any reason.

1.2 Withhold any sums as a reserve against returns.

1.3 Withhold any sums against existing and/or future liability whether or
not legal proceedings have been instituted by a third party.

1.4 Withhold any sums to meet the claim and/or demand for payment to
any agent and/or manager who has been and/or is engaged by the
[Artiste].

1.5 Withhold any sums due to the delay of the transfer of funds between
connected and/or associated companies and/or businesses whether
parent, subsidiary or otherwise of the [Company].

Third party accounts and access to records

• If is important to discuss as part of the negotiation process what exactly is

involved in the production and manufacture of the product or the supply of
the service. Try to establish historically who has been involved in the past in
 other agreements and whether this one is exactly the same. Obtain names,
businesses addresses, locations and corporate records and accounts so that
you can understand the wider picture of the operation. Also follow the
timeline of how the product or service is created and produced from the
beginning to the final product being sold or the service delivered or the
project being carried out and completed.

• This will enable you to see more clearly what material or rights will be
developed, produced, distributed, sold and exploited. You will also be able to
see the financial picture of which parties are receiving payments and which
parties are exploiting the product or service or intellectual property. This will
enable you to see which third parties may need to be included to provide
reports, royalty statements, make payments or assign rights.

• Potential third parties in any chain include agents, sub-agents, manufacturers,

freight companies, storage and warehouses, marketing and promotional
companies, distributors, sub-licensees, a parent company, subsidiary, other
companies or persons used by a licensee to create, develop, store, sell or
exploit material or rights.

• In A-Z A.329 in Publishing the publisher is using sub-agents, sub-licensees

and distributors to exploit the work. This type of clause is not necessarily
included in many older style publishing agreements. The publisher, to fulfil
this obligation, would need to be more specific as to its own business and
contractual arrangements with those third parties in order to fully comply.
Many distributors and publishers would seek to avoid agreeing to this wider
clause.

• If you are the person or company then it is to your advantage to have access
to as much information as possible to verify the sums due to be paid. This
clause also requires the material and accounts and records to be kept for a
minimum period of time and not destroyed or deleted. The clause is also
wide because it covers not just development, production, distribution and
sale but also all dealings of any nature.

A-Z A.329
The [Publisher] and its sub-agents, sub-licensees and distributors shall keep
for a minimum of [specify period] all material on which information is held
relating to the [Work], books of account, records, invoices, discs,
 microfilm, computer software, letters and contracts showing the
development, production, distribution and sale of the [Work] and all
dealings of any nature, disposal, or transfer and all sums received by the
[Publisher] in respect of the [Work].

• This third party reference usually refers to sub-agents, sub-licensees and

distributors and so the same wording often appears in a clause but in a
different context as in A-Z A.371 in Sponsorship.

A-Z A.371
The [Promoter] undertakes that it and its sub-agents, sub-licenses and
distributors shall keep full and accurate books of account, records,
contracts, software and other material showing all sums received and spent
in respect of the [Promoter’s] Budget. That the material may be destroyed
after [date] if there are no further details and copies required by the
[Company].

• Many of the issues raised and addressed above would seem antiquated to new
entrants to the commercial world. Many transactions in the ultra-fast digital
and click through and tap and pay world are agreed and fulfilled with the
minimum of fuss without overt legal concerns. Therefore the concept of
detailed accounting provisions may seem an unnecessary burden and time
wasting exercise.

• If that is the case the parties can simply minimise the whole accounting
process by agreeing a fixed total price or a fee and make an immediate
payment. However matters are not always that simple or so straight forward
as to push aside contractual obligations intended to have longevity. An
arrangement which appears on the face of it to be quite simple may, when
the parties disagree, require the accounts and sums paid to be verified. The
accounting provision clauses can ensure that you can obtain and access to all
sorts of data, files, bank records, software and stock records and sales
invoices and receipts as a contractual obligation rather than under a court
order or through litigation.

Bank account and separate funds

• It may be preferable that the sums due to the licensor or company are sent
 directly by the party making the original payment rather than held for
anytime through an agent or sub-licensee. This is an option to consider
although it may be resisted as not feasible.

• The issue of how money is held, the currency, the bank, the country in which
the account is held, and the name of the account and who has access to
authorise money in and out is another aspect of the accounting provisions to
consider. If the funds are to get mixed with the other general funds and in a
main bank account of a business, it may not be secure and pose a severe risk.
Failure to separate funds may mean that when an agent, distributor or
licensee goes into bankruptcy or administration all the sums are lost.

• Where large sums are held for a period of time in a bank account then who
benefits from the interest and is any of this then paid over to the licensor?
Usually the answer is no, because there is no clause in the agreement to that
effect.

• The requirement to place all money received in a completely new bank

account for the project over which no charge or lien can made by a
distributor, licensee or third party allows the funds to be clearly identifiable.

• In A-Z A.234 in Film and Television the licensee agrees to put the sums
relating to the Gross Receipts in a separate account but still in the name of
the licensee. No further details are specified such as which bank, country or
the signatories to the account. The licensee is agreeing not to use the funds to
be charged, have a lien over them or as security.

A-Z A.234
The [Licensee] agrees that all sums relating to the Gross Receipts for the
[Series] shall be kept in a separate bank account and not mixed with any
other monies of the [Licensee]. Nor shall a charge, lien, or other security be
given in respect of the Agreement or the Gross Receipts or the bank
account by the [Licensee].

• In A-Z A.358 in Services the manager is opening a bank account for the
funds received from his exploitation of the services of the sportsperson with
a specified signatory for the account. More than one artist or presenter has
lost significant sums through the failure to safeguard their income in this
manner.
 A-Z A.358
The [Manager] agrees to open a bank account at [bank] for the specific
purpose of depositing and dealing in all monies received from the
commercial exploitation of the product of the services of the
[Sportsperson]. The following person [name] shall be the sole signatory for
the withdrawal or transfer of any funds. This arrangement shall not be
changed without the prior written consent of the [Sportsperson]. The
[Manager] shall not be entitled to use the account to create a charge, lien or
in any way effect the claim to the sums by the [Sportsperson].

Deduction of distribution expenses

• Please also look at the main clause heading Distribution Expenses in the A-
Z.

• Some agreements do not actually set out which expenses may be deducted or
not and somewhere in the definitions or accounting clause there is a right to
make deductions. This may include marketing expenses, reproduction costs,
administration charges and many other unspecified sums. Some agreements
include a long list to include copyright fees, legal fees, travel, freight and
other unquantified costs. Widely drafted deductions may mean that the other
party can spend the money on very high expenses and costs before they have
to pay you anything.

• It is much better to state clearly that no sums can be deducted or exactly

when and how any costs and expenses can be deducted.

• It is recommended that you set a total limit on the sums that can be deducted
in any accounting period or in total during the term of the agreement.

• In A-Z A.219 in DVD Video and Discs the licensee is restricted to a

deduction of a maximum amount of agreed fixed costs under Distribution
Expenses in any one accounting period.

A-Z A.219
The [Licensee] agrees that it shall not be entitled to recover more than [–]
costs under Distribution Expenses in any one accounting period. Any
excess shall not be carried forward to the next period but shall be at the
cost and expense of the [Licensee].
• A statement of what the other party will not be entitled to deduct under the
agreement can also be stipulated.

• In the same way that there can be positive assertions in an agreement which
create the right to receive and be paid money. It is also perfectly reasonable
to establish quite clearly within the agreement costs which cannot be
deducted and expenses which each party must be liable for on its own.

• The same principle can apply to any information and data. In A-Z A.377 in
Sponsorship the sponsor is not entitled to any accounts, admission details or
marketing material in respect of the event from the organisers.

A-Z A.377
The [Sponsor] shall not be entitled to any accounts, press reports,
admission details and/or any other data, records and/or marketing and/or
any other material in any medium and/or format in respect of the [Event]
from [Name/Association]. The [Sponsor] shall be obliged to use its own
resources to analyse, assess, and/or gather marketing, ratings, admission
and/or other details which would enable the [Sponsor] to reach a
conclusion as to the value and extent of the advertising, television, press
and media exposure.

• In A-Z A.378 in Sponsorship the sponsor is not entitled to copies or access to

any documents or other material which is not available to the public.

A-Z A.378
The [Sponsor] shall not be entitled to copies of and/or access to any
documents and any other material which are not already available to the
public at any time including but not limited to the draft and audited
accounts, financial records, projected forecasts and budgets, data, sales
figures, losses, expenses, advertising and marketing costs, donations,
personal data and payment records.

• In A-Z A.384 the institute has no obligation to provide any budget, costs or
accounts to the company. The company also accepts that it has no control
over or approval in relation to the sums spent on the project. Nor as to
whether a third party may make a contribution to the costs.
 A-Z A.384
The [Institute] shall not be obliged to provide any accounts, financial
information, costs and/or budget details to the [Company] at any time. Nor
shall the [Company] be entitled to any control over and/or right of approval
in respect of any matter relating to any sums to be spent and/or received in
respect of the [Project] by the [Institute]. The [Company] shall not have
any right of approval over whether a third party is to be accepted to
participate in the cost of the [Project] and/or to provide sponsorship and/or
some other contribution at any time.

• In A-Z A.261 in General Business and Commercial no cost or expense is to

be deducted which cannot be verified by receipt or other documents.

A-Z A.261
No expense or cost or other sum shall be deducted from the accounts which
cannot be verified by a receipt or other supporting documentation

• In A-Z A.317 in Publishing any royalty to be paid to the television company

shall not include currency exchange costs and charges which means the
publisher will bear those costs.

A-Z A.317
Any royalty payable to the [Television Company] shall be paid in [sterling]
without deduction of any bank commission, charges, currency conversion
costs or otherwise.

Interest, Penalties and compensation for late payment

• Please also look at the main clause headings in the A-Z of Error, Omission,
Damages, Losses, Liability and Legal Proceedings and Interest.

• In A-Z A.224 in DVD Video and Disc where the distributor delays or fails to
pay the licensor. Then an additional sum shall be paid in compensation and
as a penalty as opposed to interest.

A-Z A.224
The [Distributor] shall pay all the sums due to the [Licensor] under this
 Agreement by the dates set out at the latest and where there is any delay or
failure to pay at any time the [Distributor] shall pay an additional payment
in compensation and as a penalty of [figure/currency] per [day/month] to
the [Licensor].

• In A-Z A.263 in General Business and Commercial the licensee must

disclose any errors and omissions in the accounts or payments. In addition
the failure to pay any sum due is accepted as a breach of the agreement.

A-Z A.263
The [Licensee] agrees and undertakes to the [Licensor] to:

1.1 Act in good faith and disclose any errors and/or omissions in the
accounts and/or payments as soon as they are noticed.

1.2 To ensure that professional accounting practices according to [specify

institute] are followed by the [Licensee] in respect of the calculation of
any sums due to the [Licensor] under this Agreement.

1.3 To ensure prompt payment of any sums due to the [Licensor] and agree
that failure to do so shall be considered a breach of this Agreement.
 ACT OF GOD

• Act of God in the A-Z is from A-Z A.386 to A-Z A.409 under the
subheading General Business and Commercial.

• This section should be read in close conjunction with Force Majeure in the
A-Z. Other main clause headings in the A-Z that you may wish to consider
include Adverse Change, Break clauses, Cancellation, Default,
Disclaimer, Force Majeure, Indemnity, Insurance, Liability, Loss,
Product Liability, Suspension and Termination.

What is meant by an Act of God and how is the term used?

• The term Act of God is not used so often on its own but falls with the drafting
of clauses for force majeure. It does help however to understand this term
and what it means as its use will have consequences which affect other
clauses under the agreement.

• The term Act of God, drafted in its most basic form and narrowly, relates to
extreme natural events of such a force and so unforeseeable as to be
unpreventable and beyond the reasonable control of both or either parties.
The intervening Act of God has not been predicted and is unexpected but
nevertheless has an impact on the fulfilment of the agreement.

• However an Act of God can be drafted to cover a much wider range of

circumstances if both parties agree that those facts can fall within the ambit
of either an Act of God or other circumstances which were beyond the
control of the parties.

• An Act of God is often defined to be limited to certain unexpected and not

predictable situations relating to extreme weather conditions such as
lightening, thunderstorms, monsoons, hurricanes, snow and related
consequences such as floods or seismic movements of the earth and sea such
 as volcanoes, earthquakes and tsunamis’.

• However an Act of God can be drafted to include a much wider scope of

events which are unexpected and which affect and interrupt an agreement.
These include:

– Fire, military invasions, declaration of war, war is taking place,

terrorism, riots

– Industrial action, strikes, national power failures and failures of other

services which may arise from such actions resulting in no electricity,
power, heat, light or transport

– Interruption of freight, supplies, work or services from third parties

caused by any of the above

– Defects and failures of machinery, equipment and computer software

– Human-related errors, omissions, accidents and other intervening

circumstances

These type of actions or events are, preferably, specifically included or

excluded from the agreement.

• The Act of God is not then caused directly or indirectly through any fault,
negligence or failure of any of the parties to the agreement. The Act of God
must have been totally beyond their control and must not have been expected
or known to have been predicted by them as likely to take place.

• That does not mean that the parties cannot consider the likelihood of an Act
of God or other factor affecting the completion of the terms of the
agreement. An insurance policy to cover such events may be considered by
the parties.

• The primary function of a clause which includes the words Act of God is to
absolve one party from the consequences of its inability to perform or carry
out all or part of its responsibilities under an agreement if there are
intervening extreme acts beyond their reasonable control which prevent the
contract being performed or fulfilled.
• An Act of God is often referred to in Force Majeure and other provisions and
drafted so that if an Act of God shall take place. As a result of such an Act of
God affecting the ability of one party to carry out their duties under the
agreement. One party, A, will not be liable to the other, B, either for a short
period of time or indefinitely so that the agreement can be terminated by one
or both parties.

• The scope of how the Act of God or Force Majeure clauses are drafted will
affect what happens after an Act of God has taken place. This may include
whether or not you will get paid for your work which has been completed or
a service which has been supplied or costs and expenses which have been
incurred.

• Often it is assumed that only one party in an agreement can benefit from the
use of Act Of God clauses or Force Majeure clauses. There is no reason why
both parties should not be permitted to rely on such clauses under an
agreement.

• The words are used to exclude responsibility under an agreement either to

pay the full sums due for products, work or a service and also to exclude
responsibility for any damages, losses, costs and expenses or additional sums
due which arise for any delay or other consequences. Here it is also relevant
to consider the other main clause headings in the A-Z Liability, Risk,
Losses and Damages.

• The exclusion of responsibility and liability is based on the actual words

drafted in the clauses and so it is important to consider potential situations
and facts that may arise or any potential consequences that may be suffered
either just directly or both directly and indirectly.

• The words Act of God can appear in a many types of agreements from
household insurance to mobile phone contracts, publishing agreements,
supply or distribution agreements or sponsorship of an event.

• In A-Z A.386 the clause relates to both parties. So if either party A or B or

both cannot fulfill their obligations under the agreement for any reason
beyond their reasonable control. Then the failure to perform or carry out
their obligations shall not be considered a breach of the agreement. In this
case examples of reasons include war, industrial action, floods and Acts of
 God.

A-Z A.386
In the event that this Agreement cannot be performed or its obligations
fulfilled for any reason beyond the reasonable control of either party to this
Agreement, then such failure to perform or fulfil the obligations required
under this Agreement by any such party shall accordingly be deemed not to
be a breach of this Agreement. The reasons may include, but are not
limited to, such events as war, industrial action, floods or Acts of God.

• It is still quite common to come across the term Act of God in both old and
new contracts and it is helpful to know ways in which it can be amended to
suit your needs which is always a smarter way of proceeding rather than
seeking to delete it.

• Great care must be taken to ensure that both parties have the same
expectations not just of the meaning but the consequences of an Act of God
clause or reference in a contract.

• The meaning and consequences to party A in an agreement as a result of Act

of God or Force Majeure clause may not be the same as in a completely
different agreement to party B. You really need to discuss and address the
scope of the meaning for each of the parties and examine the consequences
which would apply if that clause was used as a result of the Act of God
clause being relied upon by the other party.

• This type of attention to detail does not take often place and these clauses are
commonly added at the end of an agreement and dealt with as having a low
level of significance. This is a serious mistake. The exit routes out of an
agreement and who is liable at any stage for any consequences are important.

• Here the other main clause headings in the A-Z of Termination,

Cancellation, Suspension and Indemnity are also relevant.

• Therefore the challenge is to take the opportunity whether drafting or

responding to existing wording to make effective deletions or alterations
which fundamentally shift the meaning and consequences to what you intend
the term to mean and also to have the effect intended.
Potential consequences of Act of God

• Although both parties may have a general understanding of the purpose and
function of Act of God. It is worth setting out the alternative consequences in
broad detail as to what steps could be included in a clause. Choices available
may include:

– Prompt written notice of the fact there has been an Act of God that
effects fulfillment and an explanation of the facts and an estimate given
of how long it will take to be remedied if at all and when the contract can
continue

– Suspension of the agreement for an unlimited or maximum agreed period

of time

– Grounds for termination

– Period of time in which one party may be permitted to remedy problem

– Notice to terminate by either or both parties

– Negotiation to resolve the matter

• In A-Z A.395 if the institute is unable to carry out either all and/or part of the
agreement which are due to circumstances beyond its control which were not
reasonably foreseeable and are due to an Act of God. The parties have agreed
that the agreement shall be suspended for a maximum of one year. After the
expiry of one year either party may serve notice on the other to terminate the
agreement. The parties will then seek to negotiate a resolution to any
outstanding problems.

• In this clause there could be added a clearer date for the start of the
suspension as to when the commencement date for the one-year period starts.

• The Act of God can also be drafted very widely so that it includes not only
very bad weather such as lightning, floods, hurricanes but also defects in
equipment, accidents, acts of terrorism, war, national power failures and
those events which have the effect of interrupting the supplies, services or
work of any third party associated with the institute or a project.
 A-Z A.395
Where the [Institute] is unable to fulfil the terms and conditions of all
and/or any part of this Agreement due to circumstances beyond its control
which were not reasonably foreseeable and are due to an Act of God
including, but not limited to, lightning, floods, hurricanes, extreme weather
conditions, defects in equipment, accidents, acts of terrorism, war, national
power failures and/or has the effect of interrupting the supplies, services
and/or work of any third party associated with the [Institute] in respect of
this Agreement. Then the Agreement shall be suspended until such time as
it can be fulfilled by the [Institute] provided that it shall be for no more
than a period of [one year]. Thereafter either party shall be entitled to serve
notice to terminate the Agreement and for the parties to negotiate a
settlement to resolve any outstanding matters.

Notice that an Act of God has taken place and termination

• One of the immediate consequences to be addressed is the estimated time it

would take to remedy the failure to carry out either all or part of the
agreement whether due to an Act of God or some other reason.

• A-Z A.393 requires that any party must give prompt written notice to the
other and explain the facts and reasons for the delay and give an estimated
time for the situation to be remedied. This clause would be in addition to any
Act of God or Force Majeure clause.

A-Z A.393
Any party which is unable in whole or part to carry out its obligations
under this Agreement shall promptly give written notice to that effect to the
other party stating in detail the circumstances and the estimated time it is
believed will be needed to remedy the situation.

• There is an important question as to whether or not the Act of God would

even give rise to a right to one or more parties to terminate the agreement.

• In A-Z A.401 this clause only relates to specific terms in the agreement. The
Act of God is not directly referred to and is used within the context of Force
Majeure. The licensee must have been unable to fulfil the agreement for a
fixed agreed period which was beyond their control. After that first period of
 time they must notify the licensor of the nature of the force majeure and the
clauses under the agreement that the licensee cannot carry out and how long
it is expected that the problem will continue before the licensee can carry out
its obligations. Here the licensor shall have an absolute discretion and the
right to just terminate the agreement on receipt of this notice and does not
have to allow any additional period to help the licensee carry out its
obligations. This clause then leads directly to the termination clauses in the
agreement.

A-Z A.401
Where the [Licensee] is unable to fulfil and/or perform any and/or all of
[Clauses/specify] for [number] [days/months] due to circumstances beyond
the [Licensee’s] reasonable control which are due to force majeure. Then
the [Licensee] shall be obliged to notify the [Licensor] of the nature of the
force majeure and the terms which the [Licensee] is unable to perform
and/or fulfil. At the same time the [Licensee] must provide an estimated
date by which the matter is expected to be remedied. In any event upon
receipt of any such notification from the [Licensee] the [Licensor] shall
have the right to terminate the Agreement by notice is writing. It shall be
entirely at the [Licensor’s] discretion as to whether the [Licensee] is
permitted the opportunity to remedy the situation. In the event that the
Agreement is terminated by the [Licensor] then the termination provisions
in Clause [–] shall apply.

• You should define what you mean by an Act of God and include or exclude
problems created by human actions and failures or software, machines or
equipment.

• The crux of the issue from a drafting perspective is to take the opportunity to
be clear as to what is – and as equally important what is not, an Act of God.
In the context of contract interpretation the question is not what does Act of
God mean? – whether you view the interpretation from a historical,
theological or academic sense but what does the agreement actually state as
agreed between the parties. What does this term mean in the whole context
of the full agreement?

• There is a clear distinction between a narrow view of an Act of God and

those matters which are caused as a result of the actions, default, failures and
work or services of any third party whether an individual, members of the
 public, a company or consortium or an inanimate object or an animal.

• In A-Z A.389 the clause is drafted so that accidents, defect in equipment and
power failures are included as examples accepted as beyond the control of
the parties. However negligence or omissions by employees and third parties
and industrial action are not.

A-Z A.389
The term ‘Act of God’ shall be defined as those acts or circumstances
which could not reasonably have been predicted or guarded against which
are beyond the control of the parties. Examples include, but are not limited,
to lightning, floods, extreme weather conditions, defects in equipment,
accidents, terrorism, war, violent outbursts, nation-wide power failures.

The following types of acts or omissions are not applicable:

1.1 negligent acts or omissions by employees, consultants or

subcontractors or other third parties engaged to carry out work.

1.2 industrial action.

1.3 wanton acts by trespassers or visitors.

• In A-Z A.396 the whole clause is dedicated to making clear what failures,
defects and other matters cannot be relied upon under the agreement within
the heading of Act of God and are excluded.

A-Z A.396
Both parties agree that the following acts, failures, defects and matters are
specifically excluded and are not an Act of God:

1.1 Defects in any equipment provided by either party.

1.2 A major product recall of its goods and services for health and safety
reasons.

1.3 Technical failure of the [Work/Website/Product].

1.4 The suspension of the [Company] on the [Stock Market/other].

 1.5 Hackers, spam, viruses and computer hardware and software failures
and problems unless due to a national power failure.

1.6 Malicious, deliberate, negligent acts, omissions and errors by

employees, consultants, sub-contractors, agents, licensees, directors,
trustees or other third parties engaged to carry out work and/or who
provide services.

1.7 Strike, industrial action and protests.

1.8 Malicious, deliberate, negligent acts, omissions and errors by

trespassers and/or visitors.

• In addition to excluding events, defects and failures which arise through the
actions of humans, machinery or their equipment or software. A clause may
be drafted to specifically exclude what might be interpreted as an Act of God
as it relates to weather, but which has either been predicted given the local
climate and its history or which one party wants excluded.

• In A-Z A.403 the clause is drafted to relate to force majeure as opposed to an

Act of God. The point is expressly made under sub-clause 1.1 of A-Z A.403
that ‘snow and strong winds’ will not absolve a party from the contractual
consequences of non-performance.

A-Z A.403
The [Licensor] and the [Licensee] agree that the following circumstances
shall not be deemed and/or accepted as grounds for force majeure:

1.1 Snow, strong winds.

1.2 Defects in any equipment, material and/or packaging.

1.3 Technical failure of the website of the [Licensee].

1.4 Suspension and/or exclusion of the [Licensee] from the [Stock

Market/Institute].

1.5 Computer hardware and software failures.

1.6 Malicious, deliberate, negligent acts, omissions and errors by

 employees, consultants, sub-contractors, agents, directors and/or other
third parties engaged to carry out work and/or to provide services by
the [Licensee].

1.7 Protests, marches, arson, and/or criminal acts.

1.8 Malicious, deliberate, negligent acts, omissions and errors by

trespassers and/or visitors.

• The point of both this Act of God and the Force Majeure sections should
therefore be clear once these issues have been addressed or taken on board:

– What the clause states clearly to be the case is what matters, not any
party’s pre-existing perception or understanding of the terms

– The period of time the ‘problem’ may continue

– What happens after an agreed period of time

– Whether the continuing intervention can give rise to serve notice to

terminate

– Whether specific events which may seem natural are by history alone
foreseeable and possibly preventable such as those caused by snow,
strong winds, floods, heavy or persistent rain or storms

– Whether specific occurrences such as a mechanical or electrical failure,

power failure, war, terrorism and industrial action – however they come
about are to be included in the Act of God provision

– How far the clauses relate to third parties who are agents, sub-licensees,
suppliers and distributors or whether they are excluded

• It is crucially important to consider such matters in the context of personal

and business insurance, particularly the detailed wording and exclusion
provisions of any cover and to check that there are no unknown areas of
liabilities that you may be responsible for which are not covered you need to
be able to evaluate the risk and the potential financial consequences.

• Therefore the section of Act of God and the main clause heading Force
 Majeure are best read in conjunction with the other sections on Liability
and Termination in the A-Z and also this work.

• In A-Z A.394 there is no direct reference to the actual words Act of God but
extreme weather conditions are dealt with in sub-clause 1.3. The aim of this
clause is to give the company no obligation to carry out the terms of the
agreement if any of the unforeseen circumstances stated below occur to
either to the company or its suppliers, distributors and packagers.

• The company is excluded from an obligation to fulfil the terms if it is

suspended from the stock exchange or has a technical problem with its
website for more than a month or has a major product recall of its goods and
services for health and safety reasons.

• The consequences are that the agreement can either be suspended indefinitely
or if the problem ends then it can continue or the parties agree terms to end
the agreement. Here the issue of costs, expenses and liability for payments
under the agreement is not dealt with in this clause. It would be dealt with in
a completely separate clause.

A-Z A.394
There shall be no obligation to fulfil the terms of this Agreement in the
event that any of the following unforeseen circumstances shall occur in
respect of the [Company], its suppliers, distributors and packagers:

1.1 A war is declared, or a state of national emergency, the national energy

supplies are not functioning for more than [one week] in [country].

1.2 The Website is not functioning due to technical problems, viruses,

hackers or spam for more than [one month].

1.3 Floods, hurricanes, storms, or other extreme weather conditions in

[country/Europe/other].

1.4 The suspension of the [Company] on the [Stock Market/other].

1.5 A major product recall of its goods and services for health and safety
reasons.

The Agreement shall either be suspended indefinitely until the conditions

 or problems cease or shall be ended on terms to be agreed between the
parties.

• In A-Z A.398 relating to a sponsorship agreement again there is no direct

reference to the words Act of God but the grounds which both parties agree
fall within Force Majeure. Both parties have the right to make an assertion of
force majeure and then to have three months to try to resolve the situation.
After that period the parties agree to reach an amicable settlement.

• The difference here is that parties have agreed that In any event neither party
shall be obliged to pay any further sums to the other which may fall due
under this Agreement as soon as a reliance on force majeure is made by
either party.

A-Z A.398
The [Sponsor] and the [Company] agree that the following matters shall
constitute grounds for a claim of force majeure by either party where it has
a direct impact on the provision of their services and/or fulfilment of the
terms of this Agreement in respect of the [Film/Event].

1.1 Interruption and/or suspension of national and/or local and/or failure to

work due to a defect including electricity, gas, water, sewage, air
conditioning, computer hardware and/or software relating to ticket
sales and/or processing of payments.

1.2 A national and/or local situation including war, threat of invasion,

attacks, terrorism, strike, industrial action, blockades, protests,
marches, threats of criminal action which would pose a serious threat,
explosions, riot, suspension of public transport, a public announcement
by the government that there is a state of crisis and/or a severe health
risk to the public.

1.3 Major defects and/or health and safety problems with any building,
equipment, stage and/or any major product recall of the
[Products/Services] of the Sponsor and/or Company and/or any
suppliers.

1.4 Political, financial, and/or personnel problems at the

[Sponsor/Company] which would have a severe and detrimental effect
 on the marketing and/or sales figures.

1.5 Extreme weather including lightning, floods, hurricanes, snow, strong

winds.

Where a valid assertion of force majeure is made by either and/or both

parties which prevents the terms of this Agreement being fulfilled in any
significant manner. Both parties agree that the defaulting party who is
relying on an assertion of force majeure shall be allowed a period of [three]
months to remedy the situation and/or to allow the situation to change. In
the event that the Agreement cannot be fulfilled then the parties agree to
enter into negotiations to reach an amicable settlement in respect of the
matter. In any event neither party shall be obliged to pay any further sums
to the other which may fall due under this Agreement as soon as a reliance
on force majeure is made by either party.
 ADAPTATION

• This section in the A-Z starts at A-Z A.410 and ends at A-Z A.423. All the
clauses are under the sub-heading General Business and Commercial.

• Adaptation can also be read in conjunction with the main clause headings in
the A-Z of Assignment, Compliance, Consultation, Copyright Notice,
Copyright Warnings, Editorial Control, Material, Moral Rights, Rights,
Title, Variation, Website and Work.

What do you mean by an adaptation?

• The actual form of the potential adaptations will depend on the original
material and its format, but technically the approach to take is there is a very
large and wide variety of forms of exploitation.

• An adaptation means quite simply a different version – so the changes may

be due to alterations in colour, shape, size, graphics, images, photographs,
trade marks, logos, text or words, material and content, lyrics or music or use
of a different language or a completely different format.

• So, for example, adaptations cover the following:

– An adaptation of a hardback and paperback book includes an ebook and

download, film, DVD, video, merchandising such as toys, clothes, food
and household products as well as audio recordings, translations and
Braille

– A sequel to the book may also be considered within or excluded from the
above list

– A company selling a range of shoes as a product has a distinctive logo

and trade mark. It asks a designer to create a new image for its website
based on the original design or for a new label on a new range of shoes.
 The designer creates a new version of the old design in a new shape and
colour – that is considered an adaptation

– A company develops and produces an app which is based on existing

data and information for a project which is currently mainly run through
a website. Then that app is an adaptation of that project or website

A clear definition of the original source or work

• The original event, service, product, film, work, sound recordings or music
must be defined in detail in the first part of the agreement. It is in respect of
this definition in which you are granting an exclusive licence that the
licensee is acquiring the rights stated in the agreement.

• If the original source or work definition is either not there or is very widely
drafted then you may end up giving away rights you did not intend to give to
a third party.

Unlimited authority to adapt a work

• In A-Z A.410 person A is granting company B the unlimited right to edit,

adapt, vary, translate, develop, add to or delete from the work or product
owned by A and all the associated content as well as packaging, adverts and
marketing.

• However the second part is very significant: it allows it to be stated clearly

who is to own any such new versions, adaptations, sequels, merchandising
and translations. The owner of the new versions could be either party A or B.
If it was to be person A who owned the original material then there would
need to be an assignment clause from company B to person A. Please look at
the main clause heading Assignment and Buy-Out in the A-Z for more on
this subject.

A-Z A.410
The [Company] shall without limitation be entitled to edit, adapt, alter,
vary, change, translate, develop, add to and/or delete from the
[Work/Product] and all the text, images, film, sound recordings, logos,
graphics, music, slogans and any other content together with all packaging,
advertising and marketing material which may be supplied by [Name]. All
 copyright, intellectual property and trade marks rights in any such new
versions, adaptations, sequels, translations, and/or associated
merchandising shall belong to [specify].

No authority provided to adapt the original work, service or

product

• It is important to state in an agreement what adaptations you allow if any. If

the answer is none then state so in a clause and do not avoid the issue.

• If there is no financial incentive in terms of more money to grant the right to

adapt and develop a book, film, product, work, artwork, photograph or other
material or data supplied under an agreement. Then the right approach is to
deal with it in the contract and make it quite clear that no authority is
provided for any adaptations and that no such rights are granted in any form.

• Failure to take such a robust approach will mean that the other party is likely
to make assumptions that small changes, different colours, and even
completely different products may be acceptable. There needs to be a clause
in the agreement which specifically prohibits adaptations.

• More recently the issue under some agreements has been whether older
contracts which granted VHS rights can be interpreted to include DVDs and
blu-ray or whether the use of the word merchandising rights aimed at
children toys and games can also include the right to exploit the rights in the
form of theme parks, musicals, and animated and interactive games and apps.

• Associated with this debate is another argument that as a royalty was not set
for these forms of exploitation that no additional payment is therefore due for
these new formats.

• The words used in respect of any additional rights and adaptations can
therefore affect the future revenue you may receive, if any, and what rights
are claimed by a third party who you thought had only been granted limited
rights.

• In relation to books you may specifically state that sequels are not covered by
the licence.
• New editions of a book are sometimes included as a requirement under
publishing agreements for an author to write and deliver without additional
payment.

• There is no reason to agree to this clause and new editions can be excluded
from the original agreement so that it only covers that specific work and
edition. This can be done by a clear definition of what constitutes the defined
Work as well as an additional contract clause. The parties could agree to
enter into a new licence agreement for any new edition either on terms to be
negotiated or on no less favourable terms than the current agreement. There
is a main clause headings New Editions and Work in the A-Z.

• In A-Z A.411, subsection 1.1 makes it clear that there is no authority to

adapt, edit, amend, add to, delete from, change and/or alter the work, artwork
or product.

• Failure to comply with 1.2 which requires the prior written approval of the
company before any changes are carried out is considered a serious breach.
Note there is no obligation to provide any such approval and a new licence
may be required and additional sums paid to the company.

A-Z A.411
1.1 [Name] has not provided any authority to the [Company] and the
[Company] agrees and undertakes that it shall not be entitled to adapt,
edit, amend, add to, delete from, change, and/or alter the
[Work/Artwork/Product] and/or to combine any part of the
[Work/Artwork/Product] with any other material of any nature.

1.2 The [Company] must on each occasion make a written request for the
prior written approval and consent of [Name] before any work and/or
changes are carried out. The failure by the [Company] to fulfil the
terms of this clause shall be a serious breach of this Agreement.
[Name] shall not be obliged to consent to any request that may be
made. Where [Name] agrees to provide written consent then this may
be subject to further terms and conditions that may be imposed
including additional payments and/or the condition that there be a new
agreement where there is a different work, product and/or format of
any nature which the [Company] wishes to be exploit.
Agreement to consider future adaptations

• If the answer is that you will consider and may allow some adaptations in the
future then a different approach can be used. There should be no obligation
by the licensor to agree or accept proposals and each will be considered on
its merits. The licensee should accept that it has no authority to sub-licence,
produce or exploit any adaptation unless two events have happened. The
licensor has provided its consent to proceed with discussions and a new
licence has been concluded between the licensor and the licensee for the new
adaptation in each case. So that if no new licence is concluded between the
licensor and licensee then no adaptation can be exploited.

• The authority and licence granted by the licensor should be for a specific
product and a drawing or photograph attached to the agreement.

• The agreement should clearly state that no other format of adaptations are
authorised.

• The licence should be for a limited period of time and all rights in any new
material created as a result of the adaptation should be assigned to the
licensor for a nominal sum.

• If you are the licensee and the manufacturer then you would want to try to
have an assignment or an exclusive licence for a long period. You would
want to retain all the copyright and intellectual property rights in any new
material which is created by you as the licensee except for those rights which
were originally owned and supplied by the licensor.

Do you need an assignment of copyright and intellectual property

rights in new material which has been created?

• When commissioning a website or app from a designer, developer or

software company. Do not make the assumption that as you have paid for the
site to be created and put together and as it contains your business details and
material that you therefore own the website or app.

• In fact the designer, developer or software company may own all or part of
the website or app.
• They will retain ownership unless there is an assignment clause from the
software company, developer or designer of the rights they hold in the
website or app to the person or company who has commissioned them. This
will apply whether the website or app works properly or not.

List of forms of adaptations authorised in agreement with set

royalty rates

• Many different types of agreements provide a long list of different types of

rights with a variety of royalty rates which are calculated on different basis
such as retail price, wholesale price, gross receipts, net receipts or sums
received. Few relate to payment of a fixed price per item.

• There are many issues here: first the issue of how the description of the right
granted or assigned is defined. It can be done by reference to actual real
products and services or by a definition of a field of rights. For more on this
please look at the main clause heading Rights in the A-Z and this work.

• The definitions or list may be for existing forms of exploitation which are
stated to be in a specific format.

• If you do not intend to grant or assign rights in formats and rights which may
not exist now but which are created in the future and so are not listed then
specifically state that fact. Otherwise the agreement may be interpreted at a
later date in favour of the licensee.

• There have been contracts with television and distribution companies which
were signed before the existence of videos, mobile phones, the internet and
DVDs. The television and distribution companies have taken a stance that no
further sums are due to be paid to the licensor or the performers for the
exploitation of these new rights.

• In A-Z A.420 the products and work to be used by the licensee are limited to
the authorised schedule.

A-Z A.420
Any adaptations and/or new versions must be authorised by the [Licensor]
and there is no implied and/or express consent provided to permit any other
[Products/Work] to be produced based on the [Logo/Image] except those
 specifically authorised in Schedule [–] attached.

Approval and consultation in respect of samples, final version,

marketing and packaging

• Even though you have agreed to allow a licensee to exploit certain forms of
adaptation. That does not mean than you cannot have a right of approval or
consultation over the prototype and final product or service and also the
marketing and packaging. These procedures again need to be put in the
contract in the form of clauses and for this please see the main clause
headings Consultation, Editorial Control, Marketing and also Sub-
Licence in the A-Z.

• In A-Z A.412 an agreement between a company and an author. The company

is agreeing not to licence or authorise third parties to make changes to the
original work without the prior written consent of the author. Note this
clause does not extend to any adaptations.

A-Z A.412
The [Company/Distributor] agrees and undertakes that it shall not develop,
adapt, revise, edit, delete from and/or add to, translate and/or otherwise
change the title, layout, content, format, text, images, graphics, credits,
copyright notices, trade marks, logos, moral rights assertions and/or any
part of the [Work] at any time without the prior written approval in each
case of the [Licensor]. The [Company/Distributor] agrees and undertakes
not to licence and/or authorise any third party to change the [Work] and/or
any material associated with it including the cover, index, packaging and
marketing without the prior written consent of the [Author].

Third parties who work on an adaptation

• If either you directly, or a licensee who you have authorised to act on your
behalf, engages writers, designers, artists, software developers and any other
type of contributors. You have to ask the questions. What are they creating
which is new? Is it in a new format or medium – if so what? And finally who
owns the new material and the rights in it?

• If it is your project everyone should be signing contracts with assignment

 clauses so that you own and control all the copyright and intellectual
property rights, computer software rights, any logo and potential trade
marks. As well all the stages of the physical material which has been created
as well as the final version.

• In A-Z A.423 the consultant A is writing a translation of a work for company

B. He is agreeing to assign the rights and is paid a small additional fee for
that purpose. There are a list of issues addressed to ensure that the consultant
shall not have any rights in the translation he is commissioned to complete.
There would be a separate assignment document completed by the
consultant.

• There have been a number of instances where companies have assumed that
because they have commissioned work by a consultant or designer that they
therefore own all the intellectual property rights in the adaptation as well as
the original work. This is a serious misconception and you need to get a
contributor to complete an assignment either as part of the main agreement
and payment or as an additional document for an additional nominal fee.

• From this clause you can also see that there are associated issues such as:

– any claim of authorship of the new material

– credits and copyright notice

– the expectation that there will be further work on other new versions

– attempts to register rights

– additional fees and royalties

Please also look at the main clause headings Credits and Copyright Notice,
Rights, Royalties and Payment in the A-Z on these subjects.

A-Z A.423
The [Consultant] is engaged to create a translation of the [Work] in
[language] in which shall be delivered to the [Company] in the following
form: [specify]. The Consultant agrees and undertakes that:

1.1 He/she shall transfer all copyright and any other rights of any nature to
 the [Company] and shall complete a comprehensive and detailed
assignment of all rights in the adaptation and translation of the [Work]
for a fee of [one/currency].

1.2 That where the translation differs from the original text due to
adaptation and changes requested by the author of the [Work] and/or
the [Company] due to cultural, religious, interpretation and/or other
issues. Whether or not the [Consultant] is the originator he/she agrees
not to make any claim to be the author of those changes, variations
and/or adaptations. Further that where necessary the [Consultant] shall
assign all rights including copyright and any other intellectual property
rights to the [Company] so that absolutely none are held by the
[Consultant].

1.3 That the [Consultant] shall not at any time hold himself as the author,
originator and/or copyright owner and/or assert any moral rights to be
identified. That the [Consultant] accepts that he shall not be entitled to
any copyright notice at any time and only the words [translated by
Consultant].

1.4 The [Consultant] agrees that at later date the [Company] shall be
entitled to engage and/or use any other third person that it should wish
to choose at its sole discretion for any additions, changes and/or
alterations. That there is no obligation to use the [Consultant].

1.5 Further that after a period of [number] years from the date of this
Agreement. The [Company] shall not be obliged to make any credit of
any nature to the [Consultant] provided that the [Consultant] is paid an
additional sum of [number/currency] by the [Company].

1.6 That the [Consultant] shall not be entitled to any additional fee, royalty
and/or payment where the translation is used by the [Company] in any
other format and/or medium than [specify].

1.7 The [Consultant] shall not seek to register any name, word, title, image
and/ or other material directly and/or indirectly associated with the
[Work] and/or the translation and/or any parts in any part of the world.
 ADVERTISING

• The A-Z contains over 100 examples of clauses relating to Advertising from
A-Z A.428to A-Z A.554. This section should be read in close conjunction
with the main clause headings Marketing and Material in the A-Z.

• Advertising can also be considered in the context of these other main clause
headings Banner Advertisements, Brand, Budget, Films, Links, Logo,
Copyright Clearance, Editorial Control, Moral Rights, Rights and Title
in the A-Z.

• In The Media and Business Contracts Handbook (5th edition) there are
seven agreements which are related to advertising under the heading
Advertising, Promotion and Product Placement.

What do you mean by advertising?

• Advertising basically means promotion and marketing.

• There is no specific formula as to what that means in terms of what someone

must do – and so it must be specified in the agreement. Failure to make clear
the form and extent of the work expected can result in a complete disparity
between the expectations of the parties as to what constitutes a fair amount
of work in the circumstances.

• It would not be unreasonable to specify the type of advertising and then set
against that a work schedule of expenditure, a time schedule of dates and
costs with a statement as to who is to pay for them.

• Potential advertising mediums include for example:

– Books, newspapers, magazines and other forms of print

– Online forms such as websites, banner links, pop ups, paid for search
 advertisements, product placement in blogs, ebooks, downloads

– Competitions, giveaways, stands at train stations and events

– Sponsorship, logo, image and trade mark displayed

– Paid product placement and personal endorsements

– Mobile phones, texts, games, apps, ringtones, scratch cards, premium

rate phone lines

– Radio, music, lyrics, jingles

– Television in all forms with advertisements, or sponsorship of a series of

programmes with pre-programme advert or trailer

– Feature film and associated merchandising

– DVD and blu-ray, videos and associated merchandising

– Blogs, podcasts and other online television, films and videos

– Outdoor and transport advertising – placards, moving images, posters

and exteriors of cabs and buildings

– Theme parks, musicals and live tours

– Access to databases, direct mail marketing, and telephone marketing

• Advertising now can encompass a wide range of mediums and methods and
there is no limit as to the type of form of exploitation to which it can relate. It
may be for a documentary film, or merchandising relating to a children’s
book, or for a range of products such as cosmetics or clothes designed in
conjunction with an individual who has created and developed their own
associated brand, or a commercial service available from a company or for a
music festival or conference.

• Often the advertising clauses are drafted in an agreement where advertising

or promotion is not the primary function of the agreement. The supply of a
service or services or the creation of a new original product is the primary
 aim. The advertising and marketing relates to the primary focus. It is for this
reason that not enough attention is given to this subject under many
agreements. Failure to do so means that clear boundaries are not set as to
what is permitted: who pays the costs for any work; who owns the copyright
in the new material created and how the other party may use the material
under the agreement.

Rights – what is the scope of the advertising and marketing being

authorised?

• Many agreements have very general advertising and marketing clauses which
do not address any specifics at all as to the medium and methods to be used
or the copyright ownership and title in any new material created. Costs are
often not either covered at all or are at the expense of the licensee or there is
a permitted deduction but there is no fixed limit before any money is paid to
the licensor.

• In the context of any general licensing agreement the rights are licensed for a
specific period of time, in a specified territory and for a specific purpose.
Consideration needs to be given in relation to advertising and promotion as
to:

– The actual rights granted in respect of the original film, book or service.
What does the agreement permit you to do and where and for how long?

– Are you authorised to sub-licence third parties and are they allowed to
create new material?

– Who owns all the copyright and intellectual property rights in the new
material which is created?

– Who owns the physical material which is created including any proofs,
samples, prototypes, moulds, recordings, outtakes, software and anything
created in the process of developing the advertising, packaging and
marketing?

• It is often the case that certain rights are presumed but not stated expressly.
There should be clauses intended to achieve your specific aim in the
agreement. It will either prohibit or confirm and authorise expressly the right
 of the licensee or assignee to use the product, film, service or logo and name
for advertising and other related purposes.

• It is very common for different views to be taken as to the nature and extent
of the permission which is provided under an agreement for the use and
exploitation of advertising and promotional material. The parties sometimes
realise they did not address the right to use licensed material for advertising
purposes or that the licensor does not own the new advertising and
promotional material which has been created as it has not been assigned to
them.

• It is of great significance that, during the course of creating new text or

images and other material for an advertising campaign, new copyright and
intellectual property rights will certainly come into existence.

• The list above makes it quite clear as to the range of potential areas to be
considered for advertising. That list is not definitive. It is worth stating in an
agreement just how and where advertising is allowed under the agreement
and to state the areas in detail. Therefore list the agreed methods of
advertising.

• Similarly it is helpful to state for future reference the areas of advertising

which are not allowed. Failure to do so and a general clause relating to
advertising can provide the licensee with a very wide ambit which is
essentially unlimited in many ways if it broadly falls within the definition of
advertising.

• If a company or agent fails to advertise and promote a person, service or

product either at all or in any way which is considered unsatisfactory by one
party. Then you do not want as the company to be liable to a claim for loss of
publicity or the effect on a person’s reputation or lack of sales. So you could
include a clause to that effect which limits liability. Please also look at the
main clause headings Liability and Losses in the A-Z.

• In A-Z A.471 in Merchandising the agent agrees not to advertise or promote

the character outside the licensed territory without prior agreement.

A-Z A.471
The [Agent] agrees that he/she is not permitted to advertise, promote,
 market or exploit the [Character] outside the [Territory/country] unless
specifically agreed in advance with the [Licensor] on each occasion.

• In A-Z A.505 in Purchase and Supply of Products the artist is agreeing that
the distributor can use the work or image in any way it wants in any medium
or format.

A-Z A.505
The [Artist] agrees that the [Distributor] shall be entitled to use the
[Work/Image] in any manner it thinks fit and in any format and/or medium
for the purpose of increasing sales and revenue and marketing including
but not limited to postcards, greetings cards, T shirts, wristbands, posters,
reproduction on articles and/or collaborations and partnerships with other
products and brands, in books, on film, on websites, in the form of licensed
software, for exhibitions, festivals and events and performances in any
location.

Limiting the rights of the other party – restrictions and approvals

• It is worthwhile to set out in some detail how and where content is to be used
and displayed if you want to retain control. As well as to state who has final
editorial control over the content of all marketing, advertising and
promotional material.

• In A-Z A.429 in DVD, Video and Discs the licensee has a wide range of
options in terms of the medium on which to advertise the film but is limited
to a specific duration of the same part of the film that can be used.

A-Z A.429
The [Assignee] shall be entitled to include short extracts of the [Film] of
less than [duration] in total of the same section in images, text, sound or
vision or both in all media for the purpose of advertisement, promotion and
publicity including but not limited to radio, television, other videos, DVDs,
CD-Roms, discs, telephones and related gadgets, cinemas, shops and
businesses, posters, billboards, computers, software and the internet.

• In A-Z A.448 in Film and Television the television company can only use
five minutes of the same material and they may also authorise third parties in
 respect of some limited other formats.

• Here there is an obligation to provide a detailed report if so requested by the

licensor – this is not included in many agreements but is a useful tool to keep
track of what the licensee is actually using and where.

A-Z A.448
The [Television Company] shall be entitled to broadcast and/or transmit
short extracts of the [Programme] and to authorise others to do so whether
on its own channel [–] or on the internet, video or telephone [specify other
methods]. The extracts shall not be for more than [five minutes] in total of
the material of the [Programme] which shall not be accumulative. Any
such use to promote, advertise and trail the [Programme] shall not be
placed where the surrounding material is offensive, incompatible,
derogatory or offensive with the [Programme]. A full and detailed report
shall be supplied to the [Licensor] detailing the date, frequency, type and
length of any such use to be delivered on written request by the [Licensor].

• In A-Z A.433 in DVD Video and Discs the licensee is not allowed to use the
name of the distributor in respect of any advertising without the prior written
consent of the distributor. This clause would mean that the licensee would
have to get consent on each occasion and the distributor could look at the
proposal and sample material and make an informed decision as to whether
they wished to be included or not.

A-Z A.433
The [Licensee] shall not use the name of the [Distributor] for any purpose
in connection with the distribution, advertising or publicising of the
[specify] without the prior written consent of the [Distributor].

• In A-Z A.463 in General Business and Commercial the photographs taken or

the film made at the location are only to be used for the agreed specific
purpose. The company agrees that if it wants to use the material created or
grant a licence to a third party that the prior consent of the person who owns
the land will be required and an additional fee due.

A-Z A.463
[Name] and the [Company] agree that the [Company] may use the
 [Photographs/Film] which were commissioned by the [Company] and
taken at [location] of [Name] on [date] for the sole purpose of
[specify].Where the [Company] seeks to use the material for any other
reason and/or to grant a licence to a third party. Then the prior consent of
[Name] shall be required and an additional fee to [Name] must be
negotiated and agreed.

• In A-Z A.474 in Merchandising the licensee is not entitled to grant rights to

or authorise any third party to create or develop items which bear the logo
and image of the licensor or anything to do with the book or products.

A-Z A.474
The [Licensee] is not entitled to grant, agree to and/or authorise either by
consent and/or by omission the right of any third party and/or any director,
officer, employee, consultant and/or freight company and/or insurer and/or
other associates to create and/or develop other items and/or any material of
any nature which bears the [logo/Image], title, any associated characters or
otherwise of the [Book] and/or the [Product] at any time.

• If you do not want a company to use material or rights which has been
created under your arrangement with them. You must therefore consider
whether to specifically prohibit the licensee or assignee from using any of
the rights or material either for their own projects or in conjunction with a
third party.

Who bears the cost for the advertisement and marketing and the
associated material?

• The creation of packaging and content material, text, images, photographs,

films, videos and apps, as well as databases for advertising purposes,
requires the work of a team of people which includes employees of a
licensee, often freelance consultants, or other specialist parties commissioned
to create online material or artwork or are an advertising and marketing
agency which is appointed to promote brands.

• It is crucial to be clear who is paying for the cost of any work and whether
these sums may be recouped under the agreement.
• If the distributor or licensee is creating and developing new advertising and
promotional material. It is common for the other party to want to get copies
of everything to keep for their records as the licensor. You would want the
distributor or licensee to be obliged to provide copies at their own expense
and cost including any postage and freight.

• If you as the company do not want to pay for copies of advertising and
marketing material which is provided to a person or licensor or the cost of
any custom duties, freight or postage. The agreement should state that the
licensee will bear any costs that may be incurred for any material requested
and supplied. The total cost can then either be set off against future payments
to the licensee or are paid upon invoice or in advance.

• Some publishing companies provides copies of flyers and brochures and

marketing reports at no cost but then charge the full price with a discount for
additional physical copies of the book.

• If the licensor does not want to pay any advertising costs and these are the
responsibility of the licensee or assignee. Then the agreement should state
that fact. If the issue of costs is not dealt with then there is likely to be a
dispute at a later date.

• In A-Z A.462 in General Business and Commercial the licensee is not

allowed to make any changes to the layout, design, colour, size or shape of
any of the marketing formats of the logo, name and image of the licensor. All
samples have to be submitted to the licensor prior to production or
distribution. The licensee must adhere to all requests by the licensor. This
clause is focused not on methods and formats of advertising but protection of
the integrity of the brand.

A-Z A.462
It is agreed that no changes shall be made to the layout, design, colour,
size, shape or otherwise of the range of marketing formats of the
[Logo/Name/Image] provided by the [Licensor] to the [Licensee]. That all
proposed samples shall be first submitted to the [Licensor] prior to
production and/or distribution to any third party. That all requests and
changes by the [Licensor] shall be adhered to and complied with by the
[Licensee]. That the [Licensee] shall ensure strict quality control standards
in respect of reproduction of the [Logo/Name/Image].
• In A-Z A.430 in DVD Video and Discs the licensee has agreed to provide
copies of any publicity, advertising and marketing material at its cost upon
request by the licensor. Here the licensor is not limited to being supplied
with only certain types or format material.

A-Z A.430
The [Licensee] agrees to provide copies and samples of any publicity,
promotional, advertising and packaging material in respect of the
[Video/DVD/Discs at the [Licensee’s] cost upon request by the [Licensor].

• In A-Z A.549 in University, Library and Educational the company is

agreeing to pay all the advertising and marketing costs. It has agreed that it
cannot recoup sums from under the agreement with the institute. It has also
accepted that the institute will not be liable for any such costs and expenses.

A-Z A.549
The [Company] agrees that it shall be solely responsible for all costs and
expenses incurred in respect of the advertising, promotion and marketing of
the [Work/Service/Product] under this Agreement and shall not be able to
recoup such sums from those due to the [Institute] nor shall the [Institute]
be liable for any such costs and expenses.

• In A-Z A.439 in DVD, Video and Discs the licensee is authorised to promote
the DVD by competitions and a wide range of medium. Any costs are not the
responsibility of the licensor. Here there is an end and start date for the
promotion. This issue of restricting the timescale for advertising can also be
dealt with in much more detail if required.

A-Z A.439
The [Licensee] shall be entitled to promote the [Film] in the form of
[DVDs/Discs] by banner advertisements and promotions on the internet, in
newspapers and magazines, by text to mobile phones, recorded
advertisements on the radio and television, by competitions and through
arrangements with reputable food companies and/or supermarkets.
Provided that no costs incurred are attributed to the [Licensor] and none
take place before [date] or after [date].
Can the licensee or distributor design and create whatever they
want?

• There is a distinction between making it clear to a licensee what contractual

credits, copyright notices and other trademarks, service marks, text and
images they must include in a product or service or website. As opposed to
considerations regarding the design and creative process and putting in place
a series of mechanisms for consultation or approvals for all of the stages of
development and the final product. The same principle applies to advertising
material, not just the main product or service. If you want to be involved in
that process then terms need to be included in the agreement. It is best if the
contract makes a definitive statement as to which party has the final decision
on any aspect of advertising and promotional content which is planned.
Relevant main clause headings on the A-Z include Editorial Control and
Consultation.

• In A-Z A.455 in General Business and Commercial in an assignment

agreement the assignor is acknowledging that the assignee shall have the sole
discretion as to the advertising of the product, work or service. There are no
rights of approval or any editorial control by the assignor. This clause is not
strictly necessary as it is an assignment but it helps clarify issues that may
arise and so avoids problems later.

A-Z A.455
The [Assignor] acknowledges that the [Assignee] shall have the sole
discretion as to the manner and method to be used in marketing, promoting
and advertising the [Product/Service/Work] and any adaptation and/or
development. That the [Assignor] shall not have rights of approval and/or
editorial control at any time.

• In A-Z A.457 in General Business and Commercial the assignor agrees not to
have rights in the marketing, advertising and exploitation of the work.
Providedthat the assignment fee is paid in full and the assignors name, logo
and trade mark does not appear on any copies.

A-Z A.457
The [Assignor] agrees that from the date of this Agreement it shall not have
any rights or interest in the advertising, promotion, marketing, or
 exploitation of the [Work] of any nature provided that the Assignment Fee
is paid in full and the name, logo and trade mark of the [Assignor] does not
appear on any copies of the [Work] in any format in any media.

• In A-Z A.435 in DVD Video and Discs the issue of the design process is not
addressed and there is no editorial control clause.

A-Z A.435
The [Licensee] may design, create and manufacture solely at its own
expense advertising material with respect to the [Videos/DVDs/Discs] for
use in connection with the rights granted under this Agreement. The
[Licensee] agrees to adhere to all contractual obligations, moral rights and
legal obligations of the [Licensor] of which the [Licensee] has received
notice. The [Licensee] shall make all such material manufactured by the
[Licensee] available to the [Licensor] upon request at no charge to the
[Licensor] except for the cost of postage, packaging and insurance.

• In A-Z A.441 there is a wide right in 1.1 to produce the images of those
involved in the development of the film in respect of the exercise of the
rights granted under the agreement to the licensee. Note that there is an
additional part which includes the promotion of the licensees’ business. In
1.2 all control over the manner and method of advertising is given to the
licensee and any third parties. In the final part the license or acknowledges
that it shall have no approval over any promotional material. The licensee
must not do anything with the material which is offensive or derogatory to
any person who is included in the film or to the author.

A-Z A.441
For the purposes of enabling the [Licensee] to exercise effectively the
rights granted under this Agreement and to promote the [Licensee’s]
business the [Licensee] shall be entitled to:

1.1 Disseminate, reproduce, print and publish the name, likeness and
biography of the performers, directors, producers, editors, writers,
composers, musicians [and any other persons] who supplied or
provided services in, or in connection with the development and
production of the [Film] for the sole purpose of advertising, marketing
and exploiting the [Film]. Such arrangement is subject to the crucial
 term that the [Licensee] strictly adheres to all conditions, restrictions
and requirements notified in writing by the [Licensor] to the [Licensee]
at any time relating to any persons contract and/or agreement with the
[Licensor].

1.2 Advertise, market and promote the [Film]. The [Licensee] and any sub-
licensee, sub-agent or other authorised person shall have the sole
discretion as to the manner and method to be employed in the
publicity, advertising, marketing and promotion of the [Film] and the
amount to be expended thereon and the choice of advertising agencies,
consultants, directors and material.

1.3 Produce and distribute promotional short trailers for the [Film] which
shall be approximately [–] in length and shall not use in total extracts
of the [Film] of not more than [–] in duration. The [Licensee] shall be
entitled to use or arrange for the exhibition, transmission, display or
otherwise of the trailer in order to promote or advertise the [Film] for
use on television in any format, theatres, other programmes, DVDs,
CD-Roms, exhibitions, conferences, websites, telephones in any
format or otherwise. Provided that at all times the intended purpose is
to promote and advertise the [Film] whether for criticism, review or
promotional purposes.

1.4 The [Licensee] may at its discretion choose to use any trailers supplied
by the [Licensor] but shall be under no obligation to do so.

1.5 The [Licensor] shall not be entitled to any prior approval of the content
of any such promotional material, but nothing shall be done by the
[Licensee] which is offensive or derogatory to the [Film] or any
persons that appeared or contributed to the making of the [Film] or the
[Author] or [specify].

• In A-Z A.554 in University, Library and Educational the licensee has agreed
to consult with the author about the content of marketing and promotional
material in any medium. The licensee has agreed to supply draft copies and
take reasonable account of requests for changes by the author. This provides
a start to a working relationship despite the lack of editorial control by the
author.
 A-Z A.554
The [Licensee] agrees that the [Author] shall be consulted in respect of the
content of any marketing and promotional material in printed form, by
email in electronic form and on any website and/or app, and/or any other
material in any format and/or medium. The [Licensee] shall provide the
[Author] with a draft copy and take reasonable account of the requests for
any changes by the [Author].

• In A-Z A.472 in Merchandising the licensee can use the licensor’s name,
biography, photograph and image but not signature to promote, advertise and
package the character. All costs are at the licensee’s expense. The licensee
has agreed to consult with the licensor and to supply a final draft prior to
production.

A-Z A.472
The [Licensee] shall be entitled to use the [Licensor’s] name, biography,
photograph and image, but not signature in the promotion, advertising,
packaging and marketing of the [Character]. The [Licensee] shall bear all
the costs of the development, production, reproduction and supply of any
such material. The [Licensee] agrees to consult with the [Licensor] as to
the choice of photograph, text, and any associated graphics and/or slogan.
The [Licensee] shall provide a draft final copy to the [Licensor] in the
colour and layout in which it is proposed to use the material in each case
prior to the production and distribution of the promotion, advertising,
packaging and marketing of the [Character].

• A-Z A.473 in Merchandising is a wide clause which is in favour of the

licensor. The licensee has agreed that the licensor shall have the right to
approve all publicity and promotional material in all media as well as the
packaging for the licensed product. The licensee must make the changes
requested by the licensor and cannot proceed unless prior written consent has
been provided for the manufacture, production and distribution of any
material.

A-Z A.473
The [Licensee] agrees that the [Licensor] shall have the right to approve all
publicity, promotional, advertising in all media and the packaging material
in respect of the [Licensed Article]. The [Licensee] acknowledges that such
 approval must be obtained in writing prior to manufacture, production and
distribution of any such material so that any changes or alterations
requested by the [Licensor] can be incorporated.

Appointment of third parties

• In A-Z A.499 Purchase and Supply of Products the licensee has agreed that
the licensor shall be entitled to approve any sub-agent, sub-licensee or other
third party in all areas of the production and marketing of the units. There is
no requirement of prior written approval but if consent is refused the licensee
cannot appoint that third party. There is no expectation that the licensor
should act reasonably or without delay.

A-Z A.499
The [Licensee] agrees that the [Licensor] shall be entitled to approve the
appointment of any sub-agent, sub-licensee or other third party in respect
of the manufacture, distribution, supply, marketing and advertising or other
exploitation of the [Units] under this Agreement.

Third party legal obligations by licensor

• The company or licensor who has acquired the rights to make a film or create
a game or produce an event will have legal contractual obligations to third
parties which must be fulfilled in respect of the exploitation agreement with
the distributor who is creating the merchandise or the developer and
promoter who is creating the online platform and distributing promotional
content through social media.

• The company or licensor will want to create a list of such matters which
create a contractual obligation in respect of all packaging, advertising and
promotional material. This will include obligations for credits, copyright
notices, disclaimers, trade marks, images and logos. If this is important to
your company and you want to have a consistent policy then it is worth
creating a working document or pattern book of requirements with specifics
as to text, size, colour and format so that there is no ambiguity.

• In A-Z A.437 in DVD, Video and Films the licensor is providing a list of
contractual and legal obligations to the licensee for the advertising marketing
 and packaging material. The licensee can only use the storyline, biographical
details, images, text, logos and copyright notices and packaging approved by
the licensor. Note this clause does not address wider issue of process of
approval for advertising material.

A-Z A.437
The [Licensor] shall provide the [Licensee] with a full and detailed list of
all contractual, moral and legal requirements that must be adhered to in any
advertising, marketing and packaging material. This list shall include
credits for the actors and all other relevant personnel, copyright notices,
moral rights, legal disclaimer, trade marks and logos. The [Licensee]
agrees to adhere to all such terms and shall only use the description of the
content of the [Film], storyline, biographical details, images, text, logos,
copyright notices and packaging provided by or approved by the
[Licensor].

Third party competing products or services

• The advertising and promotion clauses may also deal with the right of a
company to use third party competing products as in A-Z A.536 in
Sponsorship.

A-Z A.536
The [Sponsor] agrees that the [Radio Company] shall have the right to
advertise promote and endorse any third-party products in the [Programme]
or in conjunction with it whether or not it directly competes with the
[Sponsor’s] business or products.

• In A-Z A.440 in DVD Video and Discs the licensee is not authorised to
promote or exploit the film or any part or the DVD in connection with any
other product, game, business or person or otherwise promotes the specified
field. Failure to keep to the terms of this clause is a breach of the agreement.
This clause does not refer to any particular type of service directly but does
so through the last part in general terms.

A-Z A.440
The [Licensee] shall not be entitled to use and/or promote, market, exploit
and/or authorise and/or permit the [Film] and/or any parts and/or the
 [Dvd/Disc] to be used and/or connected with and/or association with any
product, game, business, person or otherwise which supplies, sells, markets
and/or promotes [specify] at any time. Any failure to adhere to this
requirement shall be a breach of this agreement by the [Licensee].

• In A-Z A.534 in Sponsorship the sponsor agrees that the radio company is
entitled to advertise third party products in the programme whether or not
they compete with the sponsor’s products.

A-Z A.534
The [Sponsor] agrees that the [Radio Company] shall be entitled to
advertise, promote and endorse any third party products in the
[Programme] or in conjunction with it whether or not it directly competes
with the [Sponsor’s] business or products.

• In A-Z A.449 in Film and Television no third party is allowed to sponsor or

include adverts or any trade mark, logo or image or product in any part of the
film or DVD or in any trailer of the film unless specified in the agreement.

A.449
The [Licensee] agrees that no third party shall be entitled to sponsor, or
include their advertisements or have its logo, trade mark, service mark,
design, product or image associated with or incorporated in the
introductory trailer or end credits or any other part of the [Film] or any
video, DVD, CD-Rom or CD or otherwise without the prior written
consent of the [Licensor] except [specify].

• In A-Z A.444 in Film and Television the licensee is not granted any right to
deal in any form of sponsorship, product placement or cross promotion for
the film or any part in relation to any products or services.

A-Z A.444
This Agreement shall not permit or allow the [Licensee] to license, arrange
or otherwise deal in any form of sponsorship, product placement or cross
promotion in respect of the [Film] and/or parts or any form of licensing or
commercial exploitation of the [Film] in relation to any other products,
services or companies.
Advertising and promoting an individual

• In A-Z A.512 in Services the agent has agreed to consult with the actor
regarding material to be used for advertising and promotion.

A-Z A.512
The [Agent] agrees to consult with the [Actor] in respect of any artwork,
stills, photographs, film, biography, press releases and statements and any
other material in any medium which may be used to advertise, market and
promote the [Actor].

• In A-Z A.517 in Services the celebrity has agreed to provide his or her
exclusive services to endorse and promote the company’s product which can
be used in all media. The work required is set out in a schedule and any
additional dates may be agreed. The company will pay an initial fee and
repeat fees and these should be linked to the format and number of times the
material is used. The celebrity would be better off with a non-exclusive
arrangement as it is not clear what other work he may be permitted to do.

A-Z A.517
In consideration of the [Celebrity’s] Fee and the Repeat Fees the
[Celebrity] agrees to provide his exclusive services to the [Company] to
endorse, promote, and advertise the [Company’s] Product by personal
appearances, performances, and recordings, film, software, images,
photographs or otherwise of material of the [Celebrity] for advertisements
for use in all media in accordance with the [Work Schedule] and on such
other occasions as may be agreed between the parties.

• A person engaged to promote or advertise a product or service needs to

specify exactly the number of days and type of work to be completed
otherwise demands which were not discussed or expected could be made to
attend functions. In consequence it is also advisable to sort out the level of
expenses that will be paid in advance or incurred and reimbursed or the
quality of the hotel or transport that will be booked and paid for by the
company.

• In A-Z A.483 in Publishing where the author is required to attend any event
for advertising and marketing of his or her book. The company is agreeing to
 pay first class accommodation, travel and meals and to reimburse any
reasonable expenses. This clause is exceptional and not common and even
includes an advance against expenses.

A-Z A.483
Where the [Author] is required to attend any event in respect of the
advertising, promotion or publicity of the [Work] in any form, then the
[Company] agrees that it shall arrange for and bear the full cost and
expense of all [first-class] accommodation, travel and meals and reimburse
any other reasonable expenses incurred by the [Author] arising directly as a
result of any such event. On each occasion an advance against the expected
costs shall be made to the [Author].

• In A-Z A.490 in Publishing there is no obligation by the author to promote

and market and advertise the product or film. Each appearance at an event if
agreed to by the author will be the subject of a new contract and payment.

A-Z A.490
The [Author] shall not be obliged to promote, market and/or advertise the
[Product/Film/DVD] and/or to attend any launch, parties, readings,
television and/or radio programmes and/or make any sound recordings
and/or go to any other event and/or create any additional material. All such
matters shall be entirely at the personal discretion of the [Author] and there
shall be no contractual requirement to make any contribution of any nature
to that effect. Where the [Author] is requested to attend any event and/or
create any new material then the terms and conditions of the attendance
and/or contribution of the [Author] shall be subject to separate contract.

• In A-Z A.515 in Services the company agrees that the person specified in the
agreement shall be the sole and exclusive person to endorse and advertise the
product in a specific territory for a fixed period.

A-Z A.515
The [Company] agrees that [Name] shall be the sole and exclusive
personality to endorse, present, promote and advertise the [Product]
throughout the Territory from [date] to [date].

• In A-Z A.529 in sponsorship the sportsperson has agreed to wear or display

 branded goods provided by the manager during the term of the agreement
where a contract has been concluded with a third party. The spokesperson
will not be obliged to do so where they decide that it is not appropriate on
health and safety grounds or due to weather conditions or the rules of the
event, however unsuitable.

A-Z A.529
The [Sportsperson] agrees to wear and/or display and/or endorse any item
or service including clothing, equipment or other products provided by the
[Manager] under this Agreement where a contract has been concluded with
a third party to do so at all exhibitions, sports events, promotional and
television appearances, press calls during the Term of this Agreement. The
[Sportsperson] shall not be obliged to do so where in his own judgement it
would not be appropriate for health and safety reasons, weather conditions,
rules of the event or otherwise not suitable.

Obligation not to use material in manner which is derogatory,

offensive, defamatory or affects reputation

• In A-Z A.465 in Internet and Websites the company owns and controls the
website. They are allowing the promoter or sponsor access to and use of their
site. In 1.2 the promoter or sponsor agrees that no material shall be permitted
on the website which is offensive, defamatory, obscene, derogatory,
fraudulent, dishonest or misleading or is a threat to children or the health and
safety of any person or is otherwise deemed unacceptable by the company.
This clause is drafted very widely to stop material being used which is not
acceptable to the company. In 1.3 the company can remove or delete material
relating to the promoter or sponsor and there is no need for advance notice.

A-Z A.465
1.1 The [Advertiser/Promoter/Sponsor/Name] agrees that all advertisers,
promoters, sponsors and other users of the [Website] including the
public shall be informed in advance and be subject to conditions of
access and use of the [Website] by the [Company].

1.2 The [Advertiser/Promoter/Sponsor/Name] agrees and undertakes that

one of the conditions shall be that no product, services and/or any
emails, films, sound recordings, graphics and/or any other material
 shall be permitted on the [Website] which is offensive, defamatory,
obscene, derogatory and rude, dangerous, fraudulent, dishonest,
misleading, harmful, evidence of allegation of a criminal act and/or an
alleged breach of a civil action, is likely to be or constitutes a threat to
children and/or health and safety of any person and/or is otherwise
deemed unacceptable at the sole discretion of the [Company].

1.3 In any such circumstances without any notice whatsoever the

[Company] shall be entitled to ensure that all such material is removed,
deleted and/or otherwise erased from the [Website] and any associated
marketing and advertising. The person, company or entity shall not be
entitled to any further access to and/or use of the [Website] and shall
not be entitled to be refunded under sums paid under this Agreement to
the [Company]. The [Company] shall not be liable for any direct
and/or indirect losses suffered and/or incurred of any nature to any
such person, company or entity whose material has been deleted,
erased and/or removed from the [Website].

• In A-Z A.507 in Purchase and Supply of Products there is no limitation on

how the work or product may be marketed but other conditions are imposed.
The marketing must not damage the reputation of the licensor or be
associated with other material which is offensive or any company or person
who has recently had bad media coverage. If the licensor raises any
objections then the licensee has agreed to withdraw or cancel any proposed
plan.

A-Z A.507
There are no limitations placed by the [Licensor] as to how the [Licensee]
may market and raise awareness of the [Work/Product] provided that:

1.1 It does not damage the reputation of the [Licensor] in any way.

1.2 It does not seek to associate the [Work/Product] with any other
material which is offensive, of poor quality, does not comply with any
legal requirements, the business and/or any person has recently been
the subject of unfavourable media coverage.

1.3 At all times the [Licensee] shall withdraw and/or cancel any proposed
plan where the [Licensor] raises objections and requests that it not
 proceed.

• In A-Z A.470 in Internet and Websites the distributor is acknowledging the

market at which the product is aimed which could be the children’s market.
The distributor has agreed to ensure that no unsuitable text or images appear
near or with the product. Further that the distributor will only use other
companies for which the approval of the licensor has been obtained. The
format and content of any advertising will be agreed between the licensor
and the distributor in each case.

A-Z A.470
The [Distributor] agrees that it shall only market and promote
[Product/Name] in a manner which is compatible with the market at which
it is aimed [specify] for persons age [specify] and under. No promotions,
advertisements, banner links or other marketing shall be placed and/or
directed at the following markets [specify]. The [Distributor] agrees that it
shall try to ensure that no unsuitable images and text are placed near and/or
with the [Product/Name] and shall only use any companies and businesses
for which the approval of the [Licensor] has been provided and the manner
and format to be used agreed in each case.

Assignment of the copyright and intellectual property rights

created in the new material and also ownership of the physical
material

• In A-Z A.494 in Publishing the distributor has agreed that it shall not acquire
any copyright and/or intellectual property in any format of any nature in any
material or any material supplied by the publisher. The distributor has agreed
to complete a full assignment of all copyright and intellectual property rights
which may be created to the publisher for a nominal fee.

A-Z A.494
The [Distributor] agrees and undertakes that it shall not acquire any
copyright and/or any other intellectual property rights in any format of any
nature in any material, text, artwork, photographs, logos, trade marks,
music, maps, charts, articles and/or otherwise which the [Publisher] may
supply for any purpose during the course of this Agreement. That where in
 the course of creating marketing, advertising and promotional material the
[Distributor] develops any new material of any nature which results in a
copyright or other intellectual property of any nature belonging to the
[Distributor]. That the [Distributor] shall transfer any such rights back to
the [Publisher] for a nominal fee of [£1] for each such transfer and sign any
assignment that may be requested.

• Please also refer to the main clause headings, Assignment and Buy-Out in
the A-Z.

Adherence to policies and codes

• The question is: who are you seeking to be bound by any codes of practice
guidelines and laws?

• In A-Z A.496 in Purchase and Supply of Products the company is agreeing to

ensure that the advertisements used by the distributor do not contravene any
statutes, guidelines or codes. This is particularly relevant in relation to
certain markets.

A-Z A.496
The [Company] confirms that it shall ensure that the [Advertisement] will
conform to all statutes, rules, directives, guidelines, practices and codes of
advertising and sponsorship in relation to the exercise and exploitation by
the [Distributor] of the [specify rights] in the [Product].

• Please also look at the main clause heading Policies in the A-Z.

Set the budget for a launch

• In A-Z A.503 in Purchase and Supply of Products the company has agreed to
set a budget of not less than an agreed amount for the launch of the product.
Note that there is a reference to budget and not the actual payment. A range
of methods of promotion are set out and the company must supply a report
by an agreed date. This clause will also specify who is paying the sole cost
and expenses of all the campaign. For more on budget look at the main
clause heading Budget in the A-Z.
A-Z A.503
The [Company] agrees that it shall arrange a major launch of the [Product]
with a budget of not less than [specify]. That it shall arrange television and
national press coverage, organise a publicity brochure, and a national
advertising campaign of not less than [duration] in a leading magazine or
newspaper. That in addition there will be promotion on [the internet/text
messages/advertising on CD-Roms free give-aways/billboards/other]. A
review report of the promotion and advertising of the [Product] shall be
provided by the [Company] within by [date]. All costs and expenses shall
be entirely at [specify] sole cost.
 AGENCY

• There are 110 clauses relating specifically to Agency in the A-Z from A-Z
A.561 to A-Z A.670.

• This section can also be cross referenced with the main clause headings
Authorisation, Commission, Confidentiality, Copyright Clearance,
Costs, Expenses, Editorial Control, Indemnity, Payment, Rights and
Title in the A-Z.

No Agency

• Before we look at what clauses can be drafted for an agent. It is worth

considering a clause that can be added to any agreement to ensure that it is
clear that a person or company is not authorised to act as your agent. You
may not want another person or company to hold themselves as your agent
despite the fact that you are working with them on a project.

• In A-Z A.639 in Purchase and Supply of Products it is made clear that the
organizers have no agency agreement, joint venture or partnership with the
company.

A-Z A.639
There is no form of agency, partnership, joint venture and/or other legal
arrangement created by the agreement of the [Organisers] to include the
[products/articles/work] in its [festival/on line shop/event]. The
[Organisers] reserve the right at any time to withdraw their agreement and
to remove the [Company] and the [products/articles/work] from the
[festival/online shop/event]. In such circumstances the [Company] agree
that the [Organisers] will not have to provide a reason and shall not be
liable for any resulting losses, damages and/or consequences. The
[Company] agrees that it accepts this risk and potential cost.
What do you mean by Agency or to appoint an agent?

• An agent is really someone who is authorised by you to act on your behalf.

• There may be no doubt that an agent represents an individual or a group or a

legal entity, but to represent someone’s interests is by no means the same as
having authority to make decisions on their behalf or to authorise or to sign
binding agreements with third parties.

• The extent and limit of that authority is the key to understanding what matters
when someone acts as an agent. Many agency agreements are signed without
understanding the implications of the transfer of the authority to the agent
that has taken place.

• You are effectively entrusting an agent, as you believe that they have a
knowledge and skill which is greater than your own, to carry out work to a
standard and in the way that you could not achieve.

• There have been many young musicians and artists who at the first sign of
success have committed themselves on an exclusive basis to an agent and
then regretted that decision.

• The more complex legal issues relating to agents, third parties, equity and
trusts are not dealt with in this book. Our aim is to provide you with a solid
grasp of the main negotiation and drafting issues to consider in order to
conclude an agency agreement.

• There are different types of agents and agency agreements – there is not one
example which is necessarily consistent as to the terms or how it drafted.
Every agency agreement should depend on the facts of each case and be
adjusted accordingly. There is no such document as a standard agency
agreement – and if you are presented with a pro forma document on that
basis then you are being misled.

• In the same way that the agent assesses you as a potential client you need to
assess them as a company and understand how they operate as a business. If
you are entrusting them to collect and hold money on your behalf then you
need to check whether they are in profit and financially stable. You can
review any public document and also ask fo copies of their accounts and
 corporate records for the last three or five years.

• Also ask for sales data and a breakdown in terms of the range and numbers of
actual products or services or other medium and formats that they currently
promote or have exploited in different countries.

• Try to establish from discussions, their website and trade journals what forms
of exploitation and countries are not covered by the agent – so that you
appreciate the limitations of their business.

• Some of the types of agency agreements include:

– A literary agent acting on behalf of an author to negotiate a publishing

agreement for the exploitation of one of the authors’ manuscripts for a
book

– A literary agent who is acting on behalf of an author for any work written
or produced by the author and has the right to receive commission from
any associated form of media exploitation

– A promoter who is acting as an agent to book artists and organise an

event or festival for a company

– An agent who is arranging sponsorship agreements and brand

exploitation for a client

– An agent who organises and arranges appearances on television, radio,

tours, talks, speeches or conferences for a person who provides their
services to a third party

– An agent who has an exclusive agreement with a person to conclude

agreements with third parties for their music, lyrics, media appearances,
interviews and recordings, tours, merchandising, films, publishing and
any other form of exploitation in any medium

– An agent who is in effect a distributor of a product or service on behalf

of the main company

• It is increasingly common for a client or individual to have more than one

representative as an agent and for a campaign to require numerous
 consultants and agencies who are specialists.

• The problem does arise as to how to ensure that the client is not exposed to
more than one commission for the same event or transaction and that the
matrix of arrangements does not create a climate that delays a project,
creates conflicting interests, duplicates work or fails to achieve the intended
aim.

• In A-Z A.658 the promoter is engaged on a non-exclusive basis and agrees

that the company may appoint any other person or company to work with the
promoter.

A-Z A.658
1.1 In consideration of the Promotion Fee and the Promotion Expenses the
[Promoter] agrees to provide its non-exclusive services to the
[Company] to act as agent to promote, advertise and arrange
sponsorship for the [Company] and the [Company’s] Products
throughout the Territory from [date] to date].

1.2 The [Promoter] acknowledges and agrees that the [Company] may
appoint any other person and/or company to work with the [Promoter]
at any time and the [Promoter] agrees to assist and cooperate where
necessary.

In what capacity is the agent acting on your behalf and what are
the limitations?

Negotiation conclusion and signature

• It is best to set out in the agreement what is actually agreed between the
parties in full and not to rely on a goodwill understanding based on previous
discussions and assurances. It is likely that there will be a clause in the
agreement excluding earlier representations by one party to the other.

• There are different choices you can make as regard who has authority to:

– negotiate

– conclude; and
 – sign agreements

• It is possible that the agent is only be permitted a right to negotiate potential

agreements. This would mean that the agent would have to refer to you on
every agreement he or she proposed and if it was not acceptable to you then
it could be rejected.

• In A-Z A.578 in General Business and Commercial the agent must keep the
company informed of negotiations with third parties and has no right to
conclude any agreement unless there has been verbal consent from a specific
person at the company.

A-Z A.578
The [Agent] shall keep [Name] at the [Company] fully informed on a
regular basis as regards any negotiations with any third party and agrees
that he shall not have the right to conclude any agreement or provide any
release or consent relating to [specify] or the [Company] without the prior
verbal consent of [Name].

• The agent company B has the authority to enter into negotiations but they
have no final right to decide whether to accept and conclude an agreement.
That would mean all proposals must be referred by the agent and with copies
of all documents supplied to person A. Person A then decides whether or not
to accept the agreement and is also the party who is named on the contract
with the third party C not the agent.

• Therefore person A may decide to permit agent B to have the right to

negotiate on behalf of person A. Agent B may then be required under the
agreement to seek approval either in writing or verbally for each agreement
which can be rejected or accepted by person A.

• If person A agrees to go ahead with the agreement then either person A signs
and concludes agreement or agent B is authorised to do so.

• Either person A or agent B or both may be included as the main contracting

party with the other third party C.

• In some cases both agent B and party A sign the main agreement with the
third party C.
• Person A may also accept within the main agreement that payment may be
made direct to an agent company B.

• In A-Z A.577 in General Business and Commercial agent B is not entitled to

sign any agreement or consent form for person A. The agent negotiates terms
but person A must provide consent for any work and conclusion of any
agreement. In addition person A signs the final documents not the agent.

A-Z A.577
The [Agent] shall not be entitled and is not authorised to sign any
agreement, consent or other release or document or to commit the
attendance of [Name]. The [Agent] is merely permitted to negotiate and
agree proposed terms, but the consent for appearances, signature and
conclusion of any contracts or otherwise requires the signature of [Name]
in each case.

• In A-Z A.606 in Merchandising the agent does not have the right to commit
the licensor to any agreement that he or she may negotiate. The agent must
obtain the prior written consent of the licensor in order to be entitled to
confirm that the licensor would like to commit to the proposal. The agent
would have to tell that other party that all discussions and indication of
committal is subject to contract. Here all agreements are signed by the
licensor not the agent. Unless the licensor chooses to makes an exception and
authorises the agent to sign on behalf of the licensor.

A-Z A.606
The [Agent] agrees that she shall not have the right to commit the
[Licensor] to any agreement whether in writing or not without the prior
written consent of the [Licensor] and that all licence agreements must be in
writing and signed by or authorised by the [Licensor].

• In A-Z A.666 in University, Library and Educational the agent has a non-
exclusive agreement with the institute for his or her services for a specific
project. In sub-section 1.4 the agent has agreed that he or she shall not have
the right to commit the institute to any agreement – whether in writing or not
– so this restriction also therefore applies to verbal agreements. The agent
needs the prior written consent of the institute for any agreement. All
agreements must be in writing and signed by the institute.
 A-Z A.666
1.1 In consideration of the [Commission] the [Agent] agrees to provide his
non-exclusive services to the [Institute] from [date to [date] for the
following purpose [specify Project].

1.2 The [Institute] agrees to engage the services of the [Agent] as set out in
1.1 above.

1.3 The [Agent] acknowledges that the [Institute] shall have the right to
appoint another agent and/or third party in respect of any matter
including the [Project] and that this is not an exclusive agreement.

1.4 The [Agent] agrees that there is no right granted to the [Agent] to
commit the [Institute] to any agreement whether in writing or not
without the prior written consent of the [Institute] and that all
agreements must be in writing and signed by the [Institute].

1.5 The [Agent] agrees that he shall be responsible for all costs and
expenses which may be incurred in respect of the provision of his
services under this Agreement.

• Another alternative is that the agreement may authorise the agent to conclude
and sign agreements on your behalf without even seeking your prior
approval or consent as to the terms or the work required by you for a third
party.

• In A-Z A.579 the agent confirms that he or she does not have the right to
negotiate or promote the commercial interests of the company outside the
specified country.

A-Z A.579
The [Agent] undertakes that she does not have the right to negotiate or
promote in any manner the commercial interests of the [Company] outside
the [country] unless specifically agreed in advance on each occasion. Any
consent given does not mean that there is a waiver of consent for any
subsequent matter.

An exclusive or non-exclusive agreement?

• There is a main clause heading Exclusivity in the A-Z where you can find
different ways to draft exclusive and non-exclusive clauses across a range of
industries.

• An agreement may be exclusive or non-exclusive or alternatively may avoid

the issue entirely.

• A grant of an exclusive licence is expected to carry a financial premium in

negotiations as against a non-exclusive licence.

• Obviously avoiding the issue of whether an agreement is on an exclusive or

non-exclusive basis is not the best option. The absence of an express clause
as to whether an agreement is exclusive or not can lead to very expensive
disputes later.

• If the issue of exclusivity is not addressed expressly in the agreement then it

is a question of determining the parties’ intentions. A general, though by no
means exhaustive, view is that if the contract is silent on the issue then a
non-exclusive inference tends to prevail. It is almost impossible to argue
persuasively that exclusivity is an implied term in an agreement. It is far less
challenging to argue that a non-exclusive agreement was intended.

• Do not confuse an exclusive agreement with an agent with the granting of an

exclusive licence in respect of original work owned by the copyright owner.

• The Copyright, Designs and Patents Act 1988, as amended, in the United
Kingdom is only relevant to the grant of an exclusive licence to another
person in respect of original copyright material owned by the copyright
owner. In section 92(1) an exclusive licence of a copyright work means: ‘a
licence in writing signed by or on behalf the copyright owner authorising the
licensee to the exclusion of all other persons, including the person granting
the licence, to exercise a right which would otherwise be exercisable
exclusively by the copyright owner’.

• This section is only applicable to the licensing of rights if it is to take place as

part of the agreement with the agent. Therefore if agent B is granted an
exclusive licence by person A in respect of their original work then such
exclusive licence must be evidenced in writing and be signed.

• There are some agreements during which one part of the term of the
 agreement is on an exclusive basis and then followed by a non-exclusive
period. There is therefore an initial exclusive moratorium in favour of one
party for a short period. This type of arrangement is particularly attractive
where a new product or service is being launched. There may be
considerable value to a particular retailer or distributor to have the
opportunity to be the exclusive company selling that product or service for a
short period in their stores or online. These types of arrangements often
involve very successful brands, suppliers and artists with a very high
marketing budgets and a tightly controlled campaign.

• If the agreement is non-exclusive then you have a choice to work with

whoever you wish at any time.

• The appointment of an agent is often also very much about the transfer of
control not only of your services but also maybe including the work you
have created in the past or work you will create in the future depending on
how the clauses are drafted.

• If the agency agreement is exclusive then during the period you will usually
be prohibited from supplying material, work or your services to another
person or company. There may be exceptions drafted in the exclusive
agreement which are set out at the time of the original agreement as
permitted by the company.

• Alternatively there may be a clause which allows person A to request from

company B permission to do certain work, or make an appearance or
participate in another programme or project or create another product with
another manufacturer. However there is no certainty that this will be agreed
and any request may be refused by company B. Often there may be the
words added for such consent: ‘not to be unreasonably refused’ if requested
by person A.

• If there is an exclusive agreement with agent company B, there is no

obligation for you to agree that the agent will have the final decision in
respect of the decision as to whether work offered to person A is accepted or
refused.

• However an exclusive agreement will mean that all work is arranged through
agent company B and so limit the options that person A may have available
 to them in terms of work and commitments.

• If you are agent company B you would obviously prefer an exclusive

agreement and to be entitled to exploit the widest range of rights, work,
services and commitments by person A. As well as to control all negotiations
and any final terms for any agreement concluded with a third party on behalf
of person A. This would of course also include authority to agent company B
to sign and enter into agreements on behalf of person A.

• In A-Z A.669 in University, Library and Educational the enterprise company

A will act as a non-exclusive agent. Their role is to promote, distribute and
market a range of student projects which may be exhibitions, films, and
events. The students will have the right to use other third parties as this
agreement is non-exclusive.

A-Z A.669
The [Enterprise] acts as a non-exclusive agent to promote, market and
distribute via its website, short films, photographs, events, exhibitions and
online marketing details of the [Students] and their [Projects].

• You may include a clause in a non-exclusive agreement which states that the
agreement is not intended to effect any restrict or effect any other activity of
the company at any time.

• In A-Z A.657 the company appoints the promoter as its sole and exclusive
sponsorship, advertising and promotion agent for the company and its
products for the agreed countries stated in the definition Territory and for the
agreed duration defined in the Term of the Agreement. Refer to the main
clause headings Territory and Term of the Agreement in the A-Z for
further ways of defining these terms.

A-Z A.657
The [Company] agrees to appoint the [Promoter] as the sole and exclusive
sponsorship, advertising and promotion agent for the purpose of promoting
and advertising and arranging sponsorship for the [Company] and the
[Company’s] Products throughout the Territory for the duration of the
Term of this Agreement.
• A-Z A.617 in Publishing is an example of the exclusive appointment of a
literary agent. However the work of the agent is not limited to just hardback
and paperback books, but covers the commercial exploitation of the work of
the author in all media. The word work used in this clause could be defined
as a single new manuscript or a summary of a list of all material produced by
the author. Please look at the main clause heading Work in the A-Z for other
definitions and clauses.

A-Z A.617
In consideration of the Net Receipts the [Author] agrees to engage the
exclusive services of the [Agent] as a literary agent for the [Work] for the
following period [start date] to [end date] throughout the Territory for the
purpose of the commercial exploitation of the [Work] in all media.

Areas of work, services, products and rights

• Who decides your work schedule – can the agent commit you? It is vital to
consider the very important aspect of how much control you want any agent
to have over the services or work or commitments you will be bound to
supply to a third party. In practical terms how is a work schedule to be
agreed? It can either be set out as a maximum number of days and hours per
calendar month in which person A shall be available for work that they
approve or be more undecided and subject to agreement between the parties
in each case. The important question is who has the final decision as to the
work is it agent B or person A?

• The purpose and parameters of the agency can be addressed as specifically or

as generally as is appropriate to suit your circumstances.

• The extent of the subject areas and capacity in which the agency is to be
authorised to act on behalf of person A needs to be clarified. For example the
agent may be a specialist in publishing or literary rights, but not
merchandising. The agent may be suitable for television and radio work but
not for theatre or feature films. The agent may be the best to promote, market
and advertise an individual or a product on the internet or social media but
may not have knowledge of sponsorship deals computer games, apps and
merchancising worldwide.

• This section should be read in conjunction with other related sections in this
 work, and the A-Z of Exclusivity, Payments and Liability.

• The areas of work and services and products which can be dealt with by the
agent must be set out in some detail. A comprehensive list of the subject
matter to be covered by the agent is the best approach and not some general
open ended statement within the agreement which provides no depth as to
the scope of the capacity in which the agent is able to act on your behalf.

• So list the subject areas for which the agent may act for you by looking at
different areas and formats of the media.

• Conversely it helps to set out in detail those subjects which are not covered
by the agreement so that there is no confusion at a later date. You can list
any work, service, product or other subject matter not covered by the
agreement and have the agent acknowledge and agree it is not included.

• Whether the agency agreement is for the exploitation of products, services,

films or a book. It should also cover the issue of whether the agreement
includes or excludes any merchandising, adaptation or translation or any
sequel or any other new version of a similar type of product or work or
service under the agreement.

• In A-Z A.640 in Services the manager is providing his non-exclusive services

to the sportsperson. The consideration for his or her services is the payment
of the commission. Here the manager can act as agent and manager in the
agreed list of areas of the media. There is a start and end date for the duration
of this agreement. It is also stated as to which country the agreement is
applicable. It will therefore not apply to other countries not listed.

A-Z A.640
In consideration of the [Manager’s] Commission the [Manager] agrees to
provide his non-exclusive services to the [Sportsperson] to act as agent and
manager in the following areas of the media [specify] from [date] to [date]
in [country].

• In A-Z A.641 in Services the sportsperson is agreeing that he or she has

engaged the non-exclusive services of the manager. The start and end date
are set out as are the countries listed in the definition of Territory. There is a
broad list of subject areas which are covered which is very wide and none are
 defined. The sportsperson may already have another agent or manager for his
development and coaching for sport.

A-Z A.641
In consideration of the [Sportsperson’s] Fees the [Sportsperson] agrees to
engage the non-exclusive services of the [Manager] from [date] to [date] in
[country] in the following [television, radio, DVDs, film, the internet,
computer games and software, newspapers, periodicals, books and
publishing including a biography, music, professional and public
appearances, sponsorship, endorsements, promotions, competitions, events,
exhibitions and other commercial exploitation.

• In A-Z A.570 in Film and Television the copyright owner is appointing the
company as its representative to exploit rights in a named work. In this
clause there is no reference to exclusive or non-exclusive and no reference to
authority as to the right to conclude and sign agreements by the agent. These
issues may be dealt with by completely separate clauses in the agreement
between the parties. Note this clause is not as wide as an ‘all media in any
formats of any nature whether created now or in existence in the future’. This
clause does not include publishing and merchandising.

A-Z A.570
The [Copyright Owner] appoints the [Company] to act and represent the
[Copyright Owner] solely in relation to the exploitation of the following
rights in the [Work] in the [Territory] from [date] to [date]:

1.1 All forms of television including terrestrial, digital, cable, satellite but
excluding film and/or video through mobiles, small gadgets, PCs and
laptops and/or other similar equipment.

1.2 All forms of radio including terrestrial, analogue, digital, cable,

satellite but excluding film and/or video through mobiles, small
gadgets, PCs and laptops and/or other similar equipment.

• In A-Z A.592 in Internet and Websites there is no reference as to whether the

agreement is exclusive or non-exclusive. While it states that the agent is to
act on behalf of the company to help with a website and marketing
campaign. The agent is only on a short term contract and is acting as an
 advisor and may not be authorised to book any work that needs to be
completed. It is helpful that the scope of the role has been described. It is
also possible to set target dates in other clauses for completion of work.

A-Z A.592
The [Agent] shall act for and on behalf of the [Company] in relation to all
matters relating to the internet and websites whether accessed or received
on computers, television or mobiles or some other gadget in consideration
of the sums set out in Clause [–]. The [Agent] shall only be on a short term
contract of [specify] months and during that period shall advise and be
involved in the setting up of:

1.1 The budget, development, creation, legal protection of and marketing

for a website and the domain name.

1.2 The promotion and establishment of the website in [country] through a

major advertising campaign.

1.3 To carry out a comprehensive survey and report on competing

companies worldwide which exist or are setting up on the internet and
to analyse their operations and marketing.

1.4 To carry out a detailed evaluation of the website to examine the

benefits and negative factors and its effect on the [Company]. To look
at this development in conjunction with the overall strategy of the
[Company].

• The length of clause A-Z A.592 can be contrasted with A-Z A.593. Where it
appears that he agent is to act on behalf of the company on an exclusive basis
in respect of its websites, registration of domain names and to develop an
internet strategy.

• The problem with this clause is that the wording is ambiguous as to whether
it is an exclusive agreement or whether the agent is not to have any other
clients. There is no indication of the term of this agreement – although it may
be addressed in a separate clause nor any specific countries or territory set
out. The presumption is that it is global as it deals with the website and
online business of the company. It is also so widely drafted that the agent
could effect a large degree of control over the company’s online business and
 marketing and brand development unless there are a number of procedures in
place and significant exclusions which are not covered.

A-Z A.593
The [Agent] shall act on behalf of the [Company] solely and exclusively in
relation to enhance the [Company’s] websites, and the registration of
domain names, and to develop an internet strategy.

• If you are the agent then you want to avoid the approach above and aim to
acquire the right to exploit the person and their work in all formats in all
media which avoids the need for any lists.

• In A-Z A.645 in Services the agent is providing his non-exclusive services to

the actor. The actor however is providing his exclusive services to the agent.

• The term of the agreement and the territory are both defined at the start of the
agreement. Please refer to these main clause headings Term of the
Agreement and Territory in the A-Z. The agent is representing the actor in
all media. Note the words – in all media including but not limited to – so all
the topics listed are given just as examples and are not an exhaustive list.

A-Z A.645
In consideration of the [Agent’s] Commission, the [Agent] agrees to
provide his non-exclusive services to the [Actor] for the Term of this
Agreement throughout the Territory. In consideration of the Net Receipts
the [Actor] agrees to engage the exclusive services of the Agent for the
Term of this Agreement throughout the Territory in all media including but
not limited to appearances, performances, recordings in sound and vision in
all forms of television, film, theatre, radio, videos, DVDs, corporate videos,
advertisements, internet, telephone and mobile phones, promotional events
and exhibitions, features and articles in newspapers and magazines,
publishing in any format, sponsorship, and merchandising, promotional,
conference and exhibition appearances and endorsements.

Assign or licence rights in any work, material or services

• The other area to consider is whether there are any associated copyright,
intellectual property rights and computer software rights which may already
 exist, or which may be created in the future. There may also be associated
trademarks, logos, images and slogans which exist, which are used or are
created in the future for the project. Again these topics should be either
included within the agreement or specifically excluded from the subject
matter to be covered by the agent. You may also need to consider who will
own any new physical material which is supplied, created or developed by
the agent or any third party. Both these issues are dealt with later in this
section.

• The decision as to whether to licence or assign rights in any work, material or

services to an agent is a simple one. There is no reason to do so when all
agreements are signed between person A and a third party company C and
not the agent company B.

• There is no obligation to assign any rights in any existing work, material or

services or any future work you may create. Whether it is a script for a play,
a manuscript for a book or a series of characters for a television series for
children and associated merchandising or an illustration, artwork for a logo
or a sound recording or music and lyrics.

• A very useful type of clause which appears in a wide variety of contracts is a

general provision that states in effect that – if no right has been expressly
granted – it has been reserved.

• In A-Z A.562 in DVD, Video and Discs the licensee agrees that rights not
specifically granted are retained. A similar type of clause can be used with an
agent or manager.

A-Z A.562
The [Licensee] agrees and undertakes that all other rights not specifically
specified in clause [–] are retained by the [Licensor] and are specifically
excluded from this Agreement.

• In A-Z A.574 in Film and Television distributor B is acting as an agent for

person A for a film. There is a start and end date for the agreement. There is
a wide list of formats and media in which distributor B is able to negotiate
and conclude agreements for person A. The rights are limited to the original
language and version of the film. Distributor B has no right to edit and adapt
the film or grant any option or rights over the content such as characters,
 script and music or other forms of merchandising. The words ‘and/or
otherwise’ at the end of the clause are intended to broaden the list provided.

A-Z A.574
The [Distributor] is acting as an authorised agent of [Name] with respect to
the [Programme/Film] from [date] to [date]. During that period the
[Distributor] may enter into discussions, negotiations and agreements on
behalf of [Name] to licence, sell supply copies of the [Programme/Film]
for satellite, cable, WiFi, terrestrial, pay per view, video on demand,
DVDs, and in the form of transmissions for play back at a later date,
viewing on a computer, mobile and/or other gadget, and in the form of
viewings at exhibitions, aeroplanes, cinemas, theatres, clubs, festivals. The
rights are limited to the original version in [specify] language and not any
translation and/or sub-titled version. Nor does the [Distributor[ acquire any
right to edit, adapt and/or alter the [Programme/Film] and/or to licence
and/or grant any rights and/or option relating to any of the characters,
music, costumes, script, content and/or otherwise.

• You may also wish to state in an agreement that no authority is given to

register or claim a right to trade marks, copyright or intellectual property
rights, domain names or development material.

• The question of ownership is dealt with in the main clause heading Title.
Other relevant main clause headings in the A-Z include Trade Marks,
Logo, Assignment, Exclusivity and Copyright Clearance.

• The clauses below are about preventing an agent, distributor, publisher,

promoter or other third party acquiring or assuming they have the right to
register themselves as the owner of any rights or material related to your
work, services or project.

• In A-Z A.573 in Film and Television the agent company accepts and agrees
that it has no right to register or seek to claim the rights to or ownership of
any title or its content and associated material and merchandising at any
time. You could amend this clause to add reference to a specific work or
relate it to a product or service you are supplying.

A-Z A.573
The [Agent] agrees and acknowledges that it shall not be entitled to register
 and/or claim the rights to and/or ownership of any title, characters, logos,
trade marks, design rights, graphics, computer generated material, music,
slogan, format and/or any other rights of any nature in any media at any
time.

• In A-Z A.589 in General Business and Commercial the agent agrees that it
cannot register a wide list of rights, trade marks, domain names and forms of
material which may be created in any media at any time. That all rights in the
work and any developments and any rights that can be registered with a
collecting society shall be in the name of the copyright owner.

A-Z A.589
The [Agent] agrees that it shall not be entitled to register and/or claim the
rights to and/or ownership of any title, characters, logos, trade marks,
domain names, design rights, graphics, computer generated material,
typography, music, slogan, map, table, data, software, invention, patent
and/or any other rights of any nature in any media at any time. That all
rights in the [Work] and any development drafts, prototypes and/or
variations, translations, adaptations and/or rights which can be registered
with any collecting society shall be held in the name of the [Copyright
Owner/Other].

The duration or term of the agreement

• If the agreement does not have a clear start and end date then it could
theoretically continue indefinitely without end and continue year after year.

• Some start and end dates are linked to the production, manufacture or supply
of a product to a company. Others relate to the publication or release date to
the public of a product. Neither is very satisfactory because the system fails
if the event never happens. So that is why it always makes sense to include
dates by which the agreement starts and ends.

• Do not confuse the start and end date and term of the agreement for the agent
to supply his or her services with the term for the assignment or licence of
original material by a copyright owner. They are completely different.

• The simplest way of addressing the duration of any agreement is to state a

 start date and end date, such as expressed under A-Z A.576.

A-Z A.576
The [Agent] shall mean the following [Company/individual] whose address
is at [address] who is authorised to act on behalf of [Name] in respect of
the following areas [list] in [country] from [date] to [date].

• Further details as to how to draft the definition for the duration of an

agreement can be found under the main clause headings Assignment Period,
Term of the Agreement and Licence Period in the A-Z.

Commission, costs, expenses and payment

• In the context specifically of agency arrangements the most common dispute

concerns payment due after the contract is terminated. As the agent is likely
to have concluded a number of arrangements before the agency agreement
came to an end in addition to being in the process of finalising arrangements
which had yet to be agreed or signed prior to the end of the agency term or
the agreement.

• In an exclusive or non-exclusive agreement agent company B would also

want to ensure that all money received from any agreements with third
parties is paid directly to agent company B first before any money is paid out
to person A.

• Agent company B would want to deduct commission, expenses and costs

before any payments are made to person A.

• An exclusive or non-exclusive agreement may also give agent B commission

on agreements not only concluded during the term of the agreement with
person A but also in respect of material, work or rights which existed during
the term of the agreement but were not exploited but fell within the scope of
the agreement.

• If the material, work or rights are subsequently exploited by a new third party
appointed by person A after the end of the agreement with agent company B.
Agent company B may still be entitled to commission due to the way the
original agreement between the parties has been drafted.
• An exclusive or non-exclusive agreement may also lead to an additional
further claim for commission under an agreement by agent company B in
respect of copyright and intellectual property rights, a sequel, an adaptation
or physical material which did not exist during the term of the agreement.
This new material, work or rights created in the future after the end of the
first agreement may still give rise to a liability to pay commission to agent
company B by person A if the agreement does not exclude such a claim.

• The exact wording of the clauses can therefore have a very dramatic effect on
the future liability of a person who enters into an agreement with an agent to
act on their behalf to conduct their business relationships with third parties.
If you are not careful that agent may have a claim for commission on all the
work, rights and material that you create during your life and any
exploitation which arises from it.

• The main clause headings Commission, Gross Receipts, Net Receipts,

Costs, Expenses, Budget and Payment, will provide additional examples of
how to draft and define the different types of payments that can be made to
an agent.

• Accounting Provisions and Inspection of Accounts and Records in the A-

Z contain other clauses regarding how reporting can take place and how
advisors may get access to verify the sums paid.

• Note that the commission to be paid to an agent may be calculated in many

different ways and derived from many different definitions of how the
money is received, what is deducted and from which commission and other
payments are calculated.

• In A-Z A.609 the agent must pay all his or her own costs and expenses. There
is no deduction of those sums from money due to person A. The agent is
therefore only entitled to the agreed fee or percentage commission.

A-Z A.609
The [Agent] agrees that she shall be responsible for all costs and expenses
which she may incur in respect of the provision of her services under this
Agreement.

• In A-Z A.571 in Film and Television agent company B agrees that it is not
 entitled to any sums from the exploitation of the rights which are not
received by the agent by the fixed date. This shall apply even if the
agreement was signed during the agency period and the sums were due but
not received. The agent shall not be entitled to be paid any sums from any
agreement concluded from the exploitation of the rights after the end of the
agreement.

A-Z A.571
The [Agent] shall not have any right to any sums of any nature from the
exploitation of the rights in Clause [–] which have not been received by the
[Agent] before [End Date]. The [Agent] shall not be entitled to any sums
from any agreements after [End Date] whether or not any such agreement
was signed during the [Agency Period] and/or the sums were due but not
received.

• In A-Z A.611 the agent is only to receive sums or commission on contracts –

negotiated, concluded and signed – during the continuance of the agreement.
The agent has the right to receive commission for the full duration of the
licence period with the third party. The agent is not entitled to any
commission on projects prepared and developed but for which no agreement
with a third party is signed.

A-Z A.611
The [Agent] agrees that it shall only be entitled to receive sums from
contracts which are negotiated, concluded and signed in full during the
continuance of the Agreement. The right to receive commission shall be for
the duration of the licence agreement which relates to the exploitation of
the rights. Where any agreement is not signed until later, then the [Agent]
shall not be entitled to any sums despite having developed and prepared the
project.

• The question of where funds are held, in which bank, which country and by
whom and who has access to those funds is very significant. Both for the
main agreement with an agent and also third parties from whom you expect
to receive royalties.

• As is the question as to whether or not sums received by an agent for person

A are also mixed with other funds for other clients. Preferably you should try
 to ensure that sums are not mixed

• The concept of privity of contract is in essence the principle that two parties
could contract with each other but not in manner to create a liability or
bestow rights on a third party. However exceptions have developed and ways
round that principle were created to form the basis of rights to the benefit of
a third party to enforce terms against a party even if that party had not been
‘privy’ or party to the original contract.

• These points may seem somewhat academic to a modern agency or agent

until the question of payment or non-payment arises. For example if an
author contracts with a publisher as a result of a deal set up by an agent, the
agent rightly expects their commission. If the author does not pay the agent,
and the agent complains to the publisher, what rights does the agent have
against the publisher, if any?

• To a large extent this type of problem was addressed in the Contract (Rights
of Third Parties) Act 1999 in the United Kingdom. A third party C who is
not party to a contract may enforce a term of the contract as a right which he
or she can use in a legal action subject to certain conditions.

• There are three conditions required for the third party C to have rights arising
from a contract to which they are not a party:

– the contract must expressly identify the third party C

– the contract needs to provide that the third party C may exercise certain
rights; and

– the contract must ‘on a proper construction’ show that the contracting
parties intended certain rights to be enforceable by the third party C

• The legislation gave rise to a number of third party clauses in agency

agreements which included or excluded such rights as a mater of contract. A
clause would for instance make it clear that the contract did not intend to
confer any rights on a third party C. In contrast, the agreement could confirm
the third party rights and specify the name of the company. As well as set out
in detial the scope of the third party rights which it is accepted are agreed.

• A clause such as A-Z A.622 in Publishing would be sufficient to ensure that

 the agent is entitled to lay claim to his commission despite not being a party
to the author’s agreement with the publisher.

• Payment to the agent which is the third party is accepted in the main contract
as payment to the author. If the author does not receive any payment from
the agent then it is not the fault of the licensee.

A-Z A.622
All monies payable under this Agreement to the [Author] shall be paid to
[Name/Company] of [address] who is authorised by the [Author] to collect
and receive such monies as his [Agent]. The [Author] agrees that the
receipt by the [Agent] shall be a good and valid discharge of the sums due
under this Agreement.

• In 1.2 of A-Z A.649 the agent is only entitled to commission an agreement,

signed by the author before termination or expiry of the agent’s agreement.

A-Z A.649
1.1 The [Author] appoints the [Agent] to represent him/her and to
endeavour to conclude agreements with third parties for the
exploitation of works proposed and/or written by the [Author] during
the Term of the Agreement in the Territory in respect of the following
rights All forms of publications in print form whether hardback or
paperback books, magazines, digests, periodicals, brochures,
newspapers, pull-outs. All forms of television, cable, satellite, digital,
pay on demand, subscription, film via landline telephone or mobile,
DVD, discs, software and gambling, betting and lotteries in any format
and games sold for use on computers and laptops and other gadgets.

1.2 The [Agent] shall be entitled to receive commission in respect of all

agreements concluded and signed by the [Author] with the third parties
before the termination and/or expiry of this Agreement in respect of
the rights and countries stated in 1.1 above. The [Agent] shall be
entitled to receive the commission for the duration of each such
agreement.

• If you are the client and want to limit what can be deducted then it needs to
be specified what exactly can be deducted, if anything, before any money is
 paid to the client by the agent. The approach to take is to have a clause in the
agreement which authorises the deductions of the costs and expenses which
you want but is not a blanket permission.

• You may also wish to set a limit on the total amount of any deduction in an
accounting period, in total for the year or in total for the agreement.

• In A-Z A.590 the agent has agreed not to hold the author responsible for any
costs and expenses in excess of the agreed fixed limit. Except where the
sums have been authorised in advance by the author.

A-Z A.590
The [Agent] shall not seek to hold the [Author] responsible for any
expense, cost and/or other sum which is in excess of [number/currency]
which has not been specifically authorised in advance by the [Author].

• Here again putting in an agreement what is allowed and what is not allowed
is a good approach to take as it forces you to look at the effect of the
deductions on the money you will receive under the agreement.

• In A-Z A.604 in Merchandising agent B will pay licensor A the net receipts
which is defined at the front of the agreement. Dependent on how that
definition is drafted licensor A may receive no money at all or a considerable
amount. The exclusive services of agent B are engaged to exploit the
licensed articles for the licence period.

• Another clause would need to added to the contract as to whether the agent
has a claim to money received after the end of the licence and whether the
agent would still continue to collect money from any agreements.

A-Z A.604
In consideration of the Net Receipts the [Licensor] agrees to engage the
exclusive services of the [Agent] for the Licence Period throughout the
Territory and grants to the [Agent] the sole and exclusive right to negotiate
agreements on behalf of the [Licensor] for the production, manufacture,
distribution, sale, exploitation and marketing of the [Licensed Articles] for
the Licence Period throughout the Territory.
• In A-Z A.588 agent B is not entitled to any commission on any new work by
copyright owner A even if it is based on the original work or for any sequel
or adaptation. The clause is drafted widely to also include other potential
forms of payment such as royalties and any advance.

A-Z A.588
The [Agent] agrees that it shall not be entitled to any commission on any
advance, royalties, payments, commission and/or other sums from any new
work by the [Copyright Owner] whether or not derived from and/or based
on the [Work]. Further the [Agent] agrees that it shall not be entitled to any
commission on any advance, royalties, payments, commission and/or other
sums from any sequel and/or later adaptation of the [Work] and/or part at
any time.

• It is possible as shown in A-Z A.564 to have a fixed fee for the work
completed by an agent and not one based on commission.

A-Z A.564
1.1 The [Copyright Owner] appoints the [Consultant] to represent his
interests and to advise on the best business strategy to market,
distribute and exploit the [Film/Work] in respect of the following
formats [specify] in the countries listed in Appendix A from [date] to
[date].

1.2 The [Copyright owner] shall have the sole and absolute discretion as to
whether any agreement is concluded with any third parties at any time.

1.3 The [Consultant] agrees that he/she has have no right and/or authority
to conclude and/or sign any agreement, contract and/or letter which
may be legally binding upon the [Copyright Owner].

1.4 The [Consultant] agrees that he/she shall not be entitled to any present
and/or future payments, royalties and/or other sums from any
agreement concluded by the [Copyright Owner] in respect of the
[Film/Work] and shall only be entitled to the fixed fees set out in
Clause [–].

• Other clauses will require that payment only be made after the expiry or
 termination of an agreement to an agent. Where the agent has negotiated the
contract but it was not actually signed or the payment arises from an
agreement which was concluded.

• A concern from the client’s perspective is to ensure that he or she is not

exposed to a claim for two commissions arising from the same transaction.

Termination of the agreement

• The parties are perfectly entitled to draft the agreement in such a manner so
that it operates until terminated by notice or as a result of a breach or default.
The ways in which this can be achieved are addressed at some length in the
main clause heading Termination in the A-Z and in this book. It is most
effective to have an end date by which no further payments are due to the
agent whether negotiated or concluded during the term of the contract or not.

• In A-Z A.661 in Sponsorship the agent has to provide the company with
details of any conflict of interest. If they are not acceptable to the company
then the company may terminate the agreement and only pay those sums due
up to the date of termination. The agent has no right to commission – or any
other sums – in respect of agreements which exist after the termination date.
This is not a common clause in contracts but is very useful especially where
you are dealing with a large agency which may become involved in a public
controversy with another client.

A-Z A.661
The [Agency] confirms that it has not and shall not enter into any
arrangement with any person, enterprise and/or business and/or for any
service and/or product which has or might conflict with this Agreement.
The [Agency] agrees to provide the [Company] with details of any conflict
of interest that may arise at any time due to the appointment of other clients
and/or other business interests. The [Agency] agrees and undertakes to
provide written notice of any conflict within [seven] days of the conclusion
of any agreement. Where a conflict arises which the [Company] finds
unacceptable then the [Agency] agrees that the [Company] may at its sole
discretion serve written notice of the termination of the Agreement. In such
event the [Company] shall only owe and/or pay to the [Agency] such sums
as are due to the date of termination. The [Agency] agrees that no sums
and/or commission shall be paid to the [Agency] in respect of any
 agreement which exists after the termination date.

• In A-Z A.608 in Merchandising there is a similar clause of the right to

terminate if there a disclosure from the agent that there is a business
relationship or other client which is likely to harm the reputation of the
licensor. The licensor shall have the right to terminate the agreement without
further liability to the agent.

A-Z A.608
The [Agent] shall disclose to the [Licensor] any other business relationship
and/or client which may exist or be created at any time which conflicts
with or competes with the interests of the [Licensor] under this Agreement.
In the event that as a result of the disclosure the [Licensor] considers that
the reputation of the [Licensor] and/or its business is likely to be damaged,
harmed and/or to suffer losses. Then the [Licensor] shall have the right to
serve written notice of the termination of the Agreement without further
liability to the [Agent].

• In A-Z A.612 copyright owner A has the right to terminate the agreement at
any time and the agent will only receive commission up to the date of
termination on sums which have been paid. This is not a common clause but
allows the copyright owner to make a clean break from the agent.

A-Z A.612
The [Agent] agrees that the [Copyright Owner] shall be entitled to
terminate the Agreement for the services of the [Agent] at any time at the
[Copyright Owners’] sole discretion. The [Agent] shall only be entitled to
receive commission on any sums received to the date of termination. The
[Agent] shall not be entitled to receive commission on any sums which
accrue but are not paid before the date of termination. The [Agent] shall
not be entitled to be paid any commission after the date of termination
which has not been received whether or not the agreement was signed for
that date of termination.

Territorial restrictions

• There may be many concerns over the extent and limit to the agent’s
 authority and they should be stated and addressed expressly. Please also refer
to the main headings Territory and Licence Area in the A-Z.

• In A-Z A.610 the clause is concerned specifically with restrictions in respect

of the countries not covered under the agreement. The agent is not allowed to
negotiate or conclude or promote or market the character outside the
countries set out in the definition of the Territory. The only exception is if it
is agreed in advance with the licensor.

• You could use a similar type of clause to limit the agent to English, Chinese,
Spanish, Italian, French or German speaking countries only. Even in those
circumstances you would still be better off listing those countries which you
want to fall within that category rather than leaving it open to interpretation
many years later.

A-Z A.610
The [Agent] agrees and undertakes that she shall not have the right to
negotiate, conclude, promote or market the commercial interests of the
[Character] in any form outside the Territory unless specifically agreed in
advance with the [Licensor].

Sub-licensing and the right to appoint third parties

• Key issues in relation to third parties include rights, payment, deductions,

commission and editorial control. Please refer in the main clause headings
Sub-Licence, Editorial Control, Rights and Expenses in the A-Z.

• It is quite common for the agent to be able to deduct the costs of distribution
expenses, commission charges, freight costs, agency fees and marketing
from the sums before they are paid to the company for whom they are acting.
These figures are often not even mentioned as the agreement refers to net
receipts or gross receipts with deductions or sums received. You therefore
need to ask the question as to what an agent deducts. This is a negotiation
point just as much as anything else but it seems to be missed most
frequently.

• In A-Z A.665 in Sponsorship if A sponsor C to act on it, appoints agent A

there is no transfer of liability or responsibility by sponsor and it is still
bound by the terms of the agreement with company B.
 A-Z A.665
Where the [Sponsor] appoints an agent and/or other third party to carry out
its duties under this Agreement and the [Company] agrees. Such consent
by the [Company] does not mean that the [Sponsor] is not directly
responsible and it has not transferred any liability and/or obligations under
this Agreement.

• In A-Z A.597 the designer has agreed that the company may appoint any
third party to carry out work on the website.

A-Z A.597
In The [Designer] agrees that the [Company] may at any time engage any
other third party at its sole discretion to carry out work on the [Website] or
any other internet project for the [Company]. This shall include the right of
the [Company] to use any third party to provide support services at any
time.

• In A-Z A.664 the sponsor and the company have agreed that neither party
shall delegate the work or their contribution to the film or festival. The
question of the right to appoint sub-licensees and sub-agents is dealt with
later in this section on Agency.

A-Z A.664
Neither the [Sponsor] nor the [Company] shall delegate responsibility for
any work and/or contribution to this [Film/Festival] to any agent and/or
third party unless both parties have agreed that is the best course of action
and have both approved the action.

• In A-Z A.629 in Purchase and Supply of Products the distributor is allowed

to appoint sub-agents and sub-licensees to carry out its duties under the
agreement. Here the distributor must send a signed copy to the company
within one month. Note that the company is not approving or authorising the
agreement in advance. The company may not know the terms of the
agreement until it receives a signed copy from the distributor. This would
mean that the company would have had no opportunity to check out the third
parties and investigate whether they were suitable or not. This clause does
not even limit the appointments to existing sub-agents and sub-licensees with
 whom the company is currently working with in its business. Please also
consider the clauses in the main clause heading on Sub-Licences in the A-Z
and this work.

A-Z A.629
The [Distributor] shall be permitted to appoint sub-agents or sub-licensees
to carry out all or any of its responsibilities under this contract. The
[Distributor] shall forward to the [Company] a copy of any such contract
within [one month] of the date of conclusion of a signed agreement.

• In A-Z A.615 in Merchandising the agent can appoint sub-agents to carry out
work for him or her. However the agent cannot recoup any additional sums
for the extra costs, commission and charges which are incurred by those sub-
agents from money due to the company.

A-Z A.615
The [Agent] may appoint sub-agents in other countries to carry out duties
and arrangements in respect of the [Work] but the [Agent] shall not be
entitled to recoup the cost of any commission, charges, fees and/or other
costs from the sums due to the [Company].

• In A-Z A.626 publisher B agrees not to appoint any sub-agents or sub-

licensees without the prior agreement in writing of person A or their agent.

A-Z A.626
The [Publisher] agrees and undertakes that no sub-agents, sub-licensees
and/or distributors shall be entitled to edit, adapt, revise and translate the
[Work].That all such proposals are subject to the prior agreement of
[Name] in writing and/or his/her agent.

• A-Z A.638 in Purchase and Supply of Products prohibits the agent and any
distributor or supplier form changing the product or any packaging.

A-Z A.638
There is no authority provided to any agent, distributor, supplier and/or
otherwise to alter, add to change, vary, adapt any part of the
[Product/Article] and/or packaging as submitted to the [Company] in its
final form prior to production.
• This section is not dealing with other issues which are relevant please look at
the main clause headings Insurance, Liability, Product Liability, Losses
and Risk in the A-Z.
 AMENDMENTS

• This section is very short and is from A-Z A.671 to A-Z A.707 All the
clauses in this section are dealt with under the sub-heading General Business
and Commercial.

• This main clause heading can also be cross referenced to Accuracy,

Authorisation, Error, Force Majeure, Illegality, Interpretation,
Omission, Statutory Provisions, Third Party Transfer and Variation in
the A-Z.

What is an amendment?

• An amendment is a change to an existing agreement. Whatever the type of

agreement which you have concluded there may come a time when you wish
to make amendments and changes in some form to the main contract.

• The changes could be to the delivery dates, the budget, the contracting
parties, or to add extra dates for a service to be provided. Whatever the
reason if changes are to be made to an agreement then you need to check
whether there is a clause which states how the agreement may be amended.

• After an agreement has been signed and other sections of a company become
involved in the process of performing the agreement. It is quite common for
people to seek to make minor changes and for these to be agreed between the
parties without any – official – amendment of the original agreement. This
ad hoc method may work while both parties are working in harmony, but this
approach often falls apart when the parties later come to discuss the payment
due for the work and ownership of material.

• The parties may have moved away from the original exact remit of the
agreement and developed a new strategy and new work that must be
completed in order to fulfil the project. This new area of work is often
 requested and agreed to by an exchange of emails between the parties
without any real reference to the main agreement or clarification of the costs
impact on the final sums to be paid.

• This sort of problem has arisen in relation to the commissioning of the

development of a new website and apps as well as major software and data
transfer and storage commissioning agreements.

• The topic and reason for the changes agreed could be very minor or
completely the opposite and be very significant and have a major impact on
the agreement.

• In view of the fact that most emails are stored by an individual who may
move on into other employment. Even if you the company still have access
to their account it still becomes an unnecessary long process to unravel
amendments which have been agreed by email.

• It is much better to have not only an online storage system for contracts and
any amendments but also manual file systems which require amendments of
any type to be agreed and signed off by both parties in some form of paper
trail.

• This approach forces an individual in a company who is making an

amendment to an agreement to seek either authority to do so from a line
manager or alerts an executive within the management whose signature is
required to the issues which have arisen.

• So a formal process of amendments of agreements with a company can have

benefits to a company and improve management control over the contract
procedure not only at the point of signature of the original agreement, but
over the whole performance of the obligations and the crucial area of the
payments and financial costs.

• There have been many major agreements where the disputes at a later date
have revolved around amendments which were made either by a series of
verbal consents by a phone call or by a letter or by text or by email.

• It is not unknown for there to be no coherent record of the amendments that

were made to an original agreement because of failure to keep control over
who has authority to make changes and then to make a record of that fact
 with the original agreement.

• The excuse is often provided that a formal amendment would cause delay or
that it is unnecessary or that the change has no significance overall. The
trouble with all these arguments is that often the person agreeing the changes
is looking at the agreement solely from their niche perspective and so does
not see the overall or long term consequences either to the main agreement
or other agreements to which the company may be party.

• In A-Z A.671 the parties have agreed that the agreement supersedes all
previous agreements between the parties. In other words the earlier
agreements are no longer relevant.

• That the agreement may not be amended or any clauses waived unless it is in
writing and signed by the other party against who the amendment or waiver
would be enforced.

• So here an email exchange or text would not be acceptable.

• Unless it could be successfully argues that ‘in writing’ includes email –

which is unlikely especially if the contract pre-dates the internet.
Alternatively the smarter option is that the parties have a clause in the
agreement that an exchange of emails with an electronic signature is
acceptable as a form of amendment or waiver.

A-Z A.671
This Agreement contains the full understanding of the parties with respect
to the subject matter hereof and supersedes any previous agreements
between the parties regarding such subject matter. This Agreement may not
be amended nor any of its provisions waived except in writing executed by
the party against which such amendment or waiver is sought to be
enforced.

• In A-Z A.676 the clause makes reference to the fact that the agreement
supersedes – in other words comes before and replaces all previous
arrangements both verbal and written. Here any amendment be in writing
and signed by both parties to the agreement.

A-Z A.676
 This Agreement contains the full and complete understanding between the
parties and supersedes all prior arrangements and understandings whether
written or oral, appertaining to the subject matter of this Agreement and
may not be varied except by an instrument in writing signed by all of the
parties to this Agreement.

• A-Z A.678 between a company and purchaser is quite clear that all the
contractual terms agreed between company and purchaser are contained in
the document.

• The clause is drafted to protect the company which states that it shall only be
bound by any purported variation to the terms which is signed on behalf of
the company. Written and verbal variations which are not authorised in this
manner by the company are not binding and the purchaser has agreed to that
fact.

• This may however be usurped and overridden at a later date by an employee

of the company agreeing in an exchange of emails to an amendment of the
agreement despite this clause.

• In the last part the company and purchaser are also agreeing that any verbal
or written representations made before or at the time of the agreement are
excluded.

• Here the purchaser has to be quite sure that all the terms which were
discussed are actually set out in the main agreement or attached as
documents or schedules with a statement in a clause that they are to form
part of the main agreement.

A-Z A.678
The contractual terms between the [Company] and the [Purchaser] are
contained exclusively within this document and in no circumstances will
the [Company] be bound by any purported addition to, or other variation of
these terms whether oral or in writing unless any such written addition or
variation by reference to these terms is signed on behalf of the [Company].
The parties agree that any representation made by any person before or at
the time the contract is entered into whether oral or in writing is expressly
excluded.
• A-Z A.679 requires a written document which must be signed by both
parties. The signature must be by an officer of the company in other words
someone with the level of seniority and authority to commit the company.

A-Z A.679
This Agreement may not be changed, modified, amended or supplemented
except in a written document signed by both parties. Each of the parties
acknowledges and agrees that the other has not made any representations,
warranties or agreements of any kind except as may be expressly set forth
herein. This Agreement constitutes and contains the entire agreement
between the parties with respect to the subject matter hereof and supersedes
any prior or contemporaneous agreements oral or in writing. Nothing
herein contained shall be binding upon the parties until a copy of this
Agreement has been executed by an officer of each party and has been
delivered to the other party. This Agreement may be executed in
counterparts each of which shall be deemed an original but all of which
shall together be one and the same instrument. Paragraph headings are
inserted herein for convenience only and do not constitute a part of this
Agreement.

• A-Z A.689 makes it clear that not only must all amendments be in writing but
the new document must be signed by both parties in order to amend the
agreement.

A-Z A.689
This Agreement sets out all matters agreed between the parties relating to
the [subject] and no earlier documents, records or conversations shall be
relied upon at a later date to supersede these terms. All future amendments
to this Agreement must be in writing and the document signed by both
parties.

• A-Z A.691 this clause allows agreements to be amended by an exchange of

written signed documents in which the terms agreed are set out. There can be
no oral binding amendment of the main agreement or an amendment where
only one party has signed.

A-Z A.691
This Agreement sets out the entire and complete agreement between the
 parties and all previous arrangements written or oral relating to [subject]
between the parties have been or are now terminated so that they no longer
apply. This Agreement may be altered, amended or changed by an
exchange of written signed documents in which the terms agreed are
specified. There can be no oral binding amendment or signature by only
one party.

• In A-Z A.695 it is agreed between the parties that all the representations,
documents and statements and material supplied prior to signature shall be
attached and form part of the agreement. So there is no ambiguity. Where
financial figures for instance have led your company to commit to a project
then it makes sense to include them in the main document. You then address
the issue of what happens if the figures were misleading or false.

A-Z A.695
All the representations, documents, statements and material supplied and
put forward as [fact/background material/projected figures] by both parties
shall form part of this Agreement.

• A-Z A.698 is on a similar theme and makes reference not only to material
and representations which are accepted as included and set out in the
appendix and form part of the agreement. Those matters raised before the
agreement which are not within the appendix are excluded. The agreement
can only be amended by writing on paper and signed by authorised
representatives of each party.

A-Z A.698
The following documents and representations made by the [Company]
which are attached in Appendix [–] form part of this Agreement. No other
information, data, representations and/or disclosures shall be deemed
and/or are intended to be part of this Agreement. Both parties agree and
undertake that any prior exchanges of nature not in Appendix [–] are
specifically excluded. No amendments and/or additions to this Agreement
can be made by email, telephone, text, voicemail and/or other medium of
any nature except in writing on paper and signed by authorised
representatives of both parties.

• In A-Z A.696 the clause sets out three scenarios which can be accepted as a
 form of amendment of a contract. This clause is a version of what actually
happens to most agreements but this clause is not common. You could add as
many other additional methods or amendment to the list as you would like to
agree.

A-Z A.696
This Agreement can be amended by any one of the following methods:

1.1 An exchange of emails confirming agreement on new terms and

conditions.

1.2 A side letter which is signed by one party and agreed to in a

responding letter.

1.3 A formal new amending document which both parties sign and date.

• A-Z A.702 the clause makes reference to the fact that no amendment or
change to a licence between licensee B and sub-licensee C shall be outside or
exceed the terms or rights granted by copyright owner A. You cannot grant
rights in something you do not own. This principle is often forgotten and the
main original contract is often not checked before rights are granted to a
third party.

A-Z A.702
No amendment, change, variation and/or deletion from the Agreement
between the [Licensee] and the [Sub-Licensee] shall be outside the rights
and or terms granted by the [Copyright Owner/Licensor] to the [Licensee].
The [Licensee] shall have the final decision as to whether to agree to any
amendment of the Agreement with the [Sub-Licensee]. Any amendment
must be in writing signed by a director of both parties, dated and subject to
the laws of [specify].

• In contrast to all the above clauses A-Z A.703 permits both parties to amend
or change any part of the agreement at any time or to cancel or terminate it as
they wish. This clause may be amended to permit only one party the right to
amend the agreement as it thinks fit dependent on the circumstances.

• In addition also refer to the main clause headings Liability, Risk, Losses,
 Product Liability, Termination, Title and Cancellation.

A-Z A.703
Both parties agree that any part of this agreement can be amended,
changed, altered and/or cancelled and/or terminated. This can be by any
choice of method that either party should so choose including
advertisements in the press, email to the account, by letter and/or marketing
flyer and/or without any prior notice and/or warning. This shall include
price increases and additional costs and charges except that the party due to
pay the additional sums shall have the right to refuse to do so and may
cancel and/or terminate the agreement.
 ASSIGNMENT

• There are 105 clauses in the A-Z for the main clause heading Assignment
from A-Z A.762 to A-Z A.866.

• This section should be read in close conjunction with the main clause
headings Assignment Fee, Assignment Period, Licence Area, Licence
Fee, Licence Period, Rights, Royalties and Territory in the A-Z.

What is an assignment?

• An assignment is the transfer of all rights and interest so that a person no

longer owns and controls that work or subject matter.

• However despite the fact that it means that the assignor will no longer have
any ownership of or control over the work or rights assigned to the other
party.

• An assignment may be a full assignment or a partial assignment. Therefore

do not assume that, as the assignment states that all the rights in all media in
a work are assigned to the other party, that it is automatically a full
assignment. The assignment may still be limited by the countries it covers or
the time for which it is assigned.

• In drafting an assignment the term assignor is used to describe the person

who is giving or making the assignment to the other party who is referred to
as the assignee.

• Note that this will contrast with a licence agreement where the parties are
often referred to as the licensor and licensee.

• The first main decision to make in drafting an agreement is the difference

between an assignment and a licence.
• To assess the financial impact of that decision and also to consider what you
will own and control if you go down each different route. The consequences
of choosing an assignment over a licence are huge and should not be done
without a realisation as to the serious consequences which follow.

• If you do not want to dispose of and sell and allow someone else to hold the
copyright, intellectual property rights and all or some of the different types
of rights such as film, publishing, merchandising, websites, apps, games,
gambling and online internet and digital forms of exploitation. Then do not
assign the rights and go down the route of a licence agreement.

• Many companies seek to have a complete transfer and assignment of all the
rights in the material in many different scenarios. The material may be of any
format, created from services supplied by a third party company or arise
because a person was requested to take photographs at an event or from a
member of the public who has taken a video of a news event on a mobile
phone which the company wish to use as news footage on television and
exploit under licence. Other situations include acquiring the rights to a script
from the author or commissioning music for a film.

• The reason for the full assignment is that it then allows the company to list
the subject matter assigned as an asset of the company. The company then
owns and controls the subject matter assigned.

• An assignment is not limited to the assignment of copyright only – you can

assign whatever you want to be covered whether or not those are rights or
material which are currently recognised under legislation or not. It is often
the case that the legislation in any country falls behind technological
developments and industry practices.

• An assignment requires a form of consideration between one party who is the

assignor and the other who is the recipient of the assignment – the assignee.
There is no obligation for that consideration to be financial but that is the
most common approach.

• The fact is that there can be no assignment if there is shown to be no

consideration or payment made between the parties as set out in the
agreement. A lack of consideration can mean the assignment has not taken
place between the parties.
• You will find in some assignments that, purely for the reason to show
consideration, there is a nominal figure of one pound or one euro or dollar
included in the agreement

• The assignor and assignee could be a single person, a company or a

consortium. A number of parties could be listed as falling with the definition
of the assignor and assignee.

• Just because the parties fall within one definition of assignor and are all listed
in the agreement does not however mean that only one party would sign the
agreement on behalf of all the others. If they all own and control rights
which are being assigned then all the parties which constitute the assignor
must sign the main document. Otherwise each may not have assigned the
copyright, intellectual property rights and other rights they own and control.

• The consequences of an assignment of a right as opposed to the licence of a

right are intentionally draconian and have significant legal effect in the
United Kingdom and in most countries worldwide.

• In the United Kingdom under the Copyright, Designs and Patents Act 1988 as
amended section 90(3) states as follows:

‘An assignment of copyright is not effective unless it is in writing signed

by or on behalf of the assignor’.

• Therefore for an assignment of copyright in the United Kingdom to take

place from the assignor to the assignee the assignment must be in writing.

• Further the document must be signed by or on behalf of the assignor.

• This is of critical importance and especially should be taken note of if you

think that your exchange of emails constitutes a transfer of all the rights in a
work – because it is not a valid assignment

• While you may successfully argue that an exchange of emails is a form of

writing you would fail on the second stage as the writing has not been signed
by the assignor or by someone authorised and with the capacity to do so on
their behalf.

• Whilst therefore you might exchange agreements with signed pdfs, you
 cannot ignore the requirement to have the document signed with a valid
signature by the assignor.

• The assignor would also no doubt want there to be a valid signature by the
assignee which is binding. Therefore on the basis that the assignment
documents must be signed by both parties and recognised as legally binding
as a valid signature. You would need to establish the legal requirements for
that to take effect in the country in which the governing law or jurisdiction
clause is stated to apply in the assignment agreement.

• Please look at the main clause heading Jurisdiction in the A-Z for different
types of governing law clauses.

• There is not just one way of drafting an assignment – it will vary with the
copyright and intellectual property rights and any other rights – for example
trademarks, service marks, database rights, computer software rights – which
are being assigned. So there may be more than one clause which relates to
the assignment in respect of all the rights held by one party A to the other
party B.

• There should usually be reference to the physical material which exists in any
format in the assignment clause itself. Although you may use a second clause
for this purpose. There may be material which exists now but also material
which is created in the future. There are often many stages of development of
a project and different types of material are created and each may have quite
different rights attached to them which all need to be considered and
included in the agreement. So that may mean artwork for a logo or trade
mark, draft sketches of the outfits for the characters for a children’s
production, films and videos, sound recordings of music without the lyrics,
proofs, prototype models and samples of merchandising. You need to ask the
question: who will own the rights in the material and who will own the actual
physical material?

• There are different types of assignment and just like a licence they may be
limited by territory or country or by duration or the period for which it will
operate. You may therefore assign the rights for one country but retain all the
other rights outside that zone. You may assign the rights in full in all media
but only do so for a period of ten years or any other period of time.
A full assignment or a partial assignment?

• Copyright has many forms and may be transferred in a – partial – manner by

a genre such as film and television rights or by territory or by time.

• In the United Kingdom the Copyright Designs and Patents Act 1988 as
amended section 90 (2) states:

‘An assignment or other transmission of copyright may be partial, that is

limited so as to apply–

(a) to one or more, but not all, of the things the copyright owner has the
exclusive right to do;

(b) to part, but not the whole, of the period for which the copyright is
to subsist.’

• A full and complete assignment of all rights in all media is one where the
assignor A is transferring and assigning to the assignee B everything which
the assignor A owns and controls which is the subject matter of the
assignment to the assignee B.

• Note that although this may be an all media assignment in order for it to be a
full assignment the Territory must be defined as the world and may be
extended to the universe. Anything less will only be a partial assignment.

• For a complete and full assignment to take place the period of time for which
all the media rights are assigned must be defined in the Assignment Period as
either

– for the full period of copyright

– for the full period of copyright with any extensions or renewals; or

– for the full period of copyright and in perpetuity

Anything less will only be a partial assignment

• For instance a partial assignment would be where after the assignment has
been concluded by both parties. The assignor A still owns rights in countries
 which fall outside the definition of the Territory.

• Another partial assignment would be where although it is for all media

throughout the world the assignment is not for the full period which could be
drafted. Therefore the assignor A will own the rights in the time period
outside the duration set for the Assignment Period.

• There could for example be an assignment for only five or ten years with a
reversion of all the rights at the end.

• In A-Z A.793 in General Business and Commercial the full assignment is

very extensive and sets out in detail some of the areas and rights by way of
example. The reason for choosing this type of clause is that this approach
makes it very clear as to what the assignee has the right to exploit. The
clause seeks to avoid the problem of an assignor at a later date trying to
argue that they did not assign certain rights.

• In the first part the consideration is the payment of the Assignment Fee which
is defined to be paid by the assignee B to the assignor A.

• The assignor A assigns All Media Rights to the assignee B. This definition
All Media Rights is then defined later in the same clause.

• In line 2 in A-Z A.793 the clause then goes on to refer to rights which are in
existence now or created in the future. This means the assignment clause
relates not only to rights which may be held now but new forms of
exploitation that may come into existence at any time after the original
agreement.

• There have been a number of disputes related to assignment contracts where

the problem has related to more than one party claiming the right to exploit
new forms of exploitation. The current trend is for theme parks, musicals,
electronic scooters and apps – but in a few years they may be another form.
So if you are drafting a long complete assignment you do not want to limit
yourself to just a list of rights and box yourself in. The list is by way of
examples of the types of exploitation which is being assigned. The list of
new forms of exploitation is growing all the time with each development in
technology, new processes and types of joint ventures and partnerships.

• The assignment is in relation to a specific Work which is defined.

• The assignment relates not only to the complete Work but also any parts.

• Note you must use the word assign from the assignor to the assignee. Not the
word licence, grant or even sell.

• The assignment is for the Assignment Period which is defined. The

assignment period may be five years, one month or for the full period of
copyright and any extension or renewals or in perpetuity. For more examples
please refer to the main clause heading Assignment Period in the A-Z.

• The assignment is throughout the Territory which is defined. Note this clause
does not say throughout the world but it could do. For more examples of how
it may be defined please look at the main clause heading Territory in the A-
Z of this work.

• Further clauses for definitions in respect of rights can be found in the main
clause heading Rights in the A-Z and this work.

A-Z A.793
In consideration of the payment of the Assignment Fee by the [Assignee]
to the [Assignor] the [Assignor] assigns All Media Rights which are in
existence now or may be created in the future in the [Work] or parts to be
assigned to the [Assignee] for the Assignment Period throughout the
Territory. ‘All Media Rights’ shall mean all intellectual property rights of
whatever nature including without limitation all copyright, trade marks,
service marks, community marks, design rights, trade secrets, moral rights
and confidential information and domain names. The sole and exclusive
right to adapt, vary, delete from and add to, use, copy, license, authorise,
print, transmit, disseminate, store retrieve, display, process, record,
playback, rent, lend, supply or sale, distribute, market, use for sponsorship
or for endorsement of any material, services, or person, promote or
otherwise exploit by any method, medium or process whether created in
the future or in existence now of any nature and any developments or
variations or adaptations whether text, visual images, photographs,
drawings, plans, sketches, electronically generated, video, computer or
other method for creating art, graphics, and other material, sounds, sound
effects, music, software, interactive, information, logos, background,
banner, bookmark, border table, caption, character, clip art, cartoons,
computer generated art, map image, map link, data, domain name,
footnotes, titles, headings including but not limited to:

1.1 All forms of television including standard, cable, digital, satellite;

1.2 All forms of radio including cable, digital and satellite;

1.3 All forms of telecommunication systems including telephones, mobile

phones, pagers;

1.4 All forms of mechanical reproduction including videograms, lasers,

discs, cassettes, DVDs;

1.5 All forms of non-theatric audiences whether for business or

commercial use, educational, cultural, religious or social, schools,
colleges, universities, museums, readings, plays, addresses, speeches,
lectures, seminars, conferences, or discussions;

1.6 All forms of theatric exploitation including cinemas;

1.7 All forms of publishing in printed form, hardback, paperback, digests,

serialisation, newspapers, magazines, comics, periodicals, quotations,
anthologies or translations in any such format in any language;

1.8 All forms of publishing and/or dissemination of information and/or

deposit scheme by any electronic method and process including but not
limited to the internet, worldwide web, intranet, downloads, eBooks,
blogs, podcasts, newsfeeds and emails;

1.9 All forms of computer software and interactive multi-media such as

compact discs, CD-Roms, computer games including all circumstances
where there is an element of interactivity and/or there is a combination
of sound, text, vision, graphics, or otherwise;

1.10 All forms of merchandising, toys, clothing, mugs, stationery, games,

posters, shoes, games, and any other two or three dimensional
representation;

1.11 Theatre, stage plays;

1.12 Films, advertisements, banner advertisements;

 1.13 All rights in any title, chapter heading, format, character, storyline,
rules, entry conditions, equipment and layout.

1.14 All forms of storage and retrieval in any form in any medium and all
database rights, rights in any index and/or taxonomy.

1.15 All forms of reproduction and/or methods of delivery of all and/or any
part in any medium including photocopying, scanning, and document
delivery.

1.16 All forms of exploitation of the sound, music, lyrics, words, titles
whether as audio files, ringtones, downloads, CDs, audiotapes, sheet
music or any other form.

• So the aim is to transfer and assign all the rights and to be specific with a
long list of examples of those rights assigned which avoids issues at a later
date as to what was the intention of the agreement and the ambit of the
assignment. It is not necessary to verify whether all the rights exist now or
are even subject to any recognition under any legislation in order to be able
to make the transfer of ownership.

• This method of drafting is essentially based on forms of exploitation and

identifiable revenue streams, not definitions under legislation which are often
not up to date with how rights and material are exploited and do not add
constructively to drafting agreements which cover an evolving commercial
landscape. The legislation, statutes and case law are merely background
material to the drafting of contracts.

• You do not necessarily use the exactly the same formula of words for each
assignment. It must be drafted to suit the facts.

Present and future copyright

• In the United Kingdom the Copyright Designs and Patents Act 1988 as
amended section 9(1) refers to:

– Present copyright – in other words copyright which exists now

– Future copyright – which is not in existence now but will come into
 existence due to something being created or developed in the future at a
later date

• This is why many clauses use the words – in existence now or developed in
the future.

• For example, in the context of a presenter’s agreement in A-Z A.777 in Film

and Television the copyright is created as a result of the services of the
presenter and so will come into existence after the agreement is signed.
Therefore the clause refers to present and future copyright.

A-Z A.777
In consideration of the [Presenter’s] Fee the [Presenter] assigns to the
[Company] all present and future copyright, and all trade marks, domain
names and any other intellectual property rights in all media throughout the
world and universe in the product of her services and any other material
created hereunder for the purpose of this Agreement for the full period of
copyright and any extensions and renewals and in perpetuity including but
not limited to films, formats, books, brochures, catalogues and
publications, advertisements, scripts, website and newsfeed material,
programme and slot titles, slogans, jingles, music, photographs, sound or
other recordings, DVDs, CDs, marketing material, scripts, interactive
and/or website and internet material, computer software, discs, CD-Roms.

• In A-Z A.800 the assignor is assigning – all present and future copyright –
and all other rights – in all media. Here although we make reference to future
copyright – we also use the words – whether in existence now or created in
the future.

• There is also a long list of examples of the media covered by the assignment.
Note that the list begins with the words – including but not limited to-. That
means the list is not intended to be exhaustive. If a new form of exploitation
arises you would be able to argue that it fell within – all media-.

A-Z A.800
In consideration of the payment of the Assignment Fee in full by the agreed
date the [Assignor] assigns to the [Assignee] all present and future
copyright and all other rights in all media whether in existence now or
developed by new technology or by changes in the law in the [Work]
 including any parts and the [Work Material Package] throughout the
Territory for the full period of copyright and any extensions and renewals
including but not limited to:

1.1 All forms of exploitation through the medium of television and radio
whether the transmission is terrestrial, by cable, digital, satellite,
microwave, over the air; whether free, pay per view, encrypted or not
or otherwise;

1.2 All forms of exploitation through telecommunication systems,

computer software and hardware, DVDs, CD Roms, telephones,
mobile phones, pagers, electronic merchandise or the internet;

1.3 All forms of exploitation through videos, cassettes, lasers, discs,

merchandising, cinemas, non-paying audiences in educational, cultural,
religious and social establishments, clubs, universities, and/or
commercial use by businesses;

1.4 All forms of publishing whether in printed or electronic form; and/or

1.5 All forms of exploitation not covered above in any medium.

• A-Z A.783 is another example of an assignment using the words – present

and future copyright. Here the director is paid an assignment fee as
consideration. In return he or she assigns:

– all present and future copyright

– and any other rights

– in all media

– throughout the world

– in the product of his or her services

– and in the programme

– and any other material created during the existence of this agreement
 – for the full period of copyright and any extensions or renewals

Each of the above steps broken down are significant for the assignment
below in A-Z A.783.

A-Z A.783
In consideration of the Assignment Fee the [Director] assigns all present
and future copyright and any other rights in all media throughout the world
in the product of his services and in the [Programme] and any other
material created during the existence of this Agreement to the [Company]
for the full period of copyright and any extensions or renewals. For the
avoidance of doubt all media shall include but not be limited to television,
internet, radio, video, DVD, CD-Rom, computer software and games,
publishing and merchandising.

• In contrast in A-Z A.827 in Publishing there is an example of a very short

assignment in relation to a researcher for a project in the product of his
services. This clause adheres to the use of the words of present and future
copyright. It is very limited in its drafting form – it is adequate but not very
informative and makes no reference to rights that do not fall within
copyright. There is also no mention of the consideration in this clause. The
payment of the researcher may be dealt with in another clause in the
agreement.

A-Z A.827
The [Researcher] agrees to assign to the [Company] all present and future
copyright and any other rights in the product of his services relating to
[Project] throughout the world for the full period of copyright and any
extensions and renewals.

• The drafting and words used varies where the transfer of the rights involves
creation of artwork and material and software by a third party for a computer
based technology project for the internet.

• In A-Z A.816 in Internet and Websites the company is commissioning the

designer to create and develop a prototype and finished app based on all the
products and brands supplied by the company. There is a set budget and
proposed specifications of what is to be achieved,
• In 1.2 the designer assigns future copyright and/or intellectual property
rights, design rights, software rights, patents, music, sounds, shapes, images,
text, characters, codes and any other material and/or data and/or charts that
he or she may acquire and/or which they may bring into existence as a result
of the project.

• Note the period of the assignment makes reference to not only copyright but
also the other rights. The assignment includes software rights, codes and
design rights due to nature of the project and the period of the agreement is
for the full period of copyright and any extensions and renewals and for the
full period of the life of any other rights without limit.

• 1.2 also makes it clear that no rights of any nature will revert to the designer.

• In 1.3 the designer is agreeing to deliver all copies of the development

material in any format – of any nature – and any records to the company at
the company’s cost. The supply of this material is often forgotten but could
be important in later years if a dispute arises as to ownership.

A-Z A.816
1.1 The [Designer] has and/or will design, develop, create and deliver a
prototype and finished [App/Banner Link/other] based on all the
[Logo/Image/Brand/Products] of the [Company] which are listed in
Appendix [–] and on the proposed target outcomes in terms of
achievable targets in Appendix [–] and the budget in Appendix [–].

1.2 The [Designer] agrees to and does assign in this document any future
copyright and/or intellectual property rights, design rights, software
rights, patents, music, sounds, shapes, images, text, characters, codes
and any other material and/or data and/or charts that he/she may
acquire and/or bring into existence as a direct result of this [Project] to
the [Company] for the full period of copyright and any extensions and
renewals and for the full period of the life of any other rights without
limit. At no time shall the assignment period end so that any rights of
any nature revert to the [Designer].

1.3 The [Designer] agrees to retain and deliver to the [Company] all
development material of any nature and any copies of the final version
together with any documents and records held and/or controlled by
 them in any format and/or medium which can be held by the
[Company] for use as archive material. The [Company] agrees to pay
the cost of such delivery.

• In A-Z A.814 the consultant A is carrying out work for company B to design
and develop software and material for a website.

• The consultant is assigning to the company – all the intellectual property

rights and copyright, computer software rights, design rights, future design
rights, patents, trade marks, service marks, domain names and any other
rights in the [Work] and any other material created under this Agreement
throughout the world and universe for the full period of all such rights and
without limit of time in perpetuity.

• The consultant agrees not to register any claim or interest or to receive any
additional payment form any exploitation in any format in any medium at
any time.

• The consultant agrees that the company can adapt and use the work and
material as it thinks fit. There is no requirement to consult or seek approval
of the consultant. There is no editorial control by the consultant, copyright
notice due or any moral rights claimed. You could go even further and add a
waiver of moral rights clause in some agreements. For more clauses, refer to
the main clause heading Moral Rights and Waiver in the A-Z.

A-Z A.814
The [Company] has engaged the [Consultant/Supplier] to carry out the
[Work] set out in [Schedule A] to develop, design and create suitable
computer software and other material for the [Website]. The
[Consultant/Supplier] agrees and undertakes to assign to the [Company] all
intellectual property rights and copyright, computer software rights, design
rights, future design rights, patents, trade marks, service marks, domain
names and any other rights in the [Work] and any other material created
under this Agreement throughout the world and universe for the full period
of all such rights and without limit of time in perpetuity. The
[Consultant/Supplier] agrees that it shall not be entitled to register any
claim and/or interest and/or to receive any additional payment of any
nature from the exploitation and/or reproduction of any copies in any
format and/or medium at any time. The [Company] shall be entitled to use,
 licence, exploit and adapt the [Work] and the material as it thinks fit and to
engage such third parties as it shall decide shall be required at any time.

The subject matter of the assignment

• In A-Z A.781 in Film and Television the contributor is making a full

assignment to a company in respect of his or her contribution to a film. Here
note that the drafting refers to the film and/or parts as well as the soundtrack
as well as any other product of the services of the contributor. The
significance of this clause is the need to think about and consider whether
you are covering everything that you want to have assigned which is the
subject matter of the assignment.

A-Z A.781
In consideration of the fees the [Contributor] assigns to the [Company] the
sole and exclusive rights in all media whether now known or hereinafter
invented in the [Film] and/or parts including the soundtrack and in any
other product of the services of the [Contributor] under this Agreement
throughout the [Territory/world/universe] for the full period of copyright
and any extensions and renewals including but not limited to: all forms of
television, satellite, cable, digital terrestrial; all forms of video, DVD, CD,
CD Rom, games and computer software; merchandising, publishing,
interactive multi-media in any text, sound, vision or otherwise; the storage,
retrieval or dissemination of information; websites and the internet; mobile
phones and any other device for telecommunication systems; and the right
to authorise, reproduce, licence and transfer any such rights to third parties
and to exploit any such rights at any time in any format and in any form in
whole or in part.

• Even though you use a definition to define a work, book, film or product – in
the actual assignment clause. It is often better to draft more widely than
necessary rather than to make the assignment too narrow if you are acquiring
the assignment.

• There are extensive definition clauses throughout the A-Z. Please look at the
main clause headings Blog, Books, Films, Format, Logo, Podcast,
Recordings, Scripts, Software, Sound Recordings, Work, and Rights in
the A-Z for other relevant clauses.
To whom will the assignment be made?

• In A-Z A.812 the artist has created an original design and has agreed to
assign it to the assignor a website company. In 1.4 the assignment is to the
website company. Here you would need to check if you were that company
whether that is the best place for the asset to be assigned. If you are a parent
company but own a subsidiary web site company you may want the
assignment to be not to the website company but the parent company.

• The assignment in 1.4 is very wide and includes present and future copyright
as well as intellectual property rights in all media and in all medium which
are in existence at the time of the assignment as well as developed in the
future. The assignment period is for the full period of copyright and any
extensions or renewals but also extends beyond that forever. Alternatively
you could put in perpetuity.

• Note that the assignment relates to the artwork or design which is defined.

• sub-clauses 1.5–1.7 relate to an acknowledgement by the artist that the

website company can register the design or artwork with organisations and
adapt or vary it without any need for approval or further payments. The
website company may also register the artwork or design as a trade, service
or community mark. All these are surrounding issues to the assignment
which it is helpful to deal with to avoid claims and disputes.

A-Z A.812
The [Artist] agrees and undertakes:

1.1 That he/she is the sole and original creator of the [Artwork/Design].

1.2 That the [Artwork/Design] is owned by the [Artist].

1.3 That the [Artwork/Design] has not been licensed, exploited and/or
adapted in any format in any medium by the [Artist] and/or any third
party.

1.4 In consideration of the payment of the Assignment Fee the [Artist]

assigns to the [Website Company] all present and future copyright and
all other intellectual property rights in all media and in all
 [formats/medium] whether in existence now or developed by new
technology or by changes in the law or otherwise in the
[Artwork/Design] throughout the [world/universe] for the full period of
copyright and any extensions and renewals and forever without limit of
time. For the avoidance of doubt it is agreed that ‘all media’ shall
include but not be limited to terrestrial, cable, digital and satellite
television and radio; whether free, pay per view, encrypted or not. All
methods of telecommunication systems, computer software and
hardware, laptops, DVDs, CD Roms, discs, telephones, mobile phones,
pagers, the internet, websites and downloads, gadgets, videos,
audiocassettes, lasers, discs and sound recordings. All forms of
publishing whether in printed or electronic form, and the right to
supply and distribute copies in any format by any means and
merchandising, gambling, betting and lotteries.

1.5 The [Artist] agrees and acknowledges that the [Website Company]
shall be entitled to register ownership of the copyright with any
collecting society and/or other organisation and shall have the right to
reproduce, licence, and exploit the [Artwork/Design] in any manner
that it thinks fit. The [Website Company] shall not be obliged to
consult with and/or seek the approval of the [Artist]. Nor shall the
[Artist] be entitled to receive any additional payment and/or other
sums.

1.6 The [Artist] agrees and acknowledges that the [Website Company]
shall be entitled to adapt, translate, vary, develop, add to and delete
from the [Artwork/Design] at any time. Further the [Website
Company] shall be entitled to sell, dispose of, assign and/or create a
charge over the [Artwork/Design]. The [Artist] waives all rights to any
additional royalties, payments and/or other sums that may become due
at any time including resale and any other form of reproduction.

1.7 The [Artist] agrees that the [Website Company] shall have the right to
register the [Artwork/Design] as part of a trade mark, community
mark, design right, service mark, and/or domain name and which is to
be registered as owned and/or controlled by the [Website Company].

• A-Z A.865 in University, Library and Educational is a good example of a

slightly longer all media assignment. It could be a partial or full assignment
 dependent on the territory covered which is between a company and an
institute for a project. If the assignment was for the world, then neither the
company nor any employee would retain any rights or interest.

A-Z A.865
In consideration of the [Fee] the [Company] agrees to assign to the
[Institute] all copyright, intellectual property rights, and all other interests
and material which is created and developed in respect of this [Project]
which are created, developed, owned and/or controlled by the [Company]
whether in existence now or created in the future in all media throughout
the [Territory/world/country/universe] for the full period of copyright and
any extensions and renewals and in perpetuity. No rights and/or interest of
any nature shall remain vested in the [Company] and/or any employee.

• There are other examples of full assignment under the main clause heading in
A-Z under Buy-Out.

Partial assignment

• A partial assignment can be the assignment of only some of the rights owned
or controlled by a person or company. Even though the agreed assignment
period may be for the full period of copyright.

• In A-Z A.784 in Film and Television the presenter is being paid a fee and
royalties as consideration. In return the presenter is assigning the television,
DVD, video, theatric and non-theatric rights which he or she may have as a
result of his or her services to the company. The assignment is for the full
period of copyright and any extensions and renewals.

• The company is agreeing that not all the rights which he or she owns or
controls have been assigned and acknowledges this fact and that they are
reserved by the presenter. This strategy avoids a later argument that the
intention was to assign all media rights. You may also choose to list some of
the rights specifically reserved such as publishing, gambling and games,
merchandising, and online, internet and website and mobile forms of
exploitation.

A-Z A.784
In consideration of the [Presenter’s] Fee and the [Presenter’s] Royalties the
 [Presenter] assigns to the [Company] the Television Rights, the DVD and
Video Rights, the Theatric Rights and the Non-Theatric Rights in the
product of her services in the [Series] (including the scripts and sound
recordings) under this Agreement throughout the Territory for the full
period of copyright and any extensions and renewals. The [Company]
agrees that all rights not specifically assigned to the [Company] in this
clause [–] are reserved by the [Presenter].

• The partial assignment in A-Z A.786 in Film and Television is limited in

three ways

– by the rights which are granted

– the countries covered in the definition of territory; and

– the duration of the assignment period which has a fixed start and end date

A-Z A.786
In consideration of the provision of the Budget by the [Assignee] to the
[Assignor] to make the [Film], the [Assignor] assigns all present and future
copyright in respect of the Television Rights, the DVD and Video Rights,
the Non-Theatric Rights and the Theatric Rights in the [Film] and parts
throughout the Territory for the duration of the Assignment Period which
shall commence on the date of this Agreement and continue until [date].

• A-Z A.776 in Film and Television shows another way of drafting a partial
assignment. Instead of assigning certain rights which are defined as in A-Z
A.784 and A-Z A.786. Here the assignment is for the sole and exclusive
rights in all media – except for the formats, countries and rights listed – or
which can be attached as a schedule to the agreement.

• There is no limit on the duration of the assignment but the territory could be
limited if it is not defined as – throughout world or – throughout the
universe.

• In 1.3 the failure by the company to pay the fess and royalties due will result
in the assignor having the right to terminate the agreement and to have the
rights and material revert back to the assignor. For more on this issue please
look at the main clause heading Rights and Termination in the A-Z and this
 work.

A-Z A.776
1.1 In consideration of the payment of the Advance and the [Assignor’s]
Royalties the [Assignor] assigns to the [Company] the sole and
exclusive rights to the [Work] in all media except [specify
formats/rights/countries] throughout the Territory for the full period of
copyright and any extensions and renewals and forever without any
limit on the duration of time.

1.2 The [Assignor] agrees and undertakes to assist the [Company] in

respect of the transfer of any copyright ownership to the [Company]
and/or the collection of any sums due in respect of the rights assigned
to the [Company]. The [Assignor] and/or an authorised representative
shall sign and/or complete such affidavits, documents, registration
forms and collecting society forms that may be necessary.

1.3 In the event that the [Company] fails to pay the Advance and/or the
[Assignor’s] Royalties by the dates set out in this Agreement. Then the
[Assignor] shall have the right to serve written notice on the
[Company] to terminate the Agreement with immediate effect and all
rights in the [Work] and any new developments including ownership of
any material shall revert to the [Assignor].

• A-Z A.795 is a partial assignment which is limited by duration and territory.

The assignor is assigning all intellectual property rights and any other rights
in the work and the material related to the work. There is a start and end date
to the assignment period. The assignment only relates to one country and not
the world.

• At the end date all intellectual property rights in the material related to the
work and any development or variation created by the assignee will be
assigned back to the assignor.

• The material of the work is referred to as the Work Material and is defined in
A-Z A.796 where the assignee confirms it shall not retain any rights or
interest in the work or the material of the work. For further clauses on
material please look at the main clause heading Material in the A-Z.
 A-Z A.795
In consideration of the [Assignment Fee] the [Assignor] assigns to the
[Assignee] all intellectual property rights and any other rights in the
[Work] and the [Work Material] which are owned or controlled by the
[Assignor] from [start date] to [end date] in [country]. After the [end date]
all the intellectual property rights and any other rights in the [Work
Material] and any development and/or variation shall be assigned by the
[Assignee] to the [Assignor].

A-Z A.796
‘The Work Material’ shall mean all material of the [Work] in the
possession or under the control of the [Assignor] [excluding accounts, or
financial records relating to sums received but not expenses incurred for
creating and exploiting material] including:

1.1 All copies of any master material in any form;

1.2 A list of locations at which any material is held together with access
letters giving irrevocable authority for the [Assignee] to remove such
material; and

1.3 All documents, records, data in any form and other material of any
nature including contracts, licences, invoices relating to material
expenses, consents, waivers, lists, proofs, scripts, publicity, advertising
material, computer software, photographs, negatives, posters,
catalogues, drawings, plans, sketches, electronically generated
material, sounds, sound effects, music, computer generated art, video,
DVDs, film, data, and databases.

The [Assignor] agrees that it shall not retain any rights or interest in the
[Work] and/or the [Work Material].

Commissioned material – is it under licence or is there an

assignment?

• For some reason it is often assumed that if you pay for and commission
material that the mere fact you have commissioned and paid for it means that
you own all the rights and become the copyright owner. This is not the case
 and failure to make a decision as to whether you wish to acquire a licence or
an assignment from the person commissioned to create the work or product
or material can be a costly mistake. There will be no assignment of copyright
or any other rights without an assignment clause in writing and a signature
by the assignor.

• There has been an instance with one leading manufacturer who had
commissioned a logo for a label for a shoe. They did not actually own all the
rights as there had been no assignment clause discussed or put in any
documentation. Only after a costly dispute was this fact accepted – how
much easier it would have been to have added an assignment clause to the
original commission documentation.

• If you commission marketing material, artwork, photographs, sound

recordings, film, text or a website. It is vital that both parties agree at the
start whether the agreement is to be an assignment or a licence.

• Where a distributor is appointed to promote and exploit a work or product as

in A-Z A.805. You do not want the distributor to acquire any right or interest
– not only in the original work or product but in any packaging, marketing,
online competitions, app, promotions, advertising or anything else which
may be created in relation to your work or product. If there are permitted to
authorise and create new material either themselves or on conjunction with
third parties then new material in any medium or format necessarily involves
the creation of new rights. The question is who owns them?

• In A-Z A.805 1.1 the distributor has agreed and undertakes to assign all
copyright and any other rights in any new material based on or derived from
the work to the author whether it is created by a consultant or employee or
commissioned from a third party.

• 1.2 gives as examples new material in which rights may be assigned back to
the author.

• In 1.3 the distributor has agreed to pay the legal and other administrative
expenses of both parties to ensure the transfer of all the rights.

A-Z A.805
1.1 The [Distributor] agrees and undertakes that it shall assign all the
 copyright and any other rights in any new material based on and/or
derived from and/or associated with the [Work] of any nature in any
medium to the [Author/Copyright Owner] (whether the new material is
commissioned from a third party and/or created by an employee and/or
consultant).

1.2 The [Distributor] agrees and undertakes that the assignment in clause
[–] above shall include but not be limited to translations, packaging,
marketing, newspaper, television and radio advertisements, banner ads,
links, logos, slogans, images, text and trade marks.

1.3 That the [Distributor] agrees and undertakes to bear all the legal and
administrative expenses that may be incurred by both parties in order
to ensure the effective transfer of all such rights to the
[Author/Copyright Owner].

No assignment to take place

• There are many circumstances where you will want to ensure that no
assignment has taken place. The licensor may do this by getting the other
party the licensee to acknowledge and agree to the fact that there is no
assignment.

• The licensor may also want the licensee to agree that if any copyright or other
rights are created at a later date that the licensee will assign them to the
licensor. You may agree that this could be done at the licensor’s cost.

• It may also be wise to ensure that a licensee or distributor understands and

agrees that they do not have the rights to assign any rights to a third party.
For this type of clause please look at the main clause heading Third Party
Transfer in A-Z and in this work.

• Where someone is an employee the presumption is in favour of the fact that

material which they create during the course of their employment shall
belong to the company who employs them.

• It is also the case that any company would not want an employee to acquire
any copyright or other rights in any copyright, intellectual property rights or
any rights owned or controlled by the company.
• So for the avoidance of any doubt it is better to have a clause in the
employment contract which makes this clear, and to which the employee
agrees, to the effect that the employee acquires no interest or rights.

• In A-Z A.762 in Employment the executive agrees that there is no

assignment of any rights to the executive during the course of his or her
services or work.

A-Z A.762
The [Executive] acknowledges and agrees that all intellectual property
rights, domain names, inventions and patents, copyright, design rights,
property rights, rights to data, and databases, trade marks, service marks,
community marks and any other rights in the services or any work at any
time of the [Executive] in the course of or in connection with her
employment shall remain and be the sole and exclusive property of the
[Company]. This Agreement does not purport to assign, grant, or transfer
any such rights to the [Executive].

• In A-Z A.802 in General Business and Commercial the situation is reversed

the company agrees that there is no assignment to the company of rights in
the work or any part. The company has also agreed that if it commissions
new material based on the work or itself creates new material which could be
packaging, logos, images, a CD or a book cover. The company agrees that all
such new material shall be assigned to the author so that the author owns all
the rights in all media and not the company.

A-Z A.802
The [Company] acknowledges and agrees that this Agreement is not
intended and does not constitute an assignment of the rights in the [Work]
and/or any part to the [Company]. Where for any reason new material is
created in the future by any third party commissioned by the [Company]
and/or the [Company] creates and/or develops any new material based on
and/or derived from the [Work]. Then the [Company] agrees and
undertakes to assign and/or to ensure the assignment of all rights in all
media in the [Work] and/or parts throughout the world to the [Author] so
that the [Author] owns and/or controls such rights.

• There may be a requirement to have a clause which states that there is no

 assignment of a work, and no authority to authorise a third party to adapt the
work as set out A-Z A.817.

A-Z A.817
[Name] does not grant any assignment to the [Company] of any of the
rights in the [Image/Text/Banner] where it is displayed and/or exhibited on
the website. Nor does [Name] grant the [Company] any right to authorise
any third party to use and/or adapt any part of the [Image/Text/Banner]
whether or not it is for the purpose of marketing, promotion and/or review.
The prior consent of [Name] must be sought in each case and may be
refused.

• A-Z A.821 can be used where you are appointing a distributor to supply a
product or to exploit rights in a film or to distribute and sell merchandising
material.

• It must be made clear to the distributor that not only does the agreement not
assign any rights which include intellectual property rights, copyright,
computer software rights, design rights and future design rights, trade marks,
service marks, community marks or any other rights in the work or character
which is the original material on which the merchandising material is based.

• The distributor shall also not have rights in any licensed article which would
be the merchandising material based on the work or character.

• The distributor shall also not have rights in any other development,
adaptation or variation.

• The distributor agrees that all rights shall remain with, and belong to, the
licensor.

• There is no agreement to assign any rights which may be created at a later

date and this would be dealt with in another clause.

A-Z A.821
The [Distributor] agrees and undertakes that this Agreement does not
transfer and/or assign any intellectual property rights, copyright, computer
software rights, design rights and future design rights, trade marks, service
marks, community marks or any other rights in the [Work/Character]
 and/or in any [Licensed Articles] and/or in any development, variation
and/or adaptation to the [Distributor] and all rights shall remain with and
belong to the [Licensor].

• In A-Z A.858 the sportsperson and the agent are agreeing that they will not
acquire any rights or interest or attempt to register any interest in the trade
marks, business names, domain names, community marks, service marks,
logos, design rights, copyright and all other intellectual property rights
owned and/or controlled by the sponsors.

• This clause also applies to any development or adaptation whether it is in

existence now developed in the future.

A-Z A.858
1.1 The [Agent] and the [Sportsperson] agree and undertake that they shall
not acquire any rights and/or interest and/or attempt to register any
right and/or interest in the trade marks, business names, domain names,
community marks, service marks, logos, design rights, copyright and
all other intellectual property rights owned and/or controlled by the
[Sponsors] and/or any development and/or adaptation whether in
existence now and/or developed in the future. This shall include but
not be limited to any of its businesses and/or its products and/or
services and/or any marketing, packaging, advertising and/or other
material owned and/or controlled by the [Sponsor] and/or provided by
the [Sponsor] under this Agreement.

1.2 The [Agent] and the [Sportsperson] agree that the trade marks,
business names, domain names, community marks, service marks,
logos, design rights, copyright and all other intellectual property rights
owned and/or controlled by the [Sponsors’] and/or any development
and/or adaptation whether in existence now and/or developed in the
future shall be the sole and exclusive property of the [Sponsor]. That
no part of this Agreement is intended to assign, transfer or vest any
such rights in the [Agent] and the [Sportsperson

• In an agreement between a company and an institute in A-Z A.864. This

short form clause refers to goodwill in relation to any trade mark, business
name, domain name and logo which is the property of the institute. It is the
intention of the agreement which the company had agreed to that there be no
assignment or transfer of any rights to the company.

A-Z A.864
The [Company] agrees that the name of the [Institute] and the [Work] and
any goodwill and reputation created in respect of any trade mark, business
name, domain name, and logo shall remain the sole and exclusive property
of the [Institute] whether in existence now or created in the course of the
Agreement. That no part of this Agreement is intended to assign, transfer
or vest any rights in the [Company].
 ASSIGNMENT FEE

• The Assignment Fee in the A-Z is from A-Z A.867 to A-Z A.882. All the
clauses fall within the sub-heading General Business and Commercial.

• Other main clause headings in the A-Z which could also help you include
Budget, Licence Fee, Payment, Costs, Expenses and Interest.

The importance of consideration

• Every legal course which covers contract will have a topic on consideration.

• The Assignment Fee or consideration for an assignment is important. Without

any consideration for the assignment which is either financial or in some
other form the assignment will not take place. For a contract to be
enforceable there must be consideration or quid pro quo benefit transferred
which is passed to the assignor. The only exception to this is where the
agreement is executed as a deed.

• The real challenge with contract drafting is to avoid arguments and conflicts
at a later date. Therefore the clearer the wording the better for all concerned.
It is not about winning a fight but about avoiding one in the first place.

• In most contract clauses where one party is paying the other for a service or
work or rights you will see the words in consideration of. In other words one
party is paying a fee and the other is receiving services or work or rights
from the other. In such cases it is not difficult to establish that there has been
consideration if the payment due is actually paid and the service provided or
the work completed.

• Nonetheless reference to consideration is useful to the assignor if no payment

is made by the assignee as set out in the agreement. The assignor would be
able to argue that as there has been a failure or lack of consideration that the
agreement has not been fulfilled and so the assignment of the rights has not
 been made. Therefore the agreement has not been successfully performed
and the assignment does not come into effect from the assignor A to the
assignee B.

The Assignment Fee

• There are many different clauses and methods of making reference to

consideration and the sums to be paid for an assignment, examples of which
are in the main clause heading A-Z of Assignment and Buy-Out.

• If you define the Assignment Fee in the definition section it then makes it
easier to draft the assignment clause otherwise you have to put all that detail
in amongst the assignment clause itself which would be confusing.

• In defining the sums to be paid it also helps to clarify the issues of the
currency for payment, raises the issue of exchange rates and bank charges
and costs that may arise from conversion in negotiations and in the
agreement. It should also be stated in the main agreement as to which party
will pay those costs or whether they are deducted from the Assignment Fee
or Payment Schedule.

• It is worth considering whether an agreement should have a dedicated

schedule dealing with the issues of payments. This approach may assist the
finance department of a business regarding their legal obligations for
payments to third parties under agreement.

• The contract should be drafted to be easily read and the payments due clear.
This will then help all departments create a system to work with the finance
department to do the monthly reports, annual accounts and process payments
quicker.

• It may be that a contract summary should be created for every contract

concluded which highlights crucial facts regarding payment which can be
passed to the finance department.

• Many companies have a lot of software and storage capacity for documents
and payments but the system is only as good as the person who inputs the
data. The person who understands the contract most clearly will be the one
who has created and drafted it. Often companies are not even aware of rights
 which they hold in respect of older contracts as assumptions are made
regarding ownership without referring to the original documents.

• There is no one correct way of describing or drafting the consideration and

payment for an agreement.

• The use of an Assignment Fee in the A-Z is just one approach. It is an easy
way to deal with the problem as the details of the consideration can be in a
defined clause called the Assignment Fee which sets out the sums is to be
paid by one party the assignor A to the other party the assignee B.

• A-Z A.868 sets out a very simple definition for an Assignment Fee. Note that
the definition refers not only to the sums to be paid but the fact that the
payment is due for the assignment by the company to the assignee. There is
however no reference to payment method, costs and charges – this could be
dealt with in a separate clause.

A-Z A.868
‘The Assignment Fee’ means the fee of [figure/currency/words] payable by
the [Assignee] to the [Company] in respect of the Rights to be assigned by
the [Company] to the [Assignee].

• The Assignment Fee which can be a one off payment defined as an

assignment fee as in A-Z A.868 above.

• The Assignment Fee may be paid in a series of payments. In A-Z A.871 the
first payment in 1.1 is linked to the acceptance not the delivery of the
material for the film referred to as the delivery items. The second payment is
by a specific date subject to acceptance of the film material again.

A-Z A.871
The Assignment Fee shall be paid as follows:

1.1 [figure/words/currency] payable within [specify period] of acceptance

of the delivery items in respect of the [Film].

1.2 [figure/words/currency] payable on [date] [subject to acceptance of the

delivery items].
 1.3 [figure/words/currency] payable on [date] subject to acceptance of the
delivery items in respect of the [Mini-Series].

1.4 [figure/words/currency] payable on [date] subject to compliance with

sub- clauses [–] and [–] herein.

• A third alternative is not to use the words and definition of an assignment fee
but to use the words Payment Schedule as the definition. There would
therefore be a series of payments by the assignee to the assignor set out in a
schedule which forms part of the agreement. This method would allow a
more complicated detailed payment schedule to be created which sets out the
name of the party to be paid and the date by which any instalment is to be
paid. Payments may or may not be subject to completion of certain tasks by
either party or by a fixed date or both.

• In A-Z A.878 instead of using the words Assignment Fee there is a definition
of Payment Schedule. Payment Schedule would also be used as the
consideration reference in the assignment clause. The definition makes
reference to the total sum to be paid by the assignee B to the assignor A. The
actual series of payments are then set out. There can also be detail of the
name of the party to whom payment is to be made, the method of payment,
the bank, and the account details.

A-Z A.878
‘The Payment Schedule’ shall be the details of the payment of [sum] by the
[Assignee] to the [Assignor]. A copy of the Payment Schedule is attached
to and forms part of this Agreement as [–].

• Alternatively the assignment fee may just be a reference to a sum to be paid

in an assignment clause as in A-Z A.876.

• In A-Z A.876 a person is providing work to a company. The words are used
that: in consideration of the work which is set out, the company is to pay a
fee which is specified by an agreed date to a nominated person in [form] to
[a specific person]

You therefore know:

– The sum to be paid

 – The date by which it is to be paid

– The method of payment – is it cash, cheque or bank transfer?

– The person to whom the payment is to be made

A-Z A.876
In consideration of the work by [Name] the [Company] is to pay the fee of
[figure/currency] by [date] in [form] to [Name] which shall be in full and
final settlement. No further sums of any nature for any reason shall be due
to [Name] for the provision of his/her services and/or the exploitation of
the material provided by [Name] in any media at any time.

• Where you use a specific definition such as Assignment Fee then it is easier
to set out and clarify the actual figures to be paid described in words and
numbers and the currency for the payment stated.

• The fees and payments for the Assignment Fee or Payment Schedule are not
royalty-based figures or a percentage of another number but clearly defined
agreed figures.
 ASSIGNMENT PERIOD

• Assignment Period in the A-Z is from A-Z A.883to A-Z A.892 and all of
the clauses fall within the sub-heading General Business and Commercial.

• Other main clause headings which may be useful are Assignment,

Assignment Fee, Licence Fee, Licence Period, Term of the Agreement,
Territory, Termination and Novation.

• The assignment period can be for the full period of copyright and any
extensions or renewals or even in perpetuity or forever. However it can also
be defined to be a shorter period of time which means that the assignor then
has the chance of making more money from other agreements.

• You have an endless variety of ways in which the assignment period can be
described – it could be one month or 20 years. At the end of the assignment
period the rights could revert to the assignor. The agreement would have to
be drafted in such a way that it did have that intended effect.

• It is helpful to have a definition where the start and end of the assignment
period is clear rather than to try to define the period within the assignment
clause in an agreement itself. You then use the definition Assignment Period
in the assignment clause in which the assignment is to be made by the
assignor A to the assignee B.

• It is not compulsory to use the definition Assignment Period; it is just another

choice which you have when considering how best to draft the words for the
period of the assignment. You could also use the words Term of the
Agreement which is a main clause heading in the A-Z..

• The assignment period does not have to be limited and can still be for the full
period of copyright as in A-Z A.885.

A-Z A.885
 ‘The Assignment Period’ shall commence on the date of this Agreement
and shall be for the full period of copyright including any extensions or
renewals as far as possible in perpetuity.

• The duration of the assignment may be limited by reference to a start and end
date as in A-Z A.892.

A-Z A.892
The assignment period shall start on [date] and end on [date]. At the end of
the assignment period the [Company] may either negotiate a new annual
assignment fee or all the rights which were assigned will revert to [Name]
and/or any beneficiaries of their estate and/or the control of any trustees.

• A different approach, intended to achieve the same broad aim of limiting the
period of assignment, is provided by A-Z A.889. Here the problem for the
company would be that the assignment period will not start unless they have
accepted the work. The continuance of the assignment period is also
conditional on the company still exploiting the work and the assignor
receiving payments from them.

A-Z A.889
‘The Assignment Period’ shall commence on acceptance of the [Work] by
the [Company] which shall be confirmed in writing and shall continue for a
period of [ten] years thereafter provided that the [Company] shall be
promoting, selling and exploiting the [Work] and payments shall be
received by the [Name].

• Disputes or concerns can sometimes arise after an assignment period as to

whether or not the rights have actually reverted to the owner or assignor.
That problem can be addressed by a document saying that the rights have
reverted.

• In A-Z A.788 in the main clause heading Assignment in the Film and
Television section the assignee undertakes to execute any document the
assignor may require to confirm the reversion of the rights to the assignor.

A-Z A.788
The [Assignee] undertakes that at the end of the Assignment Period it will
 execute any document or do anything required by the [Assignor] to confirm
the reversion of rights to the [Assignor]. So that no rights in the [Film] are
held by the [Assignee] after that time.’

• It is also worth considering whether you want to limit the assignment period
to the expression the – full period of copyright and any extensions or
renewals. As you are then limited to the period of time which can be
established as relevant either at the time the agreement was signed or later if
you can successfully raise that argument.

• Why not make the assignment to extend beyond the full period of copyright?
There is nothing which prevents you making the period as long as you wish.
That is why in many agreements you see the following words added: in
perpetuity; without limitation of time; or forever.

• Especially if the subject matter and scope of the assignment extends beyond
just assignment of copyright then a long period which does not end would
make sense on that basis.
 CANCELLATION

• In the A-Z there are 43 clauses relating specifically to Cancellation from A-

Z C.001 to A-Z C.043.

• This section should be read in conjunction with the main clause headings
Acceptance, Delivery Default, Disclaimer, Indemnity, Liability, Quality
Control, Rejection, Set Off and Termination in the A-Z.

What is meant by cancellation as opposed to termination?

• In colloquial terms the difference between the cancellation of a contract and

its termination is this: when a contract is cancelled the contract as such is
treated by both parties as if it never was; but if a contract is terminated then
the contract comes to an end in accordance with the terms of the contract.

• This point is recognised in the first cancellation provision in A-Z C.001.Here

the company can cancel the contract without providing a reason provided
that it gives the customer two months’ notice. It is acknowledged by the
parties that this is not the same as termination.

A-Z C.001
The [Company] retains the right to cancel the contract without reason
provided that the [Customer] is given at least [two calendar months’]
written notice prior to [date]. This shall not be the same as ending the
contract under the termination provisions due to failure to carry out the
terms of the contract.

• Why would you want to cancel as opposed to terminate an agreement? In

terms of using one word as opposed to another there is no simple common
sense answer. The theme that runs through this work and the A-Z is to
embrace the fact that words in a contractual context mean what you agree
with the other party for the terms to mean.
• So it is more important to focus on the clauses you need in the agreement
which create the best terms for you rather than whether it constitutes a
cancellation or termination.

Background for consumers and businesses

• In any circumstances when a contract comes to an end what does matter,

particularly if money has already changed hands is the answer to the
question: what happens next?

• The area of cancellation is a very good example of the disparity between

legal theory and the real world of everyday life. There are numerous
consumer protection laws and regulations in Europe and the United Kingdom
which impose restrictions and protective measures around unfair and
aggressive trading practices which we do not intend to cover in this section.

• For example, in the United Kingdom, the Consumer Protection from Unfair
Regulations 2008, SI 2008/1277; the Consumer Contracts (Information,
Cancellation and Additional Charges) Regulations 2013, SI 2013/3134. The
Sale of Goods Act 1979 and the Sale of Goods and Services Act 1982 as
amended. This work is not intended to address the detail of those laws but to
examine ways in which the issue of cancellation may be addressed in
drafting contract.

• The first point to bear in mind is that the laws invariably apply to protect a
consumer from the unfair practices of a business. Therefore the rules are
very different in scope and application in circumstances where the contract is
B2C – a business to consumer agreement – as opposed to B2B – a business
to business agreement.

• Such consumer rights as do exist are surprisingly complex and narrow in

scope. When looked at closely for example in the context of the cooling off
period after signature of an agreement by a consumer the relevant regulations
apply in very limited circumstances.

• These consumer protection measures will apply to the contract irrespective of

the wording of the contract in any event in the United Kingdom.

• The point of this section is to address the issue that a contract will need to
 drafted in a manner that means the agreement will not be in technical breach
of the laws and regulations which govern agreements between a business and
a consumer.

• These are background factors to the drafting of the clauses. The most
important aim in this situation is to make the cancellation clauses both clear
and fair where dealing with a consumer.

• Modern companies such as have developed very sophisticated methods of

setting out terms and conditions and policies to both avoid and manage
potential problems and claims.

• With those issues in mind the challenge is to use language which has the
greatest possibility of being accepted by the consumer as being fair,
reasonable and non-technical. The greater the perception of being treated
fairly the less likelihood there is of a complaint or legal challenge.

• Therefore most online retailers whether selling a product or a service will use
terms and conditions and procedures for the cancellation of an order or
service which could arguably be accepted as clear, fair and reasonable based
on the facts.

• The point is to draft a clause which is unlikely to be challenged on grounds of

being unfair or unreasonable in respect of a consumer. It is not difficult to
draft a clause which is clearly favourable to one party. But nothing is
achieved if the provision is so clearly unfair that the end result is to
encourage widespread challenges based on its unreasonableness.

• Another aspect is to ensure that the party who has booked a service, a flight
or work or event and has it cancelled by a company for any reason is being
dealt with fairly. Therefore consideration needs to be given in every case as
to the consequences of cancellation – particularly at short notice.

Cancellation and no refund

• The most common issue that will arise when a contract is purportedly
cancelled is whether any money that already has been paid should be
returned. In addition whether there is an obligation to make further payments
of any other sums which may be due under the agreement.
• The most usual and least controversial route to take is a provision where both
parties can agree that no further additional sums are to be paid from the date
of cancellation which fall due after that date.

• As in A-Z C.036 in Sponsorship where the sponsor must pay all the sums due
to the date of cancellation. The sponsor will not be able to have any refund of
any sums paid before the date of cancellation. The company shall also not be
able to claim any expenses or costs they may have incurred before the date of
cancellation or after from the sponsor.

A-Z C.036
In the event that the [Sponsor] cancels the funding, the [Sponsor] shall not
be entitled to a refund of any sums due to the date of cancellation. The
[Company] shall be entitled to retain all such sums, but shall not be paid
any further sums by the [Sponsor] whether the costs and/or expenses have
already been incurred by the [Company] or not.

• Where a deposit or upfront payment has been made on signature of the

agreement. The decision as to whether this would be repaid on cancellation
or not will depend on whether it has been stated that the deposit is refundable
or not. If the agreement does not clearly state that the deposit can be retained
if the agreement is cancelled or terminated then it cannot be kept and must be
returned. Please also look at the main clause heading Deposit and also
Payments in the A-Z.

• Often the process of cancellation is indistinguishable in reality from that of

termination as the agreement is brought to an end.

Notice before cancellation

• There may be a notice period to be served before the cancellation of the

agreement comes into effect on a specific date. As in A-Z C.042 where the
institute is able to cancel at any time if its annual budget is reduced. The
institute must give the company a fixed period of notice during which the
company will still be paid. However no further sums shall be paid or due to
the company after the final cancellation date.

A-Z C.042
Where the [Institute] due to a reduction in its annual budget decides that it
 no longer requires the [Service/Work] at any time. Then the [Institute] shall
be entitled to cancel the Agreement with [number] months’ written notice
to the [Company] at [address]. The [Company] agrees that no further sums
shall be due to the [Company] for any reason after the expiry of the
cancellation period.

• One party may not have to provide a reason for the cancellation of an
agreement. The clause may be drafted in such a way that the party has the
right to cancel the agreement by service of a fixed period of notice which
may be one month or a year or any other period of time.

• The service of notice is not the same as providing a reason for the
cancellation. This is the same dynamic which often gets confused with
employment contracts because a notice period is not a ground for termination
but the means or process which brings the contract to an end.

• Likewise with A-Z C.040 the right to cancel is predicated upon the serving of
notice, not on any specific grounds. The difference here is that the institute
must either:

– give the consultant two months’ notice during which time the consultant
would work out his or her notice period; or

– make a payment for the sum that would have been paid for the two
months’ notice period

A-Z C.040
The [Institute] shall have the right to cancel the Agreement with the
[Company/Consultant] at any time as it thinks fit provided that the
[Company/Consultant] is either given [two calendar months] written notice
or payment is made of [two calendar months] fee in lieu of notice. In either
event the [Company/Consultant] shall not be entitled to any additional
sums, costs or compensation from such termination.

Grounds for cancellation

• In A-Z C.043 in University, Educational and Library the clause states the
grounds for the cancellation. The company has failed to provide the quality
 and level of work required by the institute. The company has accepted that
the institute is not obliged to go through a process of allowing the company
to attempt to remedy the work. The institute has the right to cancel the
agreement at any time. No further sums shall be due to the company from the
date of cancellation. Although the company would have an entitlement to
claim for work completed prior to that cancellation date.

A-Z C.043
Where the [Company] has not carried out the quality and consistency of
service and work represented to the [Institute] at the time of the
Agreement. The [Institute] shall not be obliged to permit the [Company] to
remedy the situation but may cancel the Agreement at any time and all
liability shall end and no further sums shall be due to the [Company] from
the [Institute].

• This is a very important distinction that one party may have set out in a
clause a statement which provides them with a list of grounds upon which
they may seek to cancel the agreement. This would help that party to cancel
the agreement at a later date as they could then rely on a ground within the
agreement. Otherwise they may be seeking to find another clause within the
agreement which would justify them being able to cancel the agreement.

• In A-Z C.038 in Sponsorship the sponsor has the right to cancel the
agreement by email or text. This is unusual – most agreements refer to notice
in writing. For further clauses on notice please look at the main clause
heading Notices in the A-Z. The sponsor has the right to cancel the
agreement at any time on the grounds set out in 1.1 to 1.3.

• You could add additional grounds or draft completely different reasons and
grounds which would suit your situation. This clause should make you
appreciate that you are not limited to the grounds set out in legislation and
case law. The parties can agree between themselves in the agreement any
grounds for cancellation which they wish within reason.

A-Z C.038
The [Sponsor] may cancel the Agreement by notice by email to [specify] at
[specify] or text to [specify] at [number] at any time where:

1.1 The [Company] has not acquired a licence for the use of the [Site].
 1.2 The [Site] has been made unusable due to weather conditions, floods,
contamination and/or otherwise.

1.3 Health and safety, security and/or waste disposal and access to water
have not been resolved to comply with the minimum standards
required by any relevant authority.

• However the distinction between grounds of cancellation and the notice to

cancel obscures the real issue to be addressed which is that the clause as a
whole is fair and enforceable if a consumer is party to the agreement as
opposed to a business to business agreement.

• Hence A-Z C.004 addresses the issue of both grounds and notice in some
detail, the aim in this clause is to establish grounds and methods of
cancellation. This clause is much wider than many cancellation provision as
it extends to family bereavement and other unexpected circumstances.

• The company must be notified of the reason for the cancellation as soon as
possible.

• You will see that notice may be by telephone and email. There is no reference
to writing a paper document except a fax.

• There is no immediate entitlement to a full refund even if the reason for the
cancellation is valid.

• Any sums incurred in ordering goods or services must be paid before there is
any refund.

• The deposit will not be refunded.

• The insurance premium will not be refunded.

• The amount of the refund will depend on how much notice is given to cancel
by the client before the booked date for the event, work or service.

• Note this clause has no reference to any discretion by the company to

consider any other reason for cancellation in this clause.

A-Z C.004
 It may be necessary for the [Client] to cancel the [booking/break/activity]
due to injury, medical reasons, accident, family bereavement, and other
unexpected circumstances. In such cases the [Company] should be
contacted by [telephone/email/fax] as soon as possible. The [Client] shall
not be entitled to a refund of any sums already incurred in respect of the
ordering of goods or services from third parties which have already been
ordered, invoiced or performed where payments are due or have been made
by the [Company] on behalf of the [Client]. The following sums shall be
refunded and shall be dependent on the period of notice given in each case
less the deposit and insurance premium and any third party costs:

1.1 More than [60 days] [full refund less deductible costs].

1.2 Between [40–59 days] [refund of 60 per cent less deductible costs].

1.3 Between [39–15 days] [refund of 30 per cent less deductible costs].

1.4 Between [Less than 14 days] [no refund].

Limitation of liability for cancellation

• The main clause headings in the A-Z of Access, Disclaimer, Insurance,

Liability, Loss, Product Liability and Risk should be considered in relation
to this subject.

• You may also view the cancellation clause not from the perspective of the
client or consultant but the company or institute. There may want their own
right to cancel an agreement.

• There may be a right by a company to cancel a service at any time and for
any reason as in A-Z C.016 in General Business and Commercial.

• Note that the total liability of the company is limited to the cost of the
repayment of the sum or fee paid by the client for the period of time of the
service which was not provided which falls after the date of cancellation.

A-Z C.016
The [Company] reserves the right to cancel the [Service/Order/Right of
Entry] at any time and for any reason. The total liability shall be limited to
 refund the payment made if any for the [Service/Order/Right of Entry]
which has not been fulfilled by the [Company] for any period after the date
of cancellation.

• A company may have the right to cancel an event for any reason, but may
seek to exclude liability for any costs, expenses, losses, damages and other
sums which the client may have incurred either prior to or as a result of the
cancellation as in A-Z C.014

A-Z C.014
In the event the [Company] is required to cancel the
[Event/Holiday/Concert] for any reason then the [Client] shall be entitled
to a full refund of the cost of the [Event/Holiday/Concert]. Where possible
the [Company] shall try to offer an alternative arrangement for the [Client]
to consider, but which it shall not be obliged to accept. The [Company]
shall not be liable for any additional costs, expenses, losses, damages
and/or other sums that may and/or have been incurred as a result of the
cancellation.

• In contrast in A-Z C.020 in Internet and Websites if the subscriber has not
adhered to the terms of access to the website. The company may cancel the
service or refuse access to the subscriber at any time without reason.

• The subscriber shall not be entitled to any compensation, damages, losses or

payment for loss of reputation or any other sums.

• The exclusion of liability relates to sums claimed due to cancellation by

company to the subscriber whether the sums claimed arose directly or
indirectly as a result of the cancellation.

A-Z C.020
In the event that the [Client/Subscriber/Customer] does not adhere to the
agreed terms and conditions of use and access to the [Website]. Then the
[Company] may at any time cancel the service and/or block access and/or
refuse to permit access to and/or use of the [Website] without providing
any advance notice and/or reasons for taking such action. The [Company]
shall not be obliged to justify the cancellation nor shall the
[Client/Subscriber/Customer] be entitled to any compensation, damages,
 losses, damage to reputation and/or other sums which arise as a direct
and/or indirect result of such action by the [Company].

No right of cancellation

• If the parties wish to avoid either side seeking to cancel an agreement for
good reasons or otherwise. Then it is best to confirm that understanding with
a clause such as A-Z C.003. Both parties agree that there is no right of
cancellation. Note that this does not mean that there is no right of
termination.

A-Z C.003
There shall be no right of cancellation under this Agreement and the parties
agree that the terms shall be fulfilled and the expenditure and payments
made by the [Company] for the duration of the Agreement.

• A-Z C.033 in Merchandising both parties have agreed that once a crucial
stage of the project has been reached which they have specified, then they
cannot cancel the agreement.

• As an alternative to cancellation the parties have agreed that either may

appoint a third party to fulfil their duties and work but not their legal
obligations.

• Both parties must still monitor the project and remain the main contracting
party to the agreement.

A-Z C.033
Both parties agree that they shall not have the right to cancel the
Agreement once the following stages of the [Project] have been completed
[specify]. The parties shall however have the right to reach an arrangement
for the substitution of a third party to carry out the agreement on their
behalf and with their authority. Provided that the main party remains
obliged to fulfil all the duties, obligations and undertakings and continues
to monitor and comply with the terms of the Agreement for the [Project].
 CONFIDENTIALITY

• In the A-Z there are over 92 clauses relating to Confidentiality from A-Z
C.408 to A-Z C.499.

• Please also look at the main clause headings Copyright Clearance, Data,
Data Protection, Defamation, Disclaimer, Legal Proceedings, Marketing,
Material, Privacy, Publicity and Rights in the A-Z.

• However in this particular section the confidentiality provisions are addressed

in a broader generic manner, focusing more on the issues than the particular
industry context.

Misuse of private information

• As a matter of general law in the United Kingdom there is a duty to keep

private any information which has been obtained or disclosed in
circumstances where one party may reasonably expect such matters to be
kept private and out of the public domain.

• This relatively new ground of action arose out of a very high profile case of a
model against a newspaper. The Campbell case was a new development in
the law in the United Kingdom. A misuse of private information which is
now part of the common law under the laws of tort.

• The misuse of private information protects confidential matters which are not
predicated upon a confidential relationship but where there is a reasonable
expectation of privacy.

• The high profile phone hacking cases in the United Kingdom passed the
hurdle of a breach of the common law despite the lack of a direct relationship
between the parties due to the nature of the actions taken to access the
messages on the mobile phones.
• Where care would need to be taken and an expert view provided is in the
context of the damages because, prior to the Mirror Group cases in the
United Kingdom adjudicated upon in 2015, the only real benchmark for
assessing damages for misuse of private information was the case of Max
Mosley who was awarded £60,000 in very extreme circumstances. There
have been even higher awards in more recent phone hacking cases.

• The specific issue as to how to calculate the damages which any party has
suffered as a result of their phone having been hacked is very varied.
Therefore the profile of the person, the number of incidents per person, the
length of the calls accessed and the nature of the information accessed and
how it was used, reproduced and distributed could all potentially be relevant
to the value attached to the damages.

• The issue of damages is dealt with in greater detail in the dedicated Damages
section of this work and also the main clause heading in the A-Z.

What is confidentiality?

• Previously cases of litigation relating to confidentiality arose in the context of

different types of relationships. For example personal matters imparted
between a husband and wife or between an employee and an employer under
an agreement and in such circumstances where there existed a duty of care
which by its nature was of confidential.

• This would include personal matters imparted between a doctor and a patient
as well as such information which is expressly set out under legislation as
classified as being confidential for example under the Official Secrets Acts
as amended in the United Kingdom.

• This section is concerned with clarifying and setting out the contractual basis
for protecting confidential information as it is easier and preferable to base a
complaint or claim for breach of confidence upon clauses within a written
contract than to rely on the common law duty of care.

• The bar has been raised very high in recent cases and it may be, that a case
for breach of confidence is better expressed in both common law and
contract.
• The focus in this section is therefore on the detailed wording which can be
used to protect confidential matters and the issues which most commonly
arise in an agreement.

• The extent of the clauses relating to confidentiality may vary from a single
brief clause in a contract to a long comprehensive range of clauses covering
two or more pages. This section breaks down the different elements that
these provisions are seeking to address and which may be completely
different when looked at from the perspective of either party.

• It is a mistake to assume that confidentiality is only about the protection of

confidential information. It is also about the other party avoiding an
allegation of breach of confidentiality.

• The parties will need to make sure that information which is not in fact
confidential and is already in the public domain or available through public
records is not set out in the agreement as confidential.

• There are different elements of confidentiality to consider:

– What exactly is confidential – either information, data or material which

you are trying to protect?

– Does the confidential information, data and material exist now or will it
be created at a later date?

• The clauses may seek to prevent for example:

– The use by the other party of the confidential information to their

advantage which is not permitted under the agreement

– The supply of the confidential information to a third party which may

then be used to the commercial advantage of the third party and the
supplier of the information

– The supply of the confidential information to a third party which is then

released to the public without any commercial benefit but which damages
the business of the company

• One party may be seeking to protect information as confidential and to

 prevent the disclosure to any third party.

• Whereas the other party to the agreement is seeking to avoid liability for use
or disclosure of information or data which is not in fact confidential or even
owned by the other party.

• In practice the way to address the issue of confidentiality is to ensure that

specific documents or emails or any form of information are clearly
indicated in a sensible and overt manner to be strictly confidential.

• In that way there is no need to be second guessing what the clause of a long
forgotten agreement defines to be confidential because it was made
abundantly clear at the time it was disclosed that the recipient was expected
to treat the information as confidential prior to distribution or disclosure.

How do you refer in a clause to the information which is

confidential?

• The definition of confidential information is very much in two parts:

– What is the information? and

– What is meant by confidential?

• There are two broad ways of addressing confidential information in drafting.

• One route is to seek to define the term – commercially sensitive information

or confidential information in great detail in the agreement and to make
reference to existing and future confidential information – by subject matter.

• The other route, which is less onerous, is where the agreement does not seek
to specifically define the actual information or material which is confidential
in specific terms but has a more general confidentiality clause.

• In most corporate circumstances the essence of the confidential aspect of

confidential information concerns any type of information which has
commercial sensitivity as expressed in A-Z C.481 in Services.

• The promoter agrees not to:

 – use, release, exploit or use to their advantage or to the detriment of the
company

– any commercially sensitive information, data, documents, software,

photographs or any other material in any medium

• Note this clause only applies during the Term of the Agreement.

• The clause does not apply to the promoter if the specified person at the
company has provided their approval.

A-Z C.481
The [Promoter] agrees not to use, release, exploit or use to their advantage
or to the detriment of the [Company] any commercially sensitive
information, data, documents, software, photographs or any other material
in any medium during the Term of this Agreement without the prior
express approval of [Name] at the [Company].

• In order to define the scope of the information, rights and material covered to
which you seek to apply the confidentiality provisions it is best to adapt any
clause to the facts in terms of the type of information, rights and material
covered.

• It is a matter of being very specific as to the circumstances as in A-Z C.441

in Internet and Websites which contains a list of types of information which
includes verbal communications, documents, recordings and a wide range of
types of material.

• The words – of any nature in any medium – are added at the end of the list of
information to provide a very wide definition which is not limited by the
actual list set out in the clause.

• The contributor agrees not to:

– disclose, supply, reproduce and/or distribute

– except to legal advisors, agent and accountants

– any verbal communications, representations, emails, documents, data,

 reports, recordings, film, images, records, business plans, marketing
strategy, databases, computer software, inventions, technology and/or
any material or facts of any nature in any media

• Despite the list in the clause it cannot be presumed to automatically be

confidential. It will only be confidential where it is made clear that the
information is confidential by a director of the company, an officer,
consultant or other professional advisor.

• This clause therefore allows the possibility that one set of information may be
confidential as it was made clear at the time it was imparted but another is
not as no instructions were imparted to the contributor regarding
confidentiality.

• There is a very strong argument that It would be unreasonable to expect a

contributor to accept that everything imparted to them under the agreement
could be classed as confidential.

A-Z C.441
The [Contributor] agrees and undertakes not to disclose, supply, reproduce
and/or distribute (except to his/her own professional legal advisors, agent
and/or accountant) any verbal communications, representations, emails,
documents, data, reports, recordings, film, images, records, business plans,
marketing strategy, databases, computer software, inventions, technology
and/or any material or facts of any nature in any media which is supplied in
circumstances where it is made clear by the [Company] and/or its directors,
officers, consultants and/or professional advisors that it is confidential.
Both parties agree that no reference is to be made to the terms of this
Agreement to any third party without the prior written approval of both
parties.

• There is a different approach to the concept of confidentiality in an agreement

between a ghostwriter and an individual to write a book. The ghostwriter is
likely to come into contact with very personal details of an individual during
the course of their research for the book which is a commercial project as in
A-Z C.452. Here the ghostwriter is being paid for their adherence to the
clause. Note that in this clause there is no reference to confidentiality as
such.
• The ghostwriter undertakes not to:

– disclose any material of any nature to any third party nor

– make any statement (whether true or not)

– concerning the private, sexual, personal and public life or views of

[Individual]

– to any third party using information

– acquired directly or indirectly during the course of the preparation of the

[Work] or from any other source of any nature

• The clause applies for the term of the agreement and thereafter and could
continue indefinitely until the information is in the public domain.

A-Z C.452
The [Ghostwriter] undertakes not to disclose any material of any nature to
any third party nor make any statement (whether true or not) concerning
the private, sexual, personal and public life or views of [Individual] to any
third party acquired directly or indirectly during the course of the
preparation of the [Work] or from any other source of any nature. The
[Ghostwriter] further agrees that such non-disclosure shall operate during
the course of the Term of this Agreement and any time thereafter
[indefinitely/until such material and/or information is in the public
domain].

Employment

• Many confidentiality provisions in employment contracts state that the duty

of confidentiality applies even after the contract of employment has come to
an end. There is no reason why this should apply in all employment
agreements.

• There would be a strong argument in common law even without a written

contract that a person is obliged to keep confidential information which was
communicated or supplied to them under a duty of care and in confidence.
• However it is easier and more reliable to seek to highlight the obligations of
an employee through their employment contract rather than to rely on the
terms of a staff handbook or common law.

• The fact that the obligation to keep information confidential in an

employment contract is set out in a contractual clause is a powerful deterrent.
It also provides evidence of the fact that the attention of the employee was
drawn to the need to be aware of and adhere to the requirements of
confidentiality.

• A-Z C.408 is a fairly common confidentiality clause in an employment

contract for a business executive. The restriction on the executive relates to
business plans, trade secrets and confidential information relating to the
company.

• This clause could be extended to cover more areas such as patents, inventions
and development projects.

• Note the restriction only applies to the company which directly employs the
executive and not any parent company or subsidiary. The clause could be
revised to extend the net wider if the executive has access to information and
material at those companies.

• There is a cut-off date where this clause will not apply which could be for
example six months or five years. It would be unreasonable to make this
clause last forever and could make the clause unenforceable by the company.

• The clause has also been drafted to exclude information which is released by
the company or a third party into the public domain.

A-Z C.408
The [Executive] shall not divulge nor communicate to any person (other
than those who need to know or with proper authority) any of the business
plans or trade secrets or other confidential information relating to the
[Company] which he may have received or obtained while in the service of
the [Company]. This restriction shall continue to apply after the
termination of his engagement for a period of [specify duration] but shall
cease to apply to information or knowledge which may come into the
public domain otherwise than through the default of the [Executive] or
 which has been received by the [Executive] from a third party not entitled
to disclose the material.

• The clause is also addressing the restriction on the employee only to

communicate confidential matters on a – need to know – basis which is a
very useful expression to deter the dissemination of information in a manner
that the employee might have otherwise thought was acceptable or marginal.

• If for example the executive imparted confidential information to the

company’s legal advisors who were dealing with a case for the company or
the company’s accountancy firm he could not be held in breach of this clause
if he or she were merely fulfilling the duties required by the company.

• A-Z C.414 is an example of a confidentiality clause which embraces the

practice of letting employees know if information is to be treated as
confidential and the duration of the period, so that there is a notified expiry
date by which the information data or material is no longer confidential.

A-Z C.414
The [Company] agrees that the [Employee] will be notified in each case if
any information and/or data is confidential to the [Company]. Further the
[Company] agrees to also provide the [Employee] with a notified expiry
date where it is no longer confidential and the [Employee] will be released
from the obligation.

• In reality confidentiality clauses are probably the most widely ignored and
routinely breached of all the terms of an employment contract. First people
like to gossip and secondly, where an employee is working themselves up
the corporate ladder from one competing business to another. One of
principal reasons for the promotion is precisely because of the confidential
information that he or she brings to the new job.

• But confidentiality provisions still have a strong currency partly because they
do act as a deterrent with regards to flagrant breaches. Such breaches as
occur routinely tend to take place discreetly and within accepted or at least
tolerated boundaries.

• Also executives who routinely acquire and are trusted with confidential
 information tend to be smart enough to work out that the worst thing to be
disclosed is that the fact that they cannot be trusted with sensitive
information.

• Therefore it is one matter to act in a professionally discreet manner; it is quite

another to post a damning quote on a social media site or to talk to the
media. In reality confidential clauses act as a warning to those in a position
of authority and responsibility to behave discreetly and professionally and in
a manner that does not embarrass the company causing an adverse impact on
its image and reputation or causing it to suffer financial losses or both.

• The most common form of disputes over confidential information relates to

supplier and customer data and sales information.

• Another example of broadening the parameters of a confidentiality clause is

A-Z C.409 which takes the opportunity to ensure that the executive must not
seek to represent the company’s views unless permission has first been
obtained.

A-Z C.409
The [Executive] is not permitted to publish any letters or articles purporting
to represent the views of the [Company] unless prior permission is obtained
from the [Company].

Confidentiality clause after expiry or termination

• If the clause regarding confidentiality is to survive the expiry or termination

of the agreement then it should specifying state that fact in the agreement.

• In 1.6 of A-Z C.430 in General Business and Commercial the confidentiality

clause continues until the parties agree to end the clause or where the
information becomes public. There is no end date for this clause.

• The parties have agreed that the term of the agreement as well as all
communications, documents and records should be confidential. The
confidential information is limited to disclosure to the directors of the board
and any statutory body and professional advisors.

• Any other disclosures of confidential information requires the consent of both

 parties.

• This clause is very wide and is intended to exert control over the confidential
information and its distribution.

A-Z C.430
Both parties to this Agreement agree that they shall maintain the following
matters in the utmost secrecy and confidence:

1.1 The terms of this Agreement.

1.2 All oral communications, representations and information of any

nature made by the parties and/or their advisors pursuant to the
conclusion and fulfillment of this Agreement.

1.3 All documents, data, reports, recordings, records, software, formula,

processes, inventions or information or any material or facts of any
nature in any media which were supplied or conveyed prior to or after
the conclusion of this Agreement and/or pursuant to this Agreement.

1.4 Further that all such matters shall be restricted to the knowledge of [the
Board of Directors/other] of either party, and any statutory body which
may have the right to request any details, including any professional
advisers. In such cases all persons shall be required to abide by a
request of confidentiality.

1.5 No further disclosures shall be made without the prior written consent
of both parties.

1.6 This clause shall survive the termination and/or expiry of this
Agreement and shall continue until matters are in public domain or
until such time as the parties mutually agree to release each other from
the undertaking.

• Another method of maintaining the integrity of the confidentiality clauses is

to state a realistic period of time after which matters will be deemed to be
non-confidential or out of date as expressed in A-Z C.411. Here the
maximum period in which information could be deemed confidential is three
years after the end of the agreement with the employee. The question of
 which information is classed as confidential will change if it is placed in
public domain by the company.

A-Z C.411
When the [Executive] ceases to be employed by the [Company] for any
reason then the [Executive] shall only be obliged to keep confidential
information which was not already or does not become placed in the public
domain by the [Company], by its reports, marketing or other employees.
Any restriction as to the use of confidential information shall only apply
for [three years] thereafter it is presumed to be out of date and no longer
relevant to the business circumstances of the [Company].

Statements to the media and press

• It is not uncommon for the confidentiality clauses in an agreement to also

address issues far wider than sensitive confidential information some of the
claims may relate to the disclosure of any statement which may have a
detrimental effect on the company as expressed in A-Z C.418 in DVD,
Video and Discs.

• The consent of both parties is needed before any statement is released to the
media or public which is not consistent with the agreed marketing or which
affects either business.

A-Z C.418
The [written/verbal] consent of both parties shall be required in the event
that a statement, press release or conference or other material is to be
distributed to the media or the public which is not consistent with the
agreed marketing material or which in any way affects either of the parties’
businesses whether beneficial or detrimental.

Disclosure of confidential information to advisors and family

• Whilst disclosure of confidential information to legal advisors, accountants,

banks and other professional bodies and advisors are often recognised as an
exception in practice. It may not be specifically dealt with as an exception to
the confidentiality clauses in the agreement.
• Disclosure to family members which of course happens is not a recognised
exception either but nor is it usually covered in an agreement.

• In A-Z C.461 in the Purchase and Supply of Products the supplier and the
seller are agreeing not to disclose:

– at any stage to any third party except their own professional advisors –
only lawyers, accountants and bankers

– any confidential business or future plans, information, data or material of

the other party including but not limited to disclosures made during the
course of negotiations of this Agreement and the terms concluded

• Note this clause would not apply to information which is either already in the
public domain or becomes so at a later date.

A-Z C.461
The [Supplier] and the [Seller] shall not disclose at any stage to any third
party (except their respective professional legal advisors, accountants and
banks) any confidential business or future plans, information, data or
material of the other party including but not limited to disclosures made
during the course of negotiations of this Agreement and the terms
concluded. This clause does not apply to anything already in or
subsequently released into the public domain by a third party not acting in
concert with the [Supplier] or [Seller].

• It is also not common to acknowledge that the party will share such matters
with immediate family members as in A-Z C.415.

A-Z C.415
The [Employee] agrees that where he/she is informed that any material to
which the [Company] has access and/or which is supplied by a third party
is under an embargo and/or likely to prejudice civil and/or criminal
proceedings and/or the subject of a legal action. Then the [Employee]
agrees and undertakes not to distribute, supply, reproduce and/or
disseminate any such material to any person except their immediate family
members.
Legal proceedings and confidentiality

• As a general rule a party will be protected against a breach of contract on

grounds of confidentiality if they were obliged under a court order or by a
‘court of competent jurisdiction’ to disclose confidential information. In
effect the judicial intervention overrides the contractual duty.

• There are very specific but limited circumstances where a disclosure is

protected as a matter of law where the information is of public interest. This
book does not seek to cover the detailed circumstances of legally protected
disclosures. The protection afforded to disclosures made during the course of
judicial proceedings is a complex subject as there are many different
scenarios involving public interest, defamation and contempt of court.

• It is not uncommon during the course of a civil or criminal trial for a witness
to ask a judge to be ordered or even simply requested to make a disclosure
for the comfort that he or she has been required by law to disclose some
detail. For example the detailed terms of a settlement agreement which
otherwise would be a clear breach of a confidentiality restriction in that
agreement.

• A journalist may decide that his professional duty to maintain the

confidentiality of his or her sources is a greater personal obligation than the
risk of being sent to prison for contempt. Part of the complication is because
of the extent of a trial judge’s discretion in each case.

• In order to avoid this type of debate a clause could be included in the

agreement which accepts that disclosure of confidential information for the
purpose of legal proceedings is not a breach of the agreement as in A-Z
C.482 in Services.

A-Z C.482
The [Agent] and the [Artist] mutually agree that each of them shall not
during the Term of this Agreement publish in writing or otherwise or make
known to the public or act in any way likely to result in publication of any
matter concerning the business affairs of the other without their prior
consent. This shall not apply after the expiry of this Agreement nor in the
event of legal proceedings being instituted by either party.
• Another way in which some contracts create an exception to the duty to
maintain confidentiality is by a brief forms of words such as:

– except as provided by law; or

– except as required by legal process

• These words are often inserted in a confidentiality clause without any depth
or detail and so are ambiguous.

No confidentiality

• There is no obligation to include confidentiality clauses in an agreement and

they are sometimes used when they are completely inappropriate.

• The parties may agree to have no such clauses and to impose no restrictions
on the disclosure of information, confidential or not.

• The whole intention of the arrangement may be to circulate and promote a

product, an event or an idea as widely as possible. The motivation and ethos
of the party is the guiding factor here. However it is worthwhile stating this
fact in a clause to avoid a misunderstanding as to the nature of what can be
disclosed.

• In A-Z C.413 in Employment the company has agreed that there is no

confidentiality imposed on the person under this agreement. Most companies
do not include this clause – they just fail to mention confidentiality at all.

A-Z C.413
The [Company] agrees that there are no confidentiality restrictions imposed
on [Name] by virtue of this Agreement. That [Name] shall not be
prohibited from sharing and/or distributing any information which relates
to the [Company] and/or its business at any time.

• Where the project involves a consortium for a educational project as in A-Z

C.499 in University, Library and Educational. The parties may be reassured
by this clause which makes it clear that the aim is to have a flow of
information and data to advisors, consultants, third parties and the media.
A-Z C.499
The [Consortium] agree that any information distributed and/or supplied by
one party to any other party involved in this [Project] shall not be treated as
confidential and/or restricted in anyway and may be released to
professional legal and tax advisors, employees, consultants and form part
of any report, press release and may be distributed, supplied and/or
reproduced by a third party.
 COPYRIGHT CLEARANCE

• There are over 200 clauses relating specifically to Copyright Clearance in

the A-Z from A-Z C.595 to A-Z C.807.

• There are other main clause headings in the A-Z which you may find helpful
in relation to this subject Access, Adaptation, Assignment, Blog, Brand,
Buy-Out, Collecting Societies, Exclusivity, Compliance, Copyright
Notice, Copyright Warnings, Credits, Disclaimer, Domain Name,
Downloading, Indemnity, Liability, Logo, Marketing, Material, Moral
Rights, Originality, Podcast, Rights, Waiver.

The broad scope of copyright clearance

• To understand the issues surrounding copyright clearance it is necessary to

have a basic legal knowledge of copyright and other intellectual property
rights – whatever the jurisdiction in which the agreement is to be concluded
or carried out. The background material is the legislation, regulations,
directives and case law. However you do not directly always use the exact
wording in these documents to draft the clauses relating to copyright
clearance. As the definitions and words may be defined either too widely or
too narrowly and may not encompass the type of facts upon which your
specific agreement is based.

• The whole aim of a copyright clearance clause is either to ensure that rights
and material are cleared for an agreed purpose or to ensure that it is certain
as to who is to pay the bill for the exercise of rights and material which have
been cleared.

• A copyright clearance clause requires therefore an understanding of the

purpose and aim of the parties and what they actually wish to do with the
rights and material which are supplied or may be created. You need to
envisage the pathway of creating the rights and material as well as the final
 product or service which may be created.

• There is a very definite practical element to copyright clearance and the

process of the administration of the documents needed to obtain clearance
and to make payment.

• Attention must also be given to matters which are ancillary to the copyright
clearance such as Copyright Notices, Credits, Moral Rights and Waivers
which are all dealt with in the main clause headings in the A-Z.

• You can look at copyright clearance in the narrow sense of the clearance and
payment for use of rights and material in which copyright exists and is
actually protected.

• A more practical approach is to take a wider view and to look not just at the
clearance and payment for material and rights in which copyright exists but
also at copyright and rights which will come into existence in the future
through the project or work which is to take place.

• Therefore you consider both present and existing copyright and future
copyright – rights which will be developed and come into existence. Here
you should think about not just what you the licensee or assignee will be
creating but all third parties involved in the project or work.

• Copyright clearance in essence involves the clearance of such rights,

permissions, consents and approvals from any third parties who may have
rights in the product – be it a book, film, play, documentary, app, website,
physical merchandise – before the product is released or commercially
exploited.

• There are two aspects: not only the types of copyright which may be created
at each stage of the project but also the types and formats of material which
will be created at each stage as each may have its own copyright quite
separately from another part of the material. There may be for instance
artwork, images, caricatures, sound recordings, film, text, photographs, an
index, music, lyrics, or a prototype sample of a product.

• Many clauses which deal with copyright clearance and payments also cover
not just copyright matters but also the wider issue of clearance of other types
of intellectual property rights which may need to be cleared and consent
 obtained for their use and for which payment may have to be made.

• The wording in the clause relating to copyright clearance may therefore

appear wider than just copyright because the intention of the clause is to
address rights of third parties however they may arise. The term copyright
clearance is often used to embrace and cover all forms of third party rights.

• Copyright clearance clauses are subsequently usually drafted widely because

the precise circumstances they are seeking to address may need to be
adaptable to the facts. The drafting approach is therefore to try to make sure
that all potential circumstances are covered.

• There may also be circumstances in which there is no recognised copyright or

other intellectual property ownership in law as a matter of fact. A library,
institute or company may have physical possession of the actual material and
so authorises reproduction and use by third parties under a licence for a
licence fee and royalty.

• The clearance of the rights by a third party may result in a licence in which
conditions are set out:

– which arise due to a contractual obligation by the third party to another

person; or company or

– as a result of an existing copyright licence held by the third party; or

– due to moral rights which have been asserted by another person; or

– due to rights held by a collecting society; or

– due to a registered trade mark or service mark or community mark or

design associated with it

• In some cases such as an original manuscript for the publication of a book.

The copyright may be mainly held by the author and the material owned and
controlled by third parties be quite limited. There may be illustrations,
photographs, maps, images.

• It is common sense that any third party should be approached for their
consent to their material being included in the book or the book cover and
 index or other work. A non-exclusive rather than an exclusive licence would
usually be obtained with either a one-off fee relating to all the potential
forms of exploitation disclosed by the author or a payment schedule related
to the exercise of the rights by the publisher.

• The licence would also set out any required copyright notice, credit, title or
company name, trade mark or logo or web reference that may be required.
Please look at the main clause headings Copyright Notice and Credits in
the A-Z for further clauses.

• There may be circumstances where a manuscript contains a short quotation

from another book or source and provided the quotation is supported with a
suitable credit to the third party book and author and the quote is not out of
context or derogatory or defamatory and is very short and only for review,
criticism or educational research purposes. Then it may be in some cases be
acceptable not to have obtained specific clearance from the copyright owner.

• However from a personal viewpoint it is a much better policy to inform a

third party that you intend to use a quote and to provide them with the
opportunity to refuse rather than to face a legal challenge at a later date
which may result in the reprinting of the book or its withdrawal from
publication or an expensive legal case.

• If you take steps to clear and obtain permission you may also discover the
fact that a different copyright owner now exists rather than the party which
you have approached as the presumed owner as the copyright has been
reassigned to another person or company.

• There may also for instance be an estate or archive which deals with the art or
books or music of a deceased person and often they adopt a very protective
policy to those who seek to benefit without authority.

• Many publishers and authors have registered some or all of their rights with
collecting societies in the United Kingdom and worldwide who control and
administer the rights on their behalf.

• It is possible for authors and publishers to be listed as excluded by the

Copyright Licensing Agency. So that the authors and publishers can manage
and licence the copyright in their works directly to third parties as they wish
and are in full control of the rights. There is no presumption that any
 collecting society can make that they control and have the right to exercise
rights on behalf of any owner of any copyright unless you have directly
provided them with authority to do so.

• It is the same in the music industry where some music publishers, musicians,
singers, songwriters, composers, arrangers and producers may have
registered their copyright ownership in respect of music, lyrics, compositions
and sound recordings, and films and other rights with the MCPS and PRS
Alliance and other collecting societies in the United Kingdom and
worldwide.

• Please look at the section on Collecting Societies in the A-Z for more details.
They is also a directory at the back of the A-Z.

• Leading television, radio, advertising, media, newspaper, distribution,

manufacturers, music and publishing companies all treat their copyright and
intellectual property rights ownership as valuable business assets which they
exploit and from which they generate revenue. They are proactive in
pursuing those who infringe their rights however small the enterprise and so
failure to seriously consider the potential risk of not clearing copyright,
rights and material is a very big mistake.

• So the point is not to underestimate the burden, expertise, time and costs
needed to make sure that the copyright and other rights are cleared. For those
reasons the section on Copyright Clearance in the A-Z is extensive as this
area is so crucial.

Signature and records

• The first issue is not the question of each and every clearance that needs to be
obtained. It is a question of who is responsible for making sure that the
documents are created, concluded, stored and kept properly. The clearances
need to be obtained on time and within budget and records kept in good
order to verify – if challenged – that the clearances have been obtained for
the precise purposes intended. It is important to create a documentary archive
of clearances, permissions and payments.

• The methods and process for the formalities can vary but what is important is
the evidence of the clearance and to have a record.
• Emails are now an accepted form of writing but an email is not the same as a
signed document, unless procedures have been agreed to accept an electronic
signature. Obviously an electronic message – however stored or retrieved –
ranks higher than a mere verbal assurance or promise but a signed and dated
physical document – a hard copy – will still be available when the person
who organised the consent has left the company and their email account has
been closed.

Distinction between clearance and payment

• Whether you are concluding a publishing agreement, a development

agreement for software and an app or organising a festival or creating your
own website or marketing a new range of products. There is always the
potential that there may be copyright and other intellectual property rights
which you do not own for which you may need to seek the consent of the
third party owner and obtain permission and clearance for the use of such
copyright and other rights.

• There are two stages:

1. The permission and consent; and

2. The fee or payment which has got to be made to the copyright owner or
other rights owner for the agreed use of the rights and it may also refer to
different formats of material

• Failure to address the issue of the clearance of copyright and other rights held
by a third party as well as to address the issue of who is paying the bill is not
uncommon and can lead to a project being delayed or cancelled.

• A licensor or company may agree to clear the copyright and pay for the sums
due for the use of rights.

• A company may agree to clear all the copyright and all the intellectual
property rights and any other rights which may be required for the
exploitation of film, book or product by a distributor. The company may pay
all the costs of such clearances or the distributor may agree to pay all the
costs of such clearances.

• In A-Z C.710 in Internet and Websites the licensor has agreed:

 – to clear all contractual, copyright and any other rights in respect of the
Work and any parts

– and any associated copyright notices, credits, moral rights, trade marks,
service marks, logos, text, graphics, sounds and music

• The licensee – the Internet Service Provider – has agreed to pay all the fees
and sums due relating to all material for use on its website except for the
text. Note the reference to material rather than the Work by the licensee. The
material is wider than the definition of Work – alternatively you could use
Work and material.

A-Z C.710
The [Licensor] shall be responsible for the clearance of all contractual,
copyright and any other rights in respect of the [Work] and any parts and
any associated copyright notices, credits, moral rights, trade marks, service
marks, logos, text, images, graphics, sounds and music. The [Internet
Service Provider] shall bear the cost of all payments relating to all material
for use on its [website] except for the [text] which shall be the
responsibility of the [Licensor].

• It is important for the parties to be clear as to where the responsibility lies for
clearances, but that does not mean to say that the responsibility for clearance
and payment cannot be shared or divided between the parties. Party A
therefore may clear some rights and pay for the costs but party B may agree
that they will clear and pay for anything else.

• In A-Z C.642 in Film and Television the assignor must clear all copyright
and any other rights musical or otherwise, including consents required under
the Copyright Designs and Patents Act 1988 as amended. The assignor is
required to obtain clearance in respect of all the rights assigned under the
agreement.

• The assignor is only obliged to pay up to the sum which is set for the total
costs for clearances in the budget in the agreement. Any additional costs
must be paid by the assignee.

A-Z C.642
In respect of the [Film] the [Assignor] undertakes that all copyright and
 any other rights musical or otherwise, including consents required under
the [Copyright, Designs and Patents Act 1988 as amended] shall be
obtained and cleared in respect of the rights assigned under this
Agreement. Provided that the [Assignor] shall only be responsible for such
clearance payments as are set out in the Budget. That the [Assignee] shall
be responsible for all other sums that may be due from the exploitation of
the [Film].

• The author in A-Z C.740 in Publishing is writing a book which will be

distributed and sold by the publisher in hardback and paperback in the
United Kingdom and serialised in a newspaper or magazine. The author is to
clear and pay for all the rights for that agreed purpose.

• The author is not under any obligation to clear or pay for the rights for any
other use. The publisher will be required to clear and pay for any other rights
that it wants to exploit. The publisher cannot deduct these additional costs
from the sums due to the author.

A-Z C.740
The [Author] agrees that he/she shall bear the cost and responsibility of
obtaining all consents, clearances and copyright in any material included in
the [Work] including, but not limited to, quotations, photographs,
references, drawings, tables, index and titles in respect of the rights granted
to the [Publisher] in this Agreement for the publication of the [Work] in
hardback and paperback in the United Kingdom, and the serialisation of
[Work] in a magazine or newspaper. The [Author] shall not be under any
obligation to clear any other rights in the [Work]. In the event that any
further additional rights in the [Work] are granted to the [Publisher] at a
later date then it is agreed that the obtaining of and payment for any further
clearances, consents and copyright shall be the responsibility of the
[Publisher] and that the [Author] shall not be liable or have any such sums
deducted from his royalties.

• There may be mechanical reproduction rights and performing rights to be

considered as in A-Z C.604 in DVD, Video and Discs.

• Here the assignee has agreed that it shall be responsible for all payments that
may be due. Note the issue of clearance would have been dealt with in a
 different clause.

A-Z C.604
The [Assignee] undertakes and agrees that it shall be entirely responsible
for all payments due or which may become due in respect of the
performing rights in any music and the mechanical reproduction of the
[Film/Recording/DVD].

• The same issue may also apply in film and television as in A-Z C.641. The
assignor of the series has agreed that all copyright and any other rights shall
be cleared for use in all media.

• The assignor has agreed to pay the costs and any sums due for performing
rights and the mechanical reproduction of the series.

A-Z C.641
In respect of the [Series] the [Assignor] undertakes that all copyright and
any other rights including footage, stills, music, and performances and
consents required shall as far as reasonably possible be obtained and
cleared for use in all media. The [Assignor] confirms that it shall be
responsible for any payments in respect of the exploitation of the [Series]
including any sums due in respect of the performing rights in any music as
are controlled by the Performing Rights Society or a society affiliated to it
and any sum due in respect of the mechanical reproduction of the [Series].

• The clause in A-Z C.595 in DVD, Video and Discs is much broader and
more detailed and covers the clearance and cost of:

– all clearances, consents, permissions, contracts, copyright and intellectual

property

– artists, performers, contributors, employees, locations

– musicians, music, lyrics

– products

– collecting societies
• The company has agreed to clear and pay for the cost of any use of the Work
which could be a film, programme or footage which is owed to third parties
in connection with the Work which is produced, recorded or reproduced in
the DVD or any part which is manufactured, distributed, sold, rented or
supplied. You could also add word exploited to make it wider.

• If the company is the licensee then the licensor is not responsible for any
clearance or costs and that fact should be stated in the agreement.

A-Z C.595
The [Company] shall be solely responsible for all arranging, obtaining and
bearing the costs of all clearances, consents, permissions, contracts,
copyright and intellectual property, artists, performers, contributors,
employees, locations, musicians, music, lyrics, products and collecting
societies or trade organisations, for production or post-production required,
due or arising to third parties arising out of or in connection with the
[Work] produced, recorded or reproduced on the [DVDs/Videos] or any
part created, manufactured, distributed, sold, rented or supplied under this
Agreement.

• In contrast in A-Z C.600 in DVD, Video and Discs the licensor must be
responsible for clearing and paying for:

– all consents, clearances, waivers, licences and payments

– in respect of all copyright, intellectual property, contract and other rights

and obligations

– owed to third parties – arising directly or indirectly – from any material

– reproduced in the DVD of the film

• Note the words – including but not limited to – where it then lists the type of
rights, clearances and consents that may be required.

• The licensor is supplying a copy of all the consents and clearances and
contract obligations to the licensee

• The licensee is not paying for any clearances or consents and if it has to pay
 any can deduct the cost from sums due to the licensor.

A-Z C.600
The [Licensor] shall be solely responsible for the consents, clearances,
waivers, licences and payment in respect of all copyright, intellectual
property, contract, and other rights and obligations due or owed to third
parties arising directly or indirectly from any material reproduced in the
[DVDs] of the [Film] in respect of the exercise of the rights granted
hereunder including but not limited to artistic, musical, literary works,
sound recordings, films. The [Licensor] shall supply to the [Licensee] at
the [Licensor’s] cost and expense upon request by the [Licensee] copies of
all consents, clearances, waivers, licenses and details of contract
obligations. In the event that the [Licensee] shall be required to make any
payment to any third party for any reason due to the failure of the
[Licensor] to obtain clearance or consents then the [Licensor] agrees to
reimburse in full the Licensee together with an additional fee of [ten per
cent] of such amount which shall be paid within [28 (twenty eight) days] of
receipt of any invoice by the [Licensor]. In the event that the [Licensor]
should fail to pay any such sums then the [Licensee] shall be entitled to
deduct them from any sums due to the [Licensor] under this Agreement.

• In A-Z C.622 in DVD, Video and Discs the clearances arise in respect of a
film or recording or pilot. The assignor has agreed to pay for the clearances
and consents as well as the payments due for a fixed period for a specific
country and certain rights.

A-Z C.622
The [Assignor] confirms that it shall be responsible for the clearance,
acquisition of rights, consents, releases, permissions, waivers, contracts,
and payments of all costs, fees, royalties and other sums due in respect of
the following matters in the [Film/Recording/Pilot] in respect of the use,
reproduction, performance, mechanical reproduction, performing rights,
transmission, distribution and licensing of the [specify] Rights in [country]
from [date] to [date]:

1.1 Artistes, musicians, production, technical and editing personnel and

companies, consultants, services, promotional and marketing persons
and companies.
 1.2 Music, lyrics, stills, films, products, ringtones, sounds, computer
generated material, images, graphics, text, slogans, service marks,
trade marks, domain names, artwork, sound recordings, internet
material and [other].

• Where there are products which are being licensed and exploited then the
clause may focus on different aspects as in A-Z C.763 in Purchase and
Supply of Products

• The supplier is responsible for all the clearances and consents and payments
– which includes copyright, patents and designs and any collecting society
for the licence granted for the product and all the packaging and marketing.

• In 1.2 the company agrees to notify the supplier of any claim and in 1.3 to
assist where the supplier makes a decision to remove any material.

A-Z C.763

1.1 The [Supplier] shall be responsible for all clearances, consents, design,
patent, copyright and performance and reproduction payments and any
other fees that may be due to any third party and/or collecting society
for the design, development, production, manufacture, distribution,
sale, supply and marketing and promotion of the [Product] and its
packaging by the [Company] in [country] from [date] during the term
of this Agreement.

1.2 The [Company] agrees to notify the [Supplier] in the event of any
allegation and/or claim being brought to its attention in respect of 1.1
above.

1.3 The [Company] agrees that where the [Supplier] decides to change,
adapt, alter and/or delete any part of any material as a result of a
decision by the [Supplier]. That the [Company] shall assist the
[Supplier] and at the [Suppliers’] cost add, remove and/or delete
material provided that such actions would not create a threat of
criminal and/or civil proceedings against the [Company] for any
reason.

• The clearance may also be more related to the ownership of a name of a

 product, company name, slogan or trade mark. You can have assurances
provided as to ownership, consent and permission within the agreement.
Please look at the main clause heading Title in the A-Z for further clauses.

• In A-Z C.671 in Film and Television in 1.3 the sponsor agrees that:

– it is the sole owner of and controls all copyright and any other rights

– in the Sponsors Logo which is described and a representation of which is

attached to and forms part of the agreement

• The association makes a similar assurance in 1.4.

A-Z C.671
The [Sponsor] and the [Association] agree to the following:

1.1 That all copyright and any other rights including but not limited to the
Satellite, Cable, Digital, Terrestrial Television Rights, the Theatric
Rights, the Non-Theatric Rights, the internet, Computer, Television
and Gadget Games, Merchandising and Telecommunication and
Telephone Rights] in the [Recordings] shall be the sole exclusive
property of the [Association].

1.2 The [Association] shall be entitled to retain all sums received at any
time from the exploitation in any nature, format, process or method in
whole or part or derived directly or indirectly from the [Recordings].

1.3 That the [Sponsor] agrees it is the sole owner of or controls all
copyright and any other rights in the [Sponsor’s Logo] and the use of
the [Sponsor’s Logo] by the [Association] and the [Television
Company] under this Agreement will not expose the [Association]
and/or the [Television Company] to any criminal or civil proceedings.

1.4 That the [Association] agrees it is the sole owner of or controls all
copyright and any other rights in the [Promotional Logo] and that the
use of the [Promotional Logo] under this Agreement will not expose
the [Sponsor] to any criminal or civil proceedings.

• A website, app, software and downloads raise further areas of clearance and
 costs which would not apply to a product. There is likely to be an interactive
element, films, blogs, and a whole array on connections between the website,
mobiles, the retail shops if any and all the associated competitions,
marketing and promotional material and events. The scope could therefore
be only really understood based on the facts in each case and adapted to
work with the parties as to their potential use of the website.

• In A-Z C.711 under Internet and Websites the company has agreed to be
responsible for the costs and clearance of a wide range of types of rights and
material from the launch date. Prior to that date all the costs regarding
clearances and rights should have been stated in the designers report and paid
under the payment schedule.

A-Z C.711
The [Company] agrees that it shall be responsible for all copyright,
consent, and other fees due to third parties arising from the operation of the
[website] from [date/launch date] for all the materials of any nature
whether comprising of text, images, whether visual or subliminal internal
or external, whether graphics which are static, interactive or moving,
photographs, drawings, plans, sketches, electronically generated material,
sounds, sound effects, music, logos, trade marks, design rights,
background, banners, bookmarks, borders, tables, captions, characters, clip
art, cartoons, computer generated art, maps, image map links, common
gateway interface script, date, domain names, footnotes, headings,
hypertext, video, DVD, CD-Rom, material for telephone, mobile,
telecommunication system or other device for transferring, downloading
supplying or distributing sound, vision, text and icons or any other
development and any and all combination of such elements, software and
information. Prior to that date all such costs shall have been included in the
report of the [Designer] and paid under the Payment Schedule.

• In A-Z C.723 in Merchandising the licensee has agreed and acknowledged

that it must pay for all costs incurred in the commercial exploitation of the
licensed articles.

• Note the list includes development, production, manufacture, packaging,

storage, distribution, supply, selling, advertising and promotion costs.

• The costs could be a direct cost or owed to a third party or for services – and
 anything else. Please note the words – or otherwise – at the end which widen
the clause still further to cover other examples.

A-Z C.723
The [Licensee] acknowledges that it is solely responsible for all costs
incurred in the commercial exploitation of the [Licensed Articles]
including development, production, manufacturing, packaging, storage,
distribution, supply, selling, advertising, promotion whether incurred as a
direct cost or owed to a third party for clearance of any rights of any nature
or for services or otherwise.

• Where you are allowing a licensee the right to sub-licence. Then you must
also consider who will bear the cost of any payments which arise if the sub-
licensee does not pay any clearance and consent fees and other payments.

• In A-Z C.726 in Merchandising the licensee has agreed that if any sub-
licensee either fails or is unable to pay any sums which fall due from the
exercise of the rights that the licensee has to make such payments. In
addition, the licensee must also pay any sums due to the licensor which the
sub-licensee does not pay for any reason.

A-Z C.726
Where the [Licensee] grants any sub-licence to a third party then the
[Licensee] shall bear the cost of any sums that may fall due arising from
the exercise of the rights which have been granted where such sub-licensee
fails and/or is unable to pay. The [Licensee] shall ensure that any such sub-
licensee is solvent and capable of paying any sums due prior to the
conclusion of the Agreement. The [Licensee] shall be responsible for all
sums due to the [Licensor] which any sub-licensee fails to pay.

• The issue of clearances and consents can also be expanded to cover

compliance with policies, health and safety, alcohol licences and legal costs
as in A-Z C.797 in Sponsorship. Here the sponsor for an event has agreed to
pay for a long list of matters that may be incurred by the company or any
third party appointed by them which may be required for the event.

A-Z C.797
The [Sponsor] agrees to bear the cost all clearances, consents, waivers,
 releases, trading, alcohol, licences, agreement, reproduction, marketing,
advertising, health and safety compliance and certificates, administration
and legal costs and expenses that may be incurred by the [Company] or any
third party appointed by them in using the [Sponsors Logo] and [Products]
for the [Film/Event/other] whether this involves trade or government
bodies, local authorities, television companies, owners of premises, other
sponsors or advertisers or any other person, body or company.

Fair Dealing – do not presume clearance is not required

• Often the most difficult judgement to make is whether any form of clearance
is required at all. There is an understandable reluctance to avoid creating
issues where none may exist and a fear that alerting third parties to a
potential claim or rights may create problems. But it is a counter-productive
and somewhat naive strategy to think that rights of third parties are more
easily addressed later rather than earlier. It can also be a great deal more
expensive to resolve a problem after a product has been manufactured or
published or broadcast or made available in shops.

• There are a few accepted circumstances where clearance is not necessary, but
these are extremely limited and if there is any doubt the parties are best
advised to be cautious and to seek prior consent. So you are advised to seek
clearance on a pro-active basis rather than make your own assessment.

• Copyright in the United Kingdom is not infringed unless the copying is of a

substantial part of an original work.

• Do not assume that the word ‘substantial’ in law means that you cannot be
found to have infringed the original work of the copyright owner if your use
is of a relatively small amount of material.

• There have been many situations where the use of a small amount of material
of an original work has been found to be an infringement.

• So do not fall into the trap of thinking that you can therefore copy and
reproduce a small amount of material belonging to a third party and it will
not be found to be an infringement. This is one of the most commonly
misunderstood legal principles – it will be found to be an infringement in
most cases.
• The word ‘substantial’ is very misleading as it has a very narrow judicial
interpretation over the years. The end result being best encapsulated in the
quote: ‘if it is worth copying it is worth protecting’.

• In other words if there is copying to any extent, it is optimistic and naive and
likely to fail if you rely on the technical defence of substantiality. The courts
traditionally interpret the word substantial in a qualitative sense and not a
substantive one.

• The best course of action to take, if the view is that the use is or will be minor
and possibly not substantial, is to make a good faith and open approach to
the copyright owner disclosing the precise nature and extent of the proposed
use and to seek permission.

• A person or company may also seek to try to give themselves comfort by

asserting that the use by them is fair dealing.

• The legal defence of fair dealing is very narrow and applies only to purposes
for review or criticism or research for non-commercial purposes where there
is a sufficient acknowledgement of copyright ownership and the work has
been made available to the public.

• The defence will not apply if the original work is not available to the public –
or if there is no reference at all to the original copyright owner.

• If in doubt of the narrow extent of fair dealing look at the actual wording in
sections 29 and 30 of the Copyright, Designs and Patents Act 1988 as
amended which provide different defences in the United Kingdom.

• Note the defence of fair dealing only applies to a literary, dramatic, musical
or artistic work.

• Section 29(1) of the Copyright Designs and Patents Act 1988 as amended

‘Fair dealing with a literary, dramatic, musical or artistic work for the
purposes of research for a non-commercial purpose does not infringe any
copyright in the work provided that it is accompanied by a sufficient
acknowledgement.’

• Section 30(1) of the Copyright Designs and Patents Act 1988 as amended
 Fair dealing with a work for the purpose of criticism or review, of that or
another work or of a performance of a work, does not infringe any
copyright in the work provided that it is accompanied by a sufficient
acknowledgement and provided that the work has been made available to
the public.

• It should be apparent that these defences are very narrow in scope and the
legal defence of fair dealing is a long way removed from the colloquial
expression of dealing with something fairly. Fair dealing is a very specific
statutory defence not a matter of personal discretion as to what is fair in the
circumstances.

• Care should always be taken to take full cognizance of the obligation to give
a sufficient acknowledgement. If in doubt as to whether the
acknowledgement is enough then it is better to follow the copyright notices,
title and ISBN, name of the author and publisher and be generous than make
this information too short. The information must be in a position and size
where it can be easily read in relation to the material which has been copied.

• There are two very different attitudes to dealing with the issue of whether
there is a sufficient acknowledgement. In the first you make a personal
decision which may be challenged at a later date or alternatively you make
direct contact with the copyright owner and ask whether your proposed
acknowledgement is acceptable and that they have no objection to the use
which you have disclosed to them.

Public domain and out of copyright are not the same – do not
presume clearance is not required

• In this part we address in the context of copyright clearance the reason why it
is so necessary to avoid the most common and often costly misconceptions
that arise. We try to highlight the dangers of accepting the optimistic view
that copyright clearance is too much of a hassle, not needed or a waste of
time as no one will notice.

• It is fundamental to any project and failure to take it seriously can lead to

very high costs at a later date for material which could have been either left
out because it was too expensive or for which an alternative could have been
found which fell within the budget.
• Copyright in any particular form does not last forever. In all circumstances
there are limitations and the most common one is that in the United Kingdom
copyright only subsists for a period of 70 years following the end of the
calendar year in which an author dies.

• This 70-year period is the general rule although there are exceptions and the
rule does not have universal application in every jurisdiction throughout the
world.

• One of the most common and serious misjudgements made is the confusion
and misuse of the terms – out of copyright – and – public domain – they are
two very different concepts.

• If a work in which there is copyright can be accessed on the internet then the
material is as a matter of fact in the public domain. That does not mean
however that because the work is in the public domain that it is also out of
copyright.

• There are limited circumstances where consent has clearly been given to the
use of the material. If someone writes a letter to an editor for a letter column
at a newspaper they cannot object if the letter is printed. It would of course
be another matter if the letter was headed ‘private and confidential’ or ‘not
for publication’ but the point is obvious.

• If the circumstances clearly imply a licence to publish or otherwise exploit a

work. Then there is no infringement because consent – either expressly or by
implication – has been given.

• But great care must be taken in taking this principle too far. It is one matter
for a newspaper to print an open letter; quite another for a freelance
journalist to think they can publish a book of letters on the presumption that
all the text is available for use because it has appeared in a newspaper.

• The consent may clearly have been given to a particular person or company
for a particular purpose, not extended to anyone who chooses to use the
material.

• Another common and dangerous misconception is that if the author or creator

of a work cannot be identified after reasonable enquiry that there is then no
copyright protection. That is not the case.
• In practice, if enquiries which by any common sense measure are reasonable
cannot identify the author. Then there is a reduced likelihood that they are
going to suddenly appear when the work is made available to the public.

• If the author or their estate does make contact then the work may have been
classified in the United Kingdom as a work by an unknown author and in
consequence, the copyright in that work would have expired 70 years from
the date the work was first made available to the public. As opposed to 70
years from when the author died because no-one could work out when the
author died.

• However it is also likely that the author may be able to show that you did not
make any real effort to contact them and did not check with any websites,
universities, libraries, collecting societies and archives to trace the author. So
the author could show that your intention was to take commercial advantage
of their material and so seek a commercial settlement based on the sums you
have received from the exploitation of the authors’ work as an alternative to
litigation.

• But the point to understand and accept is that a person’s legal rights do not
disappear because you cannot trace their ownership, even using your best
efforts.

• What is more common these days is for a polite notice to appear on the cover
or packaging stating along the lines:

– despite our best efforts we have tried to no avail to trace the copyright
owner – if you believe you have rights in this text/image please contact
us via our website

• That approach does not provide a legal defence but it will in all likelihood lay
the ground for a sensible resolution of the unauthorised use of the material if
the owner appears at a later date.

• The lesson is to be cautious and not be led into a false sense of security
simply because an internet search engine does not quickly reveal who is the
copyright owner or author of a work and how he or she may be contacted.

• The statements above are by no means intended to be an exhaustive analysis

of the numerous and often complex defences to copyright infringement
 which obviate and negate the need to undergo a process of clearance.

Formalities for copyright clearance

• Possible approaches and formalities include:

– Verbal agreement – no documents and no signature and no assignment

– Email exchange – document attached and no signature and no assignment

– Email exchange – document attached and electronic signature

– Verbal and email exchange not binding and exchange of formal signed
original documents

– Exclusive licence

– Non-exclusive licence

– Assignment

– Partial Assignment

– Trade Mark User Licence

– Release document

– Quit claim

– Novation

• It is a good idea to draw up a list of the types of copyright, intellectual

property and other rights and material to be created including for example:

– New titles, places, characters and names

– Text, script

– Quotes

– Domain names
– Trade marks, service marks, logos

– Performances, interviews, characters and other contributors

– Lyrics and music – singing and playing of instrument

– Performing rights of music and sound recordings

– Mechanical reproduction rights of music and sound recordings

– Film – with soundtrack included or excluded, DVD, video

– Sound recordings

– Artwork, graphics

– Images, stills, photographs

– Maps

– Databases and data

– Location access – use of name of place and house, sculptures, paintings

and statues

– Braille, sign language and translations

– Computer software and computer generated material

– Website – access online or download

– Mobile phone and app

– Book, print form – magazine and newspaper

– Television – cable, satellite, terrestrial, internet, subscription, pay per

view and closed circuit

– Radio

– Conferences, theme parks, musicals

 – Product, product placement

– Sponsorship and funding

– Health and safety, product liability tests, insurance

• Please look at the section on Rights for further rights and the section on
Material and Marketing which are all main clause headings in the A-Z.

• Note you may need to clear not just the copyright but also other intellectual
property rights. You may be acquiring or using material of different types
which is separate from copyright and rights.

• You need to think about what copyright and rights and material you need for
packaging, marketing and promotions and how it will be used.

• Think of the different purposes you wish to use the rights and material for;
the different formats and rights and material which exist now but also those
that will be created at different stages of the project and who you wish to
own those rights and material.

• Clearances can take a number of very different forms ranging from informal
permissions, a simple non-exclusive or exclusive licence, to quite lengthy
and precisely drafted release documents, quit claims, waivers and a wide
range of other legal documents for the acquisition and supply of rights and
materials, distribution and sale.

• In practice there does tend to be two extremes of copyright clearance: on the

one hand the clearance may involve a substantial or major process requiring
a considerable amount of work outside of and ancillary to the main
agreement. Other types of clearances may be far less onerous.

• Circumstances may arise which make it obvious that it is not sufficient for
the head or principal agreement to gloss over third party rights in a
generalised manner. An example would be where use is made of a trade
mark registered and controlled by a third party.

• If an author decided to write a book about a major brand, whether that brand
was a football team or an established retailer or even a branded product.
Then the likelihood is that the work in some form or manner would seek to
 reproduce the image, text or logo that is at the centre of that brand.

• Trade mark infringement is easily asserted and very tricky and expensive to
deal with. Once a trade mark has been registered in a specific class in a
specific territory the owner of the registration need only prove that the
unauthorised use of the registered mark dilutes the integrity of the mark that
is registered in the United Kingdom and Europe. There is no need to prove
loss or damage or even an intention to infringe.

• If clearance – in other words, permission – is sought to use a trade mark in a

controlled and authorised fashion then more often than not the parties agree
terms in the form of a trade mark user licence agreement. There is an
example in contract 20 in The Media and Contracts Business Handbook,
5th edition by the authors.

• In a different context, for example a documentary film, there may be people

interviewed or filmed in circumstances where the person is more than –
incidental – to the recording. Each person will be required to give their
consent to being filmed and for the use of their contributions for the
proposed film. It would almost certainly include a request for the assignment
of all the rights held by the person to the company. In order to do so some
form of consideration and payment would be required.

• In a poetry competition for a television company all the entrants were

required, as a condition of entry and participation, to assign the rights to the
company if they were chosen for publication in a book or were to be read on
television. In return the company agreed to publish the winning poems and to
pay each person who assigned their copyright in the poem a small nominal
fee.

• The most common way of addressing the copyright clearance needed in those
circumstances is with a signed General Release Form such as contract 89 in
The Media and Business Contracts Handbook, 5th edition by the authors.

• This type of agreement is best drafted to be less than one or two A4 pages, in
plain language which deals with the facts to ensure clearance is obtained for
the areas and rights needed. A ten-page document is not required, would be
inappropriate and would create difficulties which could have been avoided.
The aim is to create documents which are clear and succinct and to get the
 document signed and the agreement concluded efficiently and quickly.

• Novations are covered under a main clause heading in the A-Z. Novation is
in essence the process where one party assumes the rights and obligations of
another. If a contract is between A and B, a Novation substitutes C for B.

• Novations are a very useful tool in the context of clearances. If for example
one company A is selling a list of books and publishing rights to another
company B so that ownership or control is transferred to B. Then there
should be due diligence as to which rights are actually held by the publisher
as a result of an assignment and which are licensed to the publisher under an
exclusive licence. The authors at the company A may all have different
agreements with the company A and the company A may own some rights
and not others which are held by the author.

• Some of the agreements may permit the rights to be transferred or assigned to

a third party and some may not. Please look at the main clause headings
Assignment and Third Party Transfer in this work and the A-Z.

• In such circumstances the author’s original agreement with the original

publisher needs to be reviewed and an informed judgement made as to
whether the author has clearly already provided consent to the rights granted
to the original publisher being transferred to a third party at later date.

• Otherwise the author may have to be asked to provide consent to the transfer
or assignment from company A to company B and to agree to sign a
novation document.

• If the author’s consent to the transfer is needed then the best way of doing
that is for all three parties in question – the original publisher company A,
the new publisher company B and the author – to sign a brief document
called a novation. A novation has the simple effect of the rights and
obligations agreed between company A and the author, being transferred to
company B and the author.

• A widely used pro-forma Novation is in contract 33 of The Media and

Business Contracts Handbook, 5th edition by the authors.

• Often one party may take the view that a third party may or may not have an
interest in the product they are seeking to acquire rights in and exploit.
 Therefore, in order to be cautious, it is advisable to request a quit claim from
parties who may have a potential claim or interest.

• If a film production company wishes to acquire all the necessary rights to

make a film based on an author’s work. A document called a quit claim or
release form is often included at the back of the agreement which requires
the signature of third parties who potentially may seek to make a claim. By
signing the document the third parties will confirm that they do not have any
interest or copyright or other rights in the book or film or any reason to
prevent the film being made. A trustee of a charity or the estate of one of the
subjects of the film may also provide such consent. Such a document does
not prevent a commercial financial arrangement and an exclusive licence
being granted by the author to the production company for the development
and exploitation of the film.

• If the film production agreement is directly between the author and the
production company. The publisher may still be required to sign the quit
claim to confirm that they have no interest in the film rights in the work.

• Likewise the parties to the agreement may be the production company and
the publisher and the quit claim may need to be signed by the author to
confirm that the film rights can indeed be transferred by the publisher.
 COPYRIGHT NOTICE

• In the A-Z Copyright Notice clauses are set out from A-Z C.808 to A-Z
C.923.

• Please also refer to the main clause headings Access, Brand, Copyright
Warnings, Credits, Domain Name, Disclaimer, Logo, Marketing,
Material, Rights, Title, Trade Marks and Waiver in the A-Z which you
may find useful.

The importance of a copyright notice

• The positive aspects of the benefit of displaying a copyright notice on all

copies of a work or product or any packaging or marketing material should
not be underestimated.

• Both the Universal Copyright Convention and sections 104 and 105 of the
Copyright, Designs and Patents Act 1988 as amended make it clear that a
copyright notice constitutes a clear notice and presumption of copyright
ownership by one party to any third parties.

• We are not looking at the question of the jurisdiction which these legal
documents cover nor any other particular directives and legislation which are
merely legal background to the drafting issues.

• The focus in this section is the range of possible contract clauses relating to
copyright notices and other credits which you may insist that a third party is
required to use under a licence for your work or product.

• You may insist that a copyright notice appears on all copies in any format
which are based on your text, image, film or sound recording, photograph or
logo whatever the form of adaptation. However you will also still need to
address the issue of the ownership of the whole of the adapted new version
as well.
• You may require a copyright notice to appear on posters, websites, apps and
marketing and promotional material which is using the title of your work or
book or product or characters from it or images associated with it.

• If you have a website you may display a copyright notice in relation to

ownership of your material on that site.

• Often the issue of the copyright notice is also looked at in conjunction with
looking at the trade marks, credits, logos, slogans, images and words, lyrics,
music, photographs, film, recordings, music, services, products and software
that may need to be used for a project.

• You will need to think about the different methods that will be used to create
material and who will own the copyright and any other intellectual property
rights which may be created in the future – not just those which exist now.

Display, reproduction and use of a copyright notice

• There may be more than one copyright notice as a separate copyright notice
may appear in relation to ownership of different material and each owner of
original copyright or, if it has been assigned, then an assignee.

• The way in which the precise form of the copyright notice is set out more a
matter of convention and practice but is best summarised in A-Z C.811 in
DVD, Video and Discs.

A-Z C.811
The parties agree that they shall follow the [Universal Copyright
Convention] in respect of the notification of claim to copyright and
ownership of the [Work]. From the time of first publication all copies of
the [Work] published with the authority of the [Author] or copyright owner
shall bear the symbol © accompanied by the name of the copyright owner,
the year of first publication placed in such manner as to give reasonable
notice of claim of copyright. The parties agree that the copyright notice
shall be as follows [specify].

• The most basic approach is to have a c with a circle around it and the name of
the copyright owner directly beside that and then the year of publication. The
year of publication will be the year in which the material, work or product or
 film is released to the public – it does not have to be a commercial release for
money, it can be charitable or educational or anything else.

• It should be obvious that the named copyright owner should be the person or
company who actually owns the copyright and not a parent company or
subsidiary. There is no protection from the notice if the wrong copyright
owner is displayed.

• You therefore need to be careful with the names of the contracting parties to
the agreement and who you wish to own the copyright – they are two
completely different issues. Please look at the main clause headings of
Authorisation, Capacity and Parties to the Agreement in the A-Z for
other related subjects.

• It may be that the original copyright owner has assigned all the copyright to a
new company or person after the date of the original agreement. In such
circumstances the new company or person would display a new copyright
notice with their name not that of the original copyright owner.

• The copyright notice may make reference to the original copyright owner but
it is not an obligation to do so. Many companies make reference where the
status of the original copyright owner adds to the status of the brand.

• As regard the reference to a year which you would use for the new copyright
owner as opposed to the original. If there was a new product or version
distributed to the public then the year of that release would be added to the
copyright notice.

• In relation to the distribution of a film by a distributor in A-Z C.828 in Film

and Television. The original copyright owner has a copyright notice on the
film and all the marketing material. The copyright ownership has not been
transferred to the distributor they merely have a licence for distribution.

• Note the expression ‘all rights reserved’ which is next to the copyright notice
which is common as an additional warning to third parties.

• The distributor has an agreed credit near the copyright notice.

A-Z C.828
© [Company] [year]. All rights reserved
 Manufactured, sold and distributed by [Distributor]

• A contract may impose legal obligations on a licensee to ensure that all

copies of a work or product or film or other material have on it a copyright
notice.

• There are four issues which may be dealt with in one – or even four –
contract clauses depending on the circumstances:

– What should be included in the copyright notice?

– Where should the copyright notice be displayed or used?

– Is there a right to change the copyright notice?

– Is there a right to omit the copyright notice from any material?

• A-Z C.811 above is intended to be included in an agreement with clause A-Z

C.810 below. Here the licensee has been supplied with a copy of the film by
the licensor and the licensee is entitled to exploit the television and DVD
rights.

• The licensee in 1.1 has agreed to ensure that:

– the copyright notices, credits, trade marks, service marks, designs, logos
and moral rights in the film; and

– any packaging, advertising, publicity or promotional material notified by

the licensor

– shall not be deleted, changed or altered in size, order or position

A-Z C.810
The [Licensee] agrees and undertakes to ensure that:

1.1 All copyright notices, credits, trade marks, service marks, designs,
logos and moral rights in the [Film] and in any packaging, advertising,
publicity or promotional material notified by the [Licensor] with the
[Film Material] shall be transmitted or incorporated as required by the
[Licensor].
 1.2 That it shall not delete, change, or alter the position, size, order or fail
to transmit any of the matters in 1.1 in the exploitation of the
[Television Rights/DVD/other] Rights in the [Film] or parts or any
associated material.

1.3 That where an error, omission, or other failure to comply arises that the
[Licensee] shall use its [best/reasonable] endeavours to comply with
the requests of the [Licensor] to remedy the position.

• A film is produced by a company for a film or television series and it is also

adapted for DVD and Blu-Ray release in A-Z C.829 in Film and Television.
The film is based on a book. There is a copyright notice for the book to the
author or publisher and one for the company that produced the film. The
distributor has a credit but no copyright notice.

• The reason for the copyright notice here for the label, cover, packaging and
marketing material is because although there is often not a copyright notice
for these material. The ownership of the artwork and other material derived
from the original copyright in the book at it is important that it should be
protected.

• If the artist or photographer has not assigned the copyright to the author,
publisher or company. Then there could be a copyright notice for the
artwork, photographs or logo to the artist or photographer.

A-Z C.829
© [Name] and [Name] in the [Book/Character] [year of publication]

[Company] in the [Film] © [year of release/other]

Manufactured and distributed under License by [Distributor] in [language]

in [countries]

© [Name] in the label, cover, packaging and marketing material [year]

• In A-Z C.872 in Merchandising there are different owners of the artwork – as

opposed to the software or music – but each contributor will receive a
copyright notice or a credit based on the facts.
 A-Z C.872
© [year – year] [Copyright Owner] Based on [Work] by [Author]

Artwork/Cover © [year] [Name]

Computer generated material © [year] [Name]

Software © [year] [Name]

Lyrics © [year] [Name]

Music © [year] [Name]

Film © [Title] [year] [Name]

DVD/Disc Distributed by [Name]

• The focus of attention may be on the copyright notice and other credits in a
book and on a website and in marketing as in A-Z C.875 in Publishing. In
this clause a schedule of the copyright notices, credits, trade marks and logos
is attached with not only text but also sample representation of the layout and
images which are part of the agreement.

A-Z C.875
The [Company] shall ensure that any copyright notices, credits, moral
rights, trade marks, service marks and logos included in the publication of
the [Work] in [form] shall appear in the same form on the [Company’s]
website. The [Licensor] shall also be provided with the following
[copyright notice, credit, trade mark, logo] in respect of the reference to or
the use of the [Work] in any advertising, publicity, marketing and
distribution material as set out in Appendix [–] and samples of which are
described and exhibited and form part of this Agreement.

• The copyright and intellectual rights ownership position can be quite

complex in relation to a large project as in A-Z C.831 in Film and Television
for a television series. The creation of a list of roles then forces the issue of
who is due a copyright notice and who is receiving a credit or
acknowledgement.
• The issue can then also be addressed as to the order of the list, the size of the
font and shape and location in relation to the range of material which is
likely to be produced and exploited.

A-Z C.831
The parties agree the following credits and copyright notice for the
[Series]:

1.1 Based on a book entitled [specify] by [Author]

1.2 Adapted by [Writer] in collaboration with [specify]

1.3 Translated by [specify]

1.4 Music and lyrics by [specify]

1.5 Orchestration and sound recording by [specify]

1.6 Produced by [specify]

1.7 Director [specify]

1.8 Special effects and animation by [specify]

1.9 Costumes [specify]

1.10 Equipment [specify]

1.11 Performance of songs and singing [specify]

1.12 Cast [specify]

1.13 Locations [specify]

1.14 Editing [specify]

1.15 Lighting [specify]

1.16 Animals and livestock [specify]

1.17 Production Company [specify]

 1.18 Television Company [specify]

1.19 Distribution Company [specify]

1.20 [other].

• Alternatively you may address the issue of copyright notices, trade marks and
other labelling by setting out the details in a schedule attached to the
agreement which forms part of the terms by which the licensee is bound.
This approach allows images and other specific detail to be attached.

• In A-Z C.862 in Merchandising there is a definition of the Product and the

Product Package below. The Product Package is the packaging and
marketing material for the Product.

• The drafting of the clause in this way with definitions makes it easier. As you
can state the copyright notices, credits, logos and other materials are to be
displayed on each and every item or used in any packaging or marketing in a
list which is attached to the agreement.

A-Z C.862
The [Licensee] shall ensure that the following words are set out on each
and every item of the Product and the [Product Package] [trade mark/trade
mark registration/copyright
notice/warning/other/text/slogan/position/size/order] [specify] and an
example of each is attached to and forms part of this Agreement.

‘The Product Package’ shall mean all material associated with the
[Licensee’s Product] including any packaging, labels, advertising,
promotion and publicity material, films, videos, television and radio
commercials and any other visual or sound recordings, photographs,
computer generated graphics, scripts, artwork, music, DVDs, CD-Roms,
CDs, internet, or mobile phones.

• Where a licensee has acquired an exclusive licence to sell and distribute a

product they may also be entitled to licence third parties. Therefore you want
to ensure that again the copyright notice and any other trade marks and
credits are not only used by those third parties, but used in a manner which
you find acceptable.
• In A-Z C.870 in Merchandising the licensee has agreed that both it and any
distributor or sub-licensee or marketing company shall ensure that:

– the copyright notice is on each product

– the copyright notice shall not be deleted or removed

• The licensee must send the licensor proposed samples and final versions of
the product and copies of all packaging and marketing material for the
written approval of the licensor. This clause is very useful and allows the
licensor to exert control over the work of the licensee and protect the
copyright.

A-Z C.870
The [Licensee] agrees and undertakes to ensure that the [Licensee] and any
distributor, sub-licensee, consultant and/or marketing company and/or may
be engaged by and/or under contract to the [Licensee] shall:

1.1 Ensure that the following copyright notice will be incorporated on

every copy of the [Product] which is based on the [Work]: [name]
[year] and

1.2 Not at any time delete and/or authorise the removal and/or omission of
such copyright notice. The copyright notice shall be placed in such
manner and position as to give reasonable notice to the public of the
claim of copyright.

1.3 Send to the [Licensor] for the prior written approval of the [Licensor]

(a) All proposed drafts and copies of any advertising, marketing, and
press releases and promotional material before it is issued to the press
and/or public including email, website material, banners, trade
exhibition material, catalogues, brochures, flyers, display stands and
point of sale material

(b) Drawings and samples of any prototype and the final version of the
[Product] before any tools for manufacture are created and/or the
production, distribution and/or sale to the public

(c) Drawings and samples of any prototype and the final version of the
 [Product] before production, distribution and/or sale to the public of
all packaging

• There is no current policy for a copyright notice or credits for a blog and it
would seem that there is a far greater current concern regarding the domain
name, any slogan, any potential trade mark and the brand image of the blog.
However the same considerations are still relevant and A-Z C.859 in Internet
and Websites there are some ideas of areas to consider which can have a
copyright notice, credit or other acknowledgement for a blog.

A-Z C.859
[Blog title] © [year] [Name/Writer/Company]

[Blog Image] © [year] [Name/Artist]

[Blog Slogan] © [year] [Name/Writer]

[Blog Photograph] © [year] [Name/Artist]

[Blog Database] © [year] [Name/Writer]

[Blog Film] © [year] [Name/Company]

[Blog Sound recordings] © [year] [Name/Company]

[Work] sourced and reproduced under [non-exclusive/exclusive] licence

from [Company/Collecting Society] written by [Author] © [year]
[Company/Author]

[Blog Website] owned and controlled by [Name/Company] and hosted by

[Name/Company].

• In the context of an app in A-Z C.860 in Internet and Websites there is more
focus on the ownership of interactive element and software and data.

A-Z C.860
[App title, logo, image and slogan] © [specify]

[App hardware] [specify]

 [App Software] [specify]

[App Programme and Animation] [specify]

[App Maps/Games/Prizes] [specify]

[App Data] held by [specify]

All rights reserved and no unauthorised use and/or reproduction permitted.

Subject to terms and conditions of access and use for authorised members
of the public only. Permission may be withdrawn at any time without
reason.

• If a university licenses a distributor to reproduce the details of a research

project as A-Z C.921 In University, Library and Educational. The university
may require that, not only does the university have a copyright notice on all
copies that are distributed, but also professors and research personnel and
other third parties who participated. The issue of copyright notice, credits,
logos and other material which must be displayed is then best dealt with by a
list which is attached to the agreement which the distributor must adhere to.

A-Z C.921

1.1 The [Distributor/Licensee] agrees to provide the following copyright

notice; [name] [year of first publication], credit, and logo and slogan to
the [Company/Author] which shall be displayed in a prominent
position on each and every copy and in every style, format and media
on anything based or derived from the [Work/Service/Products] or any
part so that it can be clearly read by any member of the public and/or
purchaser. A copy of which is attached in Schedule [–] and forms part
of this Agreement.

1.2 The [Distributor/Licensee] agrees not to reproduce, supply, release,

and/or market [Work/Service/Products] which do not bear the
copyright notice to any third party. The [Distributor/Licensee] shall not
at any time delete or authorise the removal and/or omission of such
copyright notice.

1.3 The [Distributor/Licensee] undertakes that the following copyright

 notice, credit, and logo and slogan to the [Company/Author] in 1.1
above shall also be incorporated on any material based on or derived
from the [Work/Service/Products] including discs, tapes, brochures,
flyers, on all packaging, labels, jackets, sleeves, posters, catalogues,
advertisements, press releases, display stands at exhibitions, websites,
posters and in any other media created, developed, commissioned,
licensed, sold or supplied by the [Distributor/Licensee].

1.4 The [Distributor/Licensee] agrees and undertakes that it shall not

acquire any copyright, trade mark, service marks, design rights, logo or
any other intellectual property rights and/or computer software rights,
names, words and titles in respect of the [Work/Service/Products]
and/or the [institute] and shall not attempt to register any rights and/or
interest and/or authorise others to do so.

• Where a consultant is commissioned to write a report or a person carries out

research for content to be published on a website or in a book or for
reproduction in any form as in A-Z C.905 in Services. Then every agreement
should ensure that the consultant must set out in the report details of any
material which he or she has used in full or in part or which is derived from
the work of a third party – either based on copyright ownership or other
intellectual property rights. In this clause the consultant will also have to
supply contact details and sums which will have to be paid for copyright
clearance.

• Failure to ensure that the consultant does this may allow the company to
assume that the consultant has supplied completely original material which is
not correct.

A-Z C.905
The [Consultant] agrees that when preparing, compiling and writing the
Report that he/she shall ensure that all third party ownership of the
copyright and/or intellectual property rights and/or any material shall be
suitably acknowledged and highlighted in the Report in the form of a
copyright notice and/or other relevant credit. The [Consultant] shall
provide a complete separate list of the title of the work, the source used and
any reference, the contact details, confirmation as to whether there are any
copyright and/or contract issues outstanding and/or whether the material is
cleared for use by the [Company] and if so the payments that may be
required.
 COPYRIGHT WARNINGS

• Copyright Warnings are addressed as a dedicated main clause heading in

the A-Z from A-Z C.924 to A-Z C.956.

• Other main clause headings which should be considered include Access,

Brand, Copyright Clearance, Copyright Notice, Credits, Disclaimer,
Domain Name, Downloading, Indemnity, Liability, Moral Rights, Title,
Trade Marks and Waiver in the A-Z.

What is a copyright warning?

• A copyright warning is not a copyright right notice or credit and has is not
based on any legislation. It is a business practice which has been developed
in the film, video, toy and software industry which then expanded into other
areas.

• It is merely an additional method of making it clear to a third party that the

company who owns the rights is taking a very proactive and aggressive
stance to those who may seek to infringe their rights in some form.

• A copyright warning does what it says – which is to act as an additional

warning to a third party.

• The term ‘copyright warning’ has no legal basis but the specific legal
function that it serves is to place the party on notice that:

– certain specific acts are not permitted; or

– conversely that only certain acts are permitted

• An important legal consequence of such copyright warnings being ignored is

that the party who has received such notice is at greater risk of a claim for
aggravated damages in the United Kingdom under Copyright Designs and
 Patents Act as amended under section 97 which states as follows:

(1) Where in an action for infringement of copyright it is shown that at the

time of the infringement the defendant did not know, and had no reason
to believe, that copyright subsisted in the work to which the action
relates, the plaintiff is not entitled to damages against him, but without
prejudice to any other remedy.

(2) The court may in an action for infringement of copyright having regard
to all the circumstances, and in particular to: (a) the flagrancy of the
infringement, and (b) any benefit accruing to the defendant by reason of
the infringement, award such additional damages as the justice of the
case may require.

• Where there is an allegation of flagrant infringement against a defendant

company, that it has copied a product without authority or consent and sold
and distributed it for commercial gain. The existence of a copyright notice on
the product and also a copyright warning is crucial evidence to counter the
argument that the defendant did not know or had no reason to believe that
copyright subsisted in the work.

• This point is very real in practice where there is an allegation of flagrant

breach as the evidence of the copyright notice and copyright warning will
often result in the other party being more likely to settle the case. Otherwise
the defendant will be exposed to the potential risk of losing the case with
consequent even higher legal costs and damages.

• It common now for companies of all sizes and institutes of all types to
formulate a policy and procedures with respect to the use of their products,
services and materialby third parties.

• A company or copyright owner or any other owner of intellectual property

rights should display their policy on their website and in their terms of
tading, and in their corporate documents.

Types of copyright warnings

• There are many different ways in which a company or individual may seek to
place a copyright warning. It may be done by a clause in a contract for the
 supply of services or work or products. There is no limit on which type of
contract this may potentially be used in – the only question is what copyright
are you seeking to protect and who owns it?

• You may be seeking to protect the copyright which is owned by a third party,
but whose products or rights you have permission to use at a venue such as a
gallery or theatre. For example at an exhibition where people need to be
given a clear warning not to take photographs of the exhibits.

• A starting point would be A-Z C.928 In General Business and Commercial

which addresses the issue in language intended to be readily understood as a
warning. This type of wording is intentionally threatening and aggressive to
create the impression that the company will not hesitate to pursue any person
who infringes its rights. Note the reference to the fact that it does not matter
whether the person has made a financial gain or not. This would therefore
apply to someone who has passed on copies to a colleague or friend without
regard to the copyright situation. In reality however enforcement against
every individual would be very difficult and expensive. This clause is also
then just as much a policy statement by the company as a warning.

A-Z C.928
The [Company] has a strong policy of copyright enforcement and will issue
a charge and take action against any person and/or business who in any part
of the world is discovered to have illegally reproduced and/or exploited this
[Work/Project] whether they have made money from it or not.

• It is often necessary to have very detailed and direct copyright warnings in

the terms and condition for use of or access to computer software, discs,
websites, apps and material which can be downloaded to a mobile or gadget
or laptop. The reason for this type of clause being more common in these
areas is because there is a much higher risk of a person or company ignoring
the issue of copyright ownership.

• The clause may be drafted quite widely as in A-Z C.930 under Internet and
Websites. Here the person who is being permitted access to the website is not
permitted to:

– to supply, transfer, distribute, or copy

 – all or large extracts of these webpages

– to any third party at any time

• The webpages can only be used for personal research. All material must only
be provided with the credit requested. Note this warning does not specifically
refer to use for educational purposes and so it is ambiguous. It would
therefore be appropriate to seek clarification from the company rather than
assume it is permitted. As personal use could mean only use at home and not
at university.

• Any commercial use will require the prior written consent of the company.

A-Z C.930
You are not permitted to supply, transfer, distribute, or copy all or large
extracts of these webpages to any third party at any time. You may keep
copies at your personal address for your own use and research, but any
commercial work, regular exchanges with others of text, pictures, data or
other parts or any contribution to another website, book, film, or other
adaptation using any of the material on this [Website] will require our prior
written consent. Failure to obtain permission could create a risk of being
sued for copyright infringement and a claim for all the legal costs. In any
event all material sourced from this [Website] should be credited as follows
[–].

• A literary estate, library or institute or a publisher or newspaper may have

developed as a matter of policy. That a third party company or person may
make a very limited amount of copying or specified material which is then
stated on its website which its owns or controls. Provided that it is for the
sole purpose of review or criticism in an article or for educational purposes
or for private study.

• This clause is not a direct copyright warning, but indirectly it makes it clear
that this is the only copying permitted without consent. This clause may be
combined with other notices such as ‘all rights reserved’.

• For example in A-Z C.955 under University, Library and Educational. The
institute is agreeing that a third party may use:
 – A short quotation of the work or service – a limited number of words

– For the purpose of review or criticism in an article or for an educational

purpose for private study

– Provided there is a credit to institute, author, title, ISBN and website

A-Z C.955
It is permitted to make a short quotation from the [Work/Service] provided
that it is for the purpose of review and/or criticism in an article and/or
educational purposes for private study provided that it is limited to no more
than [number] words in total and there is a credit to the [Institute] and the
correct title, author and ISBN details quoted together with the website
address of the [Institute].

• A company may have a policy for its work or service or project that no
copying should be permitted at anytime as set out in A-Z C.948. This would
particularly apply where the work or service or project is not on a website or
in the public domain.

• This is perfectly acceptable but it does not prevent a person seeking to have a
defence that the copying was only for the purposes of review or criticism in
the event there was any alleged infringement and claim. If the person was
specifically granted access on the basis that they were not to do so as a
matter of contract between the parties then that argument would be weak.

A-Z C.948
There is no right granted for any person and/or third party to display,
reproduce, edit, adapt, change and/or translate any part of this
[Work/Project] on any website, the internet and/or any form of mobile,
app, blog and/or telecommunication system at any time. Such prohibition
shall apply to quotations, reviews, criticisms and/or otherwise to all text,
logos, images, titles and headings, recipes, taxonomy, data, maps, charts,
statistics, formulae and other material in any form which is contained in the
[Work/Project] and/or associated with it in anyway.

• A-Z C.924 in General Business and Commercial addresses the situation

where the service or product contains material and rights which are owned
 by third parties.

• The ownership of the rights can be set out in detail including the display of
the credits due to the third party, the trade marks and TM marks and any
images and slogans.

• The fact that no copying is authorised may be stated. Together with contact
details for requests for any permissions at the company.

A-Z C.924
The copyright and intellectual property rights, trade marks, logos and
images are owned by [specify] and distributed under license. You are not
authorised to make any copy, alter, adapt, supply, distribute, release,
market or otherwise exploit this [Product/Service] in any media at any
time. Requests for permission for any such uses should be sent to [–].

• It is very common in different forms of merchandising to have copyright

warnings on the product and packaging and also on the promotional material.
Such an example is A-Z C.943 in Merchandising. This combines a copyright
notice and trade mark notice with a statement that all rights are reserved and
that no reproduction is authorised.

• This avoids the issue of allowing some typwes of copying such as for
personal home use only. This type of clause could also be amended to be
used on a website where the company does not want any person to download
and store material.

A-Z C.943
The [title], [logo], [image] [characters] in the [Work] and the [Articles]
belong to [Name]. © [year] [specify] trade mark [specify]. No reproduction
is authorised and all rights are reserved.
 CREDITS

• In the A-Z there are over 100 clauses relating to Credits from A-Z C.1072 to
A-Z C.1176.

• The issues addressed in this section should be read in conjunction with the
main clause headings in the A-Z of Access, Brand, Copyright Notices,
Copyright Warnings, Disclaimers, Downloading, Domain Name, Logo,
Marketing, Publicity, Moral Rights, Trade Marks and Waiver.

What is a credit?

• A credit differs conceptually from a copyright notice, a trade mark or other

mark or a where a person has asserted a moral right to be identified as the
author.

• A copyright notice by its nature is rooted in a claim to the legal ownership of

copyright. Whereas trade marks, service marks and logos are either
registered or unregistered

• The contractual obligation in an agreement to provide a credit is not covered

by the same legal background. A person does not have to own any copyright
or have asserted any moral rights to be provided with a credit.

• There may be situations where a person or company receives a credit as well

as a copyright notice, trade mark or other identification as an author of a
work by the asssertion of their moral rights.

• However a credit may be due simply because a company has agreed to

provide such an acknowledgement in relation to the supply of a product or
service or for material which has been licensed for use.

• Credits are therefore much wider in scope and appear in many different ways
dependent on the circumstances and industry. For example credits are often
 included at the end of a film for a broad range of roles and functions from
costume designer to assistant make-up artist.

• In a book there may be a credit to an illustrator, a printing company, a

photographer and other contributors who have helped bring the project to
fruition.

• A product and its packaging will often have a credit to the manufacturer, a
major global distributor and then a more local national distributor or retailer.

• When you look at the issue of credits you must also consider moral rights,
copyright notices, trademarks, logos and also disclaimers.

• The fundamental aim of the clause will be the same in most cases, which is to
clarify between the parties the contractual obligations regarding credits.

The scope of credits

• You may decide that there should be no obligation to provide credits and then
you must ensure that you get the other party to agree that there is no
obligation and that they have no right to a credit in any form.

• An alternative is to include a clause which provides a limited credit.

Therefore you will try to keep any credit due to a minimum length, size and
form. You will also want to limit the types of formats and material on which
the credit must appear. So for instance it may appear on the main product but
not on any packaging, promotional material, advertisements or other formats
in which the material or product may be exploited.

• The third option is to establish a policy for your company that suitable credits
must be included on everything in any medium and any format of any nature.
This would apply both to your own products, services and materials but also
any third party. You would provide the other third party with detailed
instructions on the credits and any associated images, logos and slogans
which would be set out in a document which would be attached to, and form
part of, the agreement. You could also attach a very extensive list of the
different formats for the credits dependent on the forms of exploitation.

• You would also need to consider the ranking of the credits for your company
and the order of the credits in relation to third parties which may be used.
• You may stipulate that the credits cannot be altered or varied in size or colour
or typography without prior written approval.

• In addition you would need to ensure that one of the clauses regarding credits
ensures that the other party agrees and undertakes that the credits will be
used on all the formats in which the rights or product or film or book is used
and in all medium in which any adaptations may be exploited.

• The clause would also need to make it clear that the credits must appear even
where rights or material are to be exploited in new forms which have come
into existence at a later date after the signature of the agreement.

• Consideration must be given to providing a clause which obliges the other

party to make sure that it will enforce the use of the credits in the agreed
manner by any third party. So that the obligation will also apply to agents,
sub-licensees, distributors and sponsors who may be involved in a project.

• In A-Z C.1082 in Film and Television the television company has agreed that
no other third party shall be entitled to sponsor the programme or have its
logo, trade mark, image or slogan in the programme or any trailer.

A-Z C.1082
The [Television Company] agrees that no other third party shall be entitled
to sponsor the [Programme] or have its logo, trade mark, service mark,
design, product, image or slogan or ringtone or music incorporated in the
[Programme] or in the introduction, trailer, or end credits whether for the
purpose of corporate promotion, advertising or other publicity purposes at
any time during the Term of this Agreement in the Territory.

• The licensor may refuse quotes by any third party being used on any
packaging or marketing material in A-Z C.1114 in General Business and
Commercial. As the licensee must seek the prior approval of the licensor.

A-Z C.1114
The [Licensee] agrees that all quotes and use of statements from third
parties to be used in packaging or marketing material shall be subject to the
prior approval of the [Licensor].
No obligation to provide credit

• It is much better in an agreement to state that there is something which is not

acquired or is not to be done or is not to be provided. So where there is to be
no credit and that has been agreed between the parties then state so in a
clause and get the other party to acknowledge and accept this fact.

• It is better to expressly exclude the right to a credit than to make no such

reference. As there may be an expectation based on a previous arrangement
with that person or due to the nature of the product or service or material.

• In A-Z C.1101 the person agrees and accepts there is no credit for the
programme.

A-Z C.1101
[Name] agrees and accepts that there is no right to a credit on the
[Film/Programme/other] either when he/she appears and/or at the end
and/or in any verbal and /or audio form and/or in any exploitation of any of
the rights by the [Company] and/or any third party.

• Where a person is a ghostwriter for a book which may be exploited as a film.

There is always an issue as to whether the ghostwriter is to be openly
credited or not. If the ghostwriter is not to be credited or acknowledged in
any sense in relation to the work. Then it is very important that the
agreement states that fact and that the ghostwriter agrees to this contractual
clause. The ghostwriter is intended to be the invisible and unidentified.
Hence A-Z C.1131 in Publishing where the ghostwriter agrees that not only
shall he or she not have a credit but that the company shall receive the credit
and copyright notice.

A-Z C.1131
The [Ghostwriter] agrees that he shall not be entitled to any credit or
acknowledgment in respect of the exploitation of the [Work] by the
[Company] or any person or any media at any time. The [Ghostwriter]
agrees that the [Company] shall be entitled to receive the sole credit and
copyright notice for producing and writing the Work.

• Where a copyright owner is transferring rights, then issues of credits of any

 kind should be expressly addressed and should not be presumed to be dealt
with by implication. In A-Z C.1129 in Merchandising the assignor has
agreed that he or she shall not receive any credit or acknowledgement in
respect of the exploitation by the assignee of the format.

A-Z C.1129
The [Assignor] agrees that he/she shall not be entitled to any credit or
acknowledgment in respect of the exploitation of the [Format] in any media
by the [Assignee].

Limited credit

• The credit may be limited by the ways it is to appear or by the fact that it will
only be used on some occasions and not others dependent on the
circumstances at the discretion of one party such as the licensee.

• There also may be reference to the fact that the credit may only appear in one
format such as the film or book but will not appear if a different format is
used such as radio or disc.

• In A-Z C.1099 the consultant will only have a credit for the programme if he
or she appears in vision or sound for more than an agreed duration.

A-Z C.1099
The [Consultant] agrees that he/she shall not be able to claim any right to a
credit or acknowledgment unless he/she appears in sound or vision for
more than [specify duration]. In such event the following credit shall
appear [at the end of the Programme/on screen/on advertising] [–].

• You may also deal with a limited credit by agreeing to provide a credit to a
person but then listing circumstances in which the credit will not be provided
as in A-Z C.1147 in Services. The company has also got the director to agree
that the company will not be liable for the failure of third parties to provide
the credit. Although the company will try to remedy the problem and has
committed to using its best endeavours which is far more than reasonable
endeavours. For more on Best Endeavours please look at the main clause
heading in the A-Z.
 A-Z C.1147
In the event that the [Film] is completed using the services of the [Director]
then the [Director] shall be accorded a credit in the following manner
[specify name, size, location] in all publicity, advertising and promotional
material and in the end credits of the [Film]. The [Director] acknowledges
that he shall not be provided with a credit in the following circumstances:

1.1 Short extracts of the [Film] to promote, advertise and/or exploit the
[Film] in any media including television, radio, websites, DVDs, CD-
Roms and mobile phones.

1.2 Where any advertising, publicity or other exploitation relates to the

work on which the [Film] is based or the screenplay or any members of
the cast, personnel, author or producer. Except when such material
relates to the [Director] then a credit shall be provided.

1.3 Advertising, publicity and promotion in any media where due to lack
of time or space no other artist or person involved in the production of
the [Film] is credited.

1.4 All commercial tie-ins, merchandising or other related exploitation

including publications, periodicals and other written form and sound
recordings in any format.

1.5 Exploitation in the form of [DVDs/other] credit shall be on the [Film]

but not the associated packaging.

1.6 Any other exploitation where no credits are provided to any other
production personnel.

The [Company] shall not be responsible for failure by third parties to

provide a credit to the [Director] which was unintentional. Provided that
when the [Company] becomes aware of any such failure or default it shall
use its endeavours to remedy the position as soon as possible.

• There may be a more general commitment to credits in an agreement so that

the parties agree eitherthat both shall have a credit or both shall not have a
credit as in A-Z C.1075 in DVD, Video and Discs. There is however
agreement that the licensor will receive a credit on all copies of the film and
 any packaging of the DVD.

A-Z C.1075
The [Licensor] shall not be accorded a credit in any case in which the
[Licensee] is also not credited which may be due to the type of promotion,
lack of time and/or space. In any event the [Licensor] shall at all times be
credited in the manner above on all copies of the [Film] and on all
packaging of the [DVD/Videos].

• A clause may limit the ways in which a person’s photograph, image,

signature and name may be used by a company. In A-Z C.1162 the company
has agreed not to use the presenters’ details for any other purpose than the
marketing and exploitation of the programme unless the presenter has agreed
in advance in each case.

• The company has agreed to provide samples of the proposed use of the
presenters’ name, image, signature and endorsement and has agreed to make
such changes as may be requested by the presenter.

A-Z C.1162
The [Company] agrees that the [Presenter’s] name, image, signature and
endorsement shall not be used for any other purpose other than the
marketing and exploitation of the [Programme] and [Company] unless
agreed in advance on each occasion with the [Presenter]. The [Company]
agrees to provide the [Presenter] with exact samples of all materials in any
medium in which it is intended to use the name, image, endorsement or
otherwise of the [Presenter]. In the event that the [Presenter] requests
alterations or changes in any form then the [Company] agrees to carry out
the request provided that it is reasonable in the circumstances and the cost
is not prohibitive.

• Credits can be used in many different scenarios and wording needs to be

tailored according to the circumstances. In the context of a website the
wording of A-Z C.1140 in Internet and Websites is adapted to suit the
different forms of marketing. The seller is left with a degree of discretion as
to whether to include the suppliers logo and product or not.

A-Z C.1140
 The [Seller] agrees that in any associated publicity, advertising,
promotional material, emails, text message, adverts, webpages or other
marketing material by the [Seller] of the [Seller’s] website that where
appropriate the [Supplier’s Logo] and the [Product] shall be given
reasonable prominence, recognition and credit as follows [specify
name/size/location/position].

Full Credit

• The function of A-Z C.1132 in Publishing is to protect the author and ensure
that the author’s credit, copyright notice and trade mark are reproduced with
the work they have supplied to the agent and any publisher or other third
party. The author is setting out how he or she wants the information to
appear rather than leaving this matter for the agent to decide. The
information should apply to the original material and any adaptation or
marketing material.

A-Z C.1132
The [Agent] confirms that in addition to the moral rights of the [Author]
under this Agreement the [Agent] shall ensure that the [Author] is provided
with the following copyright notice, trade mark, logo and credit in the
[Work] in any form and in any publicity, promotional, advertising, website
or packaging material in respect of any type of exploitation of the Work as
follows [–].

• There may be a number of credits, a copyright notice, moral rights to

consider and other contractual obligations to fulfil as in A-Z C.1072 in
DVD, Video and Discs. Distributor B is the licensee and has agreed to abide
by the whole list which licensor A supplies to the licensee relating to the film
material or package.

• The purpose of this clause is not just to ensure that the licensee adheres to all
obligations to give the credit where it is required but also to underline the
fact that the licensee is in essence acting in an official and authorised manner
as distributor.

A-Z C.1072
The [Licensee] agrees to adhere to all credit, copyright notice, moral right,
 contractual and legal obligations, trade mark, service mark, logo or other
rights notified by the [Licensor] in the written statement with the [Film
Package]. The [Licensee] shall add its own distribution name as:
Distributed by [–] with the following logo/mark [–] in all exploitation of
the rights and any associated packaging, brochures, catalogues, websites,
publicity, advertising or otherwise whether by the [Licensee] or any
authorised third party.

• The level of detail of course can vary enormously but often the parties will
agree a number of schedules which will address the exact form of any credit,
its size and location as in A-Z C.1077 in DVD, Video and Discs.

A-Z C.1077
The [Company] agrees to provide the following trade mark, logo and credit
to the [Sponsor] in any publicity, promotional, advertising and packaging
material in respect of the exploitation of the [DVD and Non-Theatric
Rights] in the [Film/Recordings] as follows [specify and attach a copy].
The position on the front and back of the label and packaging of the [DVD]
shall be as follows [specify and attach a copy]. The [Company] agrees to
provide the [Sponsor] with copies of all such material in which a credit
appears to the [Sponsor] upon request by the [Sponsor] at the [Company’s]
expense.

• The issue of the relative dimensions for an onscreen credit and the length of
time the credit will appear are addressed in A-Z C.1088 in Film and
Television.

A-Z C.1088
The [Television Company] confirms that the [Sponsor’s] Logo will be
reasonably and prominently and clearly identifiable in the [Programme]
and in any event will not be less than the following relative on-screen
dimensions: Horizontally [–]% Vertically [–]%. During the duration of the
[Programme] the [Television Company] undertakes that the [Sponsor’s]
Logo will appear on screen for not less than [–] seconds on not less than [–]
separate occasions.

• A useful general phrase is that a credit will be reasonably, prominently and

clearly identifiable in any reproduction of an original work. This expression
 is used in A-Z C.1084.

A-Z C.1084
The [Television Company] confirms that the [Sponsor’s] Logo will be
reasonably, prominently and clearly identifiable in the [Programme] and
shall not be obscured or otherwise positioned so that it is not easily
recognisable. The [Television Company] agrees that the [Sponsor’s] logo
shall appear as follows [description: duration/position/background].

• In the context of both physical products and a website then A-Z C.1141 in
Purchase and Supply of Products might be more appropriate. There is an
agreed schedule which sets out the credits, copyright notices and trade marks
or logos which the seller is to use on the website and in any packaging or
marketing. Here the seller is to provide the supplier with samples and copies
at the sellers’ costs of products or material with the relevant credits and other
matters which may be required.

A-Z C.1141
The [Seller] agrees to provide the following copyright notice, credit,
service mark, trade mark or logo to the [Supplier] in respect of the
[Product] as is specified in Schedule [–] in respect of the [Sellers] Website
and any advertising, marketing, publicity, promotional and packaging
material and shall provide the [Supplier] with copies and samples at the
[Seller’s] cost on a regular basis.

• It is always important to ensure that any sub-licensees, distributor or other

third parties are also bound to incorporate the credits set out in the original
main agreement as anticipated in A-Z C.1127 in Merchandising.

A-Z C.1127
The [Agent] acknowledges and agrees to ensure that all third parties to be
licensed by the [Licensor] under this Agreement shall agree that the
copyright notice for the [Character] and any trade mark or logo, together
with any credit, shall be incorporated on each item of the [Licensed
Article] as far as possible and on all packaging, promotional advertising
and other material relating to the [Licensed Article].
Failure to use credits

• It is often the case that television and media companies will ensure that there
is a clause which excludes liability for failure to show the credits at the
beginning or end of a programme or film. This is despite the fact that there
may be a clause regarding credits and a commitment that they be used.

• In A-Z C.1080 in Film and Television the failure to broadcast the credits due
to any reason beyond the control of the television company such as lack of
time, power failure or equipment failure shall not be a breach of the
agreement. This is a short version and the grounds could be extended. Please
also look at the main clause heading Liability in the A-Z and this work.
Note this clause does not deal with any claim for loss, damages or loss of
reputation.

A-Z C.1080
The [Television Company] agrees and acknowledges where appropriate by
suitable legend to broadcast, transmit and display on all copies and material
the ownership of any copyrights in any material they may use and shall not
delete any credits or titles from the [Film] material supplied under this
Agreement. The failure to broadcast, transmit or display credits and/or
titles due to any reason beyond the control of the [Television Company]
including, but not limited to, lack of time, failure of facilities or otherwise
shall not be a breach of this Agreement.

• This clause A-Z C.1173 is wider than A-Z C.1080 above. The consultant
agrees that if there is no credit on any copies of the project to which he or
she has contributed. That the institute shall not be liable to the consultant for
any loss of reputation or breach of moral rights. The consultant has waived
all rights to any claim for losses, damages or for any other failure regarding
the credit.

A-Z C.1173
The [Institute] confirms that the [Contributor/Consultant] shall be entitled
to the following credit in respect of the [Project]. In the event that no credit
appears in any copies then the [Contributor/Consultant] agrees that there
shall be no liability by the [Institute] to the [Contributor/Consultant] for
any loss of reputation and/or breach of moral rights. The
[Contributor/Consultant] waives all rights to any claim for losses, damages
and/or otherwise in respect of any failure to put a credit on any material at
any time.
 DAMAGES

• In the A-Z there are 53 clauses relating specifically to Damages from A-Z
D.001 to A-Z D.053.

• This section should be read in conjunction with the main clause heading
Liability in the A-Z and this work. Other relevant main clause headings
include Cancellation, Costs, Delivery, Disclaimer, Disputes, Expenses,
Indemnity, Insurance, Legal Proceedings, Loss, Product Liability,
Rejection, Set-Off and Title in the A-Z.

Contract and potential liability and damages

• It is not our intention to cover the legal basis and aspects of a claim for
damages in the many contexts which it can be considered.

• We are not dealing with a claim arising from an allegation of negligence

unless it relates to an agreement between two or more parties under a
contract. There the issue is one of liability of the parties to the agreement. In
the case of the supply of products please also look at the main clause heading
Product Liability in the A-Z.

• A claim for damages for negligence based on a duty of care in common law
or otherwise is not the same as a claim for damages based on a breach of
contract. We are not addressing the issue of the process and procedures for a
claim in law in either case.

• We are only dealing with how to address the issue of a potential claim for
damages in a contract. The intended aim is to avoid any litigation and to
reduce or eliminate liability. As the matter was discussed and resolved at the
negotiation stage rather than after the event.

• There is a clear distinction between liability – who bears the responsibility for
a matter if there is a breach or something goes wrong – as opposed to
 quantum –the amount of the damages and the extent of any other legal costs
and expenses.

• Even what should be covered as damages and whether this should include not
only physical injury, ill health and death, but also other matters is open to
interpretation based on the facts. It is dependent on how the agreement is
drafted and what is defined as included or excluded. A claim may also
include or exclude expenses incurred which are related directly or indirectly
to the breach, loss of profit as well as other losses, administration costs,
public relation charges, legal costs and expenses, costs of professional
advisors, the costs of product recall and freight, the effect on reputation and
goodwill and the termination of related agreements.

• In the absence of either an accepted liability or a proven case of liability then

the question of damages and quantum does not arise.

• Where there is an agreement between two parties A and B and one party B is
in breach of the agreement. Party A may then have a potential claim for
damages against party B which arise from the breach.

• Whether the other party B must pay damages and has any liability for the
breach will depend upon the terms of the agreement between the parties.
Therefore when considering damages you are also looking at the issue of
liability and risk. There are main clause headings on Liability and Risk in
the A-Z.

• In terms of the potential claim for damages by party A against party B the
broad concept would be to seek restitution for party A. So that party A, who
is not in breach, should be paid damages which would put them in the same
position as if the agreement had not been breached. The approach is
therefore geared towards: what are the natural consequences of the breach?

• This concept will not apply if the parties have entered into an agreement
which has a contract clause which overrides this principle and they have
agreed to a fixed limit for an event in respect of damages.

• There is also no immediate need for the parties to go direct to expensive

litigation and other routes to resolve the matter should be considered. Other
main clauses headings in the A-Z which can be considered are Arbitration,
Default, Disputes, Legal Proceedings, Mediation, Settlement, Suspension
 and Termination.

• So you may include other clauses in the agreement which create alternative
choices of resolution methods to be taken before a party decides to take legal
action where a dispute has arisen.

• In The Media and Business Contract Handbook 5th edition Contract 14 is

a Binding Determination of a Dispute: Terms of Reference and may assist in
resolving a dispute.

• Therefore it should be quite apparent that the way in which damages are
addressed in a contract requires a good understanding of a number of broader
issues but the principle as always is the same. The function of the agreement
is to resolve matters before the dispute is reached, not to lay the ground for
further disputes.

Damages in a business to business as opposed to a business to

consumer agreement

• The first issue to decide is whether the agreement will be signed by

consumers or whether it safely falls within the ambit of a business to
business agreement.

• As a general guide to clauses in contracts the law will enforce and not seek to
undermine a clause which is fair and reasonable. That view is taken based on
all the facts of the case. So a full assignment clause may be reasonable in the
context of the assignment fee to the assignor.

• Note the court will only get involved where one party seeks to enforce the
agreement – most contracts are never the subject of any litigation and so the
clauses are not tested in this manner.

• However care must be taken to distinguish between agreements between a

consumer and a business and those which are business to business.

• The courts and the law will allow a great deal more room for different types
of clauses and terms and conditions in respect of responsibility, liability, and
damages in agreements between two businesses rather than an agreement
between a business and a consumer.
• In the interpretation of contracts which involve consumers with a large
manufacturer or supplier the court will favour the party who has not issued
the agreement – the consumer. There is a myriad of legislation, regulations,
directives and cases which exist to protect the consumer against
unreasonable and unfair clauses in agreements. Note that this does not,
however, prevent the consumer being subject to agreements and terms and
conditions which are not fair and reasonable because, unless challenged by
the consumer, the company will continue to issue such terms.

Potential damages can be viewed from the perspective of all

parties to an agreement

• Often an agreement only specifies damages and loss in relation to one party
and not the other.

• However all parties to an agreement should consider the possible scenarios

where damages, losses and costs may arise during the course of the
agreement that they are about to sign. Then to make a decision as to who
should pay any costs, expenses and damages that may arise as a consequence
– which may either be the company themselves or the other party or even a
third party.

• It is worthwhile to create a viewpoint of the worst case scenarios which may

have an impact on an agreement and to consider the level of risk and how
they would be dealt with and who you would expect to pay for the damages,
costs and expenses.

• A festival or event may rely on good weather conditions or the attendance

and performance of an individual. Where the schedule of work is crucial and
must be completed within a specified timescale, it is even more important to
consider the potential consequences of a breach by a company or a third
party. You may need to consider an alternative plan to manage and minimise
the risk.

• It is necessary to look at the issue from each party’s perspective under an

agreement. For example, a carefully planned music festival will necessarily
involve the active participation of a wide range of singers, performers and
personnel.
• The consequences to the event of the illness or inability or unwillingness for
whatever reason of a leading band to perform will either be resolved by the
organiser finding the best replacement they can at short notice or by
cancelling the event. The issue of the cancellation of the event or the
alternative band should have been dealt with not only in the main agreement
but also in the terms and conditions on the website and the booking process
for the tickets. There may also a provision for a new date to be scheduled
which is quite common for major bands and singers.

• The courts in the United Kingdom have always acknowledged that they
cannot enforce the unenforceable particularly in an artistic context requiring
a degree of creativity whether a writer under contract to deliver a book, a
singer, dancer, artist to perform or indeed any type of performance.

• So the organisers would not have been able to insist and enforce by way of a
court order that the lead band appear at the event. It is also worth noting that
injunctions are invariably an interim or interlocutory remedy requested
before the principal claim is decided upon. Such pre-trial actions are subject
to a number of well-established historical rules and very detailed court
procedures.

• One of the hurdles to overcome before the grant of an injunction is even

considered – let alone granted – is that the court must be persuaded that
damages, if the breach is established would not be an adequate remedy. The
costs of any form of injunction can be prohibitive – any strategy involving a
High Court action for an injunction should have a budget well into five
figures in the United Kingdom.

• This work addresses concerns which arise before court proceedings are even
contemplated. The challenge is to find the best way of dealing with a
potential problem that may arise before the contact is signed. In other words
how to achieve a fundamental connection between the contract you draft and
the reality of its actual performance and fulfilment.

• In A-Z D.040 the parties have agreed that there will not be any application
for an injunction due to the personal nature of the agreement. Therefore
where the individual B is expected to be in breach or is in in breach of the
contract and does not wish to provide his or her services. The only claim
open to the company would be for one of damages and not an injunction.
 Note there is no value or limit set on the damages in this clause.

A-Z D.040
The [Company] acknowledges that the services of the [Individual] are of a
personal nature which can only be compensated in damages. The
[Company] agrees that the [Company] shall not be entitled to and shall not
seek, if the circumstances arise, an injunction or other equitable remedy to
prevent or curtail any actual or threatened breach by the [Individual] with
respect to the provisions of his/her services under this Agreement.

Liability and damages

• In this section we offer a range of contract clauses where there may be a

breach by one or both parties and therefore a potential claim for damages,
costs and expenses in an agreement.

• The aim is to create agreement between the parties and to clarify who will
pay any damages and under what circumstances and how much.

• There may be occasions where the parties agree that each should bear the
responsibility for and the cost of its own damages relating to a project. In
which case both parties would seek insurance cover at their own cost. Please
also look at the main clause heading on Insurance in the A-Z.

• The issues to cover therefore are:

– Which party or parties accept liability for potential damages or a claim?

– What subject matter or material is the liability accepted for under the
agreement?

– Are the potential damages, costs and expenses to be paid quantified and
agreed as a figure in advance?

– If not how shall the parties agree to calculate damages?

– Are legal costs and professional advisors to be paid for as an additional

cost and expense?
• It should be borne in mind that damages are simply one remedy for a breach
of contract. It may be that money is not the solution to the problems the party
or parties are concerned about.

• As a general principle the courts will not enforce what is perceived to be a

penalty clause as opposed to a genuine pre-estimate of the potential damages
that will arise and flow from the breach of a contract. These potential
genuine estimated damages are referred to as liquidated damages.

• If party A to an agreement sets out in a clause whatever damages it thinks fit

but which are not a genuine estimate of the damages which could arise and
are in fact a penalty for not performing the agreement or delivering the
material. The court may decide that it will not enforce an application for a
court order for payment by party A against party B. This is however a
contentious legal issue and will depend on the facts of the case.

• Against that background the wording of contracts should be robust and

confidently express the agreement between the parties. Hence the wording of
A-Z D.009 in General Business and Commercial which is commonly used to
clarify the fact that the damages are not penalties but are a genuine pre-
estimate of the damages due and are based on commercial factors.

A-Z D.009
In the event of non-performance of the conditions set out in Clause [–] of
this Agreement then the party who has defaulted shall be liable to pay the
[Company] the sum of [currency/figure] per [day/week/month] as
liquidated damages. These sums are agreed by all parties to be a fair and
accurate assessment of the damages due to the [Company]. The parties
expressly agree that such sums are not to be construed as a penalty clause.

• Therefore whilst it is not that difficult to draft in a manner that takes an

aggressive stance in relation to another party care and caution should be
exercised not to go so far as to render the clause unenforceable as no
reasonable court would enforce the clause if asked to do so.

• A-Z D.001 is intended to strike a fair balance where the contractor B will pay
fixed sums to the company A for failure to complete the project by the
completion date. Note the contractor B accepts that the company A may
claim interest if the sums due are not paid and the company A has to seek to
 recover the debt. Also the company A has the right to set off the sums due
from the contractor B from payments due from the company A to the
contractor B.

A-Z D.001
The [Contractor] shall be obliged to pay the [Company] such sums as set
out in this Agreement as may be due for failure to complete the [Project]
by the Completion Date. The [Company] shall provide written notice of the
total sums and the details thereof after the Certificate has been issued to the
[Contractor] by the [Individual]. The [Contractor] shall be obliged to pay
such sums within [specify duration] of notice. In the event that the payment
is not received by the [Company] within that period then the [Company]
shall be entitled to seek to recover the debt together with interest at [specify
percentage] above base rate of [Name Bank plc]. In addition the
[Company] shall be entitled at its sole option to withhold and retain the
total sums due from the [Contractor] from any monies that the [Company]
is due to pay to the [Contractor] under this Agreement in settlement of the
debt.

• A party to an agreement has a number of options which it can agree in

relation to liability and damages some of which are listed below:

– One party may agree not to make a claim for damages against the other
party if certain events or matters take place. So they agree the other party
has no liability

– One party may have to waive rights to damages as a condition of use of

or access to material

– No liability and no damages clause unless arising from a claim for

personal injury or death

– Liability related to specified rights or material or events but with no set

figure as to potential damages

– Liability for specified rights, material or events but with set figure which
limits damages

– Liability is wide but not unlimited and there is a fixed set of limits of
 damages, each of which relate to the event or breach

– No limit on scope of liability but does not include liability for third
parties and no set figure or limit on damages

– No limit on scope of liability and also covers third parties engaged by the
company and no set figure on damages

• Liability and damages may be not only for the company but also for the third
parties that the company brings to the project and engages directly as
manufacturers, developers, suppliers and distributors.

• The sponsor of a festival has agreed with the company in A-Z D.047 in
Sponsorship that if any agent, consultant, employees, casual staff or persons
or third parties engaged by the sponsor cause any damages or losses or costs
or expenses. That if such sums have to be paid by the company, the sponsor
will pay all sums due upon invoice by the company.

A-Z D.047
If any agents, consultants, employees, casual staff and/or any other person
and/or third party engaged and/or appointed by the [Sponsor] causes any
damages and/or losses and/or incurs any costs and expenses which have to
be paid by the [Company] which relate directly and/or indirectly to the
[Sponsor] and it participation at the [Festival]. Then the [Sponsor] agrees
that it shall pay the [Company] all such sums within [number] days of
invoice by the [Company] subject to supporting evidence of any matter
being made available to the [Sponsor].

• Liability and payment of damages can also be limited by time but

consideration must be given to a potential claim for personal injury or death
which arises which is subject to different criteria.

• A company may agree a clause in an agreement that the liability and damages
are only for a fixed period and then after that time that both parties accept
that they bear their own liability and costs that arise.

• In A-Z D.022 in Merchandising the company has limited its total liability for
an order for any products ordered by a third party to the value of the payment
to be made by the third party. Note here there is no mention of damages but
 it is clearly connected to that issue.

A-Z D.022
The total liability for damages by the [Company] which can arise in respect
of this [Order] and [Products/Services/other] shall be limited to the total
value of the payment for that [Order].

• Where an institute engages a consultant the agreement may include a clause

that there is no right to any additional compensation and damages arising
from termination as in A-Z D.051 in University, Library and Educational.
The total liability of the institute is limited to the agreed fees to be paid to the
company or consultant.

A-Z D.051
The [Company/Consultant] agrees that in the event the [Institute] decides
to cancel and/or terminate the Agreement at any time. That the
[Company/Consultant] shall not be entitled to any additional sum in
compensation, as damages, for loss of reputation or goodwill, costs, losses,
expenses or any other reason. That the total liability of the [Institute] shall
be limited to the fees due under Clause [–] to the date of termination or
cancellation.

• In A-Z D.046 in Services the sponsor has agreed that it will not make any
claim against the company for damages, costs and expenses for any of the
matters set out in 1.1 to 1.6. Here the sponsor has agreed that the company
has no liability and does not have to pay damages if those events happen
during the agreement.

• Note that it is the sponsor who has agreed this term for the benefit of the
company. It may be that there is also a similar clause in the agreement from
the company to the sponsor for other matters. This list could be expanded to
cover other events that the sponsor agrees will not be paid for by the
company.

A-Z D.046
The [Sponsor] agrees that it shall not be entitled to make any claim against
the [Company] nor seek repayment of any fees or offset any sum for any
damages, costs, losses, expenses or any other reason arising under this
 Agreement including but not limited to:

1.1 Breach or alleged breach of contract by the [Company] or any of its

agents, subcontractors or participants which is remedied.

1.2 Loss of reputation or goodwill by the [Sponsor].

1.3 Failure or delay in launching a new brand or product by the [Sponsor].

1.4 Advertising, marketing and promotional costs of the [Sponsor].

1.5 Fees and payments due to third parties engaged by the [Sponsor].

1.6 The [Event] is cancelled, delayed, reduced in size or capacity for

health and safety reasons, or any [Artists/Athletes] do not appear.

• A-Z D.049 In University, Library and Educational the institute is making it

clear that it will make a claim for damages against a consultant or supplier
who provides services or goods which it considers is in breach of the
agreement. The types of potential categories of breach are listed 1.1 to 1.7.
Note that the claim for damages is not fixed and may include the wide
criteria described in the second part of the clause.

A-Z D.049
The [Institute] shall have the right to claim and be paid damages, costs and
expenses against any [Consultant/Supplier/Distributor/third party] who
provides goods and/or services to the [Institute] which the [Institute]
decides:

1.1 Do not fit the agreed description and order;

1.2 Are defective;

1.3 Are not fit for their intended purpose;

1.4 Are misleading as to their content or uses;

1.5 Pose a risk to health;

1.6 Are not produced in accordance with product safety standards;

 1.7 Fail to comply with all necessary legislation, directives, standards and
practices in [country].

The claim for damages is not fixed or limited in value and may include:

1.1 Loss of profit,

1.2 Administration, public relation and legal costs,

1.3 The costs of product recall from the public and other customers
including freight and refund charges.

1.4 Damage to and loss of reputation and goodwill,

1.5 Cancellation or termination of existing contracts and agreements,

1.6 Cancellation of promotions, advertising or marketing.

• It should always be remembered that a claim for damages is fundamentally

intended to place the innocent party in a position they would have been had
the contract not been breached and not unjustly enrich the claimant.

• Therefore if as a matter of good business practice and prudence a company

has taken out an insurance policy which covers the damages in whole or in
part. The general principle is that the company cannot be expected to be paid
twice over for the same matter. However it is likely that as a result the
company’s premiums will increase and there will be damages and losses that
the insurance policy will not cover.

• Hence the wording of A-Z D.012 the company will not be paid for any loss
or damage by the person who has caused the loss and damage if it is covered
by an insurance policy of the company.

A-Z D.012
Where the [Company] supplies access to and/or use of any services,
products and/or other material by [Name] while they are at the [Event].
That it is agreed that [Name] must take due care and consideration and not
cause any loss, damage and/or injury at any time. Where [Name] causes
any damage and/or loss and/or injury then the [Company] shall be paid in
 full for all sums which shall be due, claimed and/or settled including legal
costs and expenses which shall have arisen due to [Name]. Provided that
the [Company] can provide full details of any such sums and supporting
evidence and it is not covered by any insurance policy of the [Company].

• A company may seek to accept, or not be responsible and liable for, matters
which arise directly and result in a claim for damages and losses.

• Or a company may seek to accept or not be responsible for not only direct
damages and losses but also the wider scope of indirect and wider
consequential contracts and other matters which arise as in A-Z D.004 in
General Business and Commercial.

A-Z D.004
The [Company] agrees and undertakes that it shall be liable for any
physical damage, power failures, indirect and direct financial loss,
interference with existing functions of software, machinery or devices,
failure to supply, deliver or distribute any material or products, cancellation
or termination of orders or contracts or negotiations or any other
consequence whether foreseeable or not which arises from the
[Service/Product/other].

• On a website as in A-Z D.016 in Internet and Website the issue of damages

may be related to a disclaimer of liability rather than damages. Here the
value of the fixed maximum damages is set as a precaution to limit the risk
and exposure of the company. For other clauses on disclaimer please look at
the main clause heading Disclaimer in the A-Z where there are examples
where there is no reference to any damages. Please also look at the main
clause headings in the A-Z of Product Liability and Downloading.

• Note there where the product supplied through the website is used by the
consumer and causes personal injury and death there could be no disclaimer
of liability or limit of liability which could be held to apply in law in the
United Kingdom.

A-Z D.016
The [Company] shall not be responsible for any damage which may arise
as a result of following the advice on this [Website] as to how to [specify].
 This advice is for guidance only and you are expected to read the
instructions which accompany the [Product] and use the item in accordance
with those instructions issued by the [manufacturer/supplier]. In any event
where any claim is made you agree that the total maximum claim for
damages is limited to [figure/currency].

• In A-Z D.020 in Internet and Websites there is a similar situation where the
company which is supplying an app free of charge is making it clear that the
person who accesses and uses the app must accept that they use the app at
their own risk and have also waived any claim for damages.

A-Z D.020
This [App] and its contents and use are provided to you to use for free as
you think fit for your own purposes and to your own advantage. Provided
that you agree to the following terms of use:

1.1 That you agree to waive all rights to make any claim and/or allegation
and/or summons for any damages, losses, expenses and/or any other
sum arising from such use including viruses, security failures and loss
of data and/or other material.

1.2 That you will not reproduce and/or exploit any part of the [App] in any
form and/or media at any time.

1.3 That where you intend to incur any costs and/or take any steps based
on information derived from your use of the [App] that you agree that
any such decision is at your own cost and risk.

1.4 That you agree that the [Company] and the [Distributor] have only
granted you a non-exclusive licence to use the {App] and content and
that there is no right to sub-licence and/or grant and/or exploit any part
at any time.

• Where a licensor has granted a licensee the right to create a product which is
to be sold to the public as in A-Z D.024 in Merchandising. The licensee must
deal with any claims and also be liable for the damages and losses incurred
and cannot deduct those sums from money due to the licensor. The only
exception is where the claim is due to a breach by the licensor otherwise the
 licensee bears the risk and cost.

A-Z D.024
Where any claim and/or payment is made to any person and/or third party
for damages, losses, expenses, interest, refunds, product liability and/any
other liability and/or sum is made by the [Licensee] and/or any sub-
licensee. There shall be no automatic right to deduct any such payments
from the royalties due to the [Licensor]. Unless the payment and/or sum is
directly due to a breach and/or an alleged breach of a term of this
Agreement by the [Licensor]. Then all such payments and/or sums shall be
the responsibility of the [Licensee] and/or any sub-licensee and not the
[Licensor].

• Here again in A-Z D.045 in Sponsorship this clause limits the damages and
losses to which the company is exposed at the event. As the sponsor is
accepting responsibility for the costs and expenses if the agreed
circumstances take place.

A-Z D.045
The [Sponsor] confirms that it shall be entirely responsible and bear all
costs, expenses and damages that may arise from:

1.1 A comprehensive insurance policy including product liability at the

Venue [of not less than figure/currency for any claim] and
subsequently during the course of the [Festival] in respect of the
[Sponsor’s] Product and any other material, goods, displays and
advertising that may be owned, controlled or organised by the
[Sponsor] or any agent or other third party authorised by them to act on
their behalf at any time.

1.2 Loss, theft, damage to all material provided by the [Sponsor].

1.3 Loss, theft, damage or any other claim of any nature from the
[Organisers] and/or the public directly or indirectly arising from the
[Festival] and/or access to and/or use of any material provided by the
[Sponsors] including all products, goods and services.
 DEFAMATION

• In the A-Z there are 84 clauses relating specifically to Defamation A-Z

D.143 to A-Z D.226.

• Other main clause headings in the A-Z which may be of interest which are
relevant to this topic include Blog, Disclaimer, Discrimination,
Downloading, Editorial Control, Error, Illegality, Indemnity, Legal
Proceedings, Liability, Loss, Obscenity, Omission, Podcast and Quality
Control.

Why consider defamation in a contract?

• Defamation can occur through the spoken word and in writing and be
defamatory of a person or a company or institute.

• The reason why defamation is covered in an agreement is to seek to protect

one party against the actions of another for which they may both be held
liable. In such event party A who has done nothing wrong will want the other
party B to indemnify them for all the consequences of the actions of party A
who has been defamatory to a third party C.

• Defamation can arise in all sorts of different ways for example:

– A sponsor of an event may make a defamatory or derogatory remark

concerning a competitor while being interviewed at the event

– A contributor to a radio programme may make a defamatory remark

about a former group member

– A distributor of a licensed product may make comments on its website or

in advertising which create the impression that another company is
misleading or lying to the public
• Defamation is very relevant in a contract as one party A may be exposed to a
legal claim as a result of the defamatory statements, however made, by either
the other party B or someone they have engaged to work on the project or a
member of the public who has contributed to the website.

• For example if a person A is interviewed by a newspaper, radio or television

company B and makes a defamatory statement against a third party C during
the course of the interview. Then both person A making the defamatory
statement and the publisher of the statement – the company which owns the
newspaper, radio or television station B – are potentially exposed to a claim
for defamation from C.

• The same principle applies to publishing or distributing a defamatory

statement, whether it is done through a website, or blog or app or in a
paperback or hardback book. Both the person who made the original
defamatory statement and the publisher or distributor of the defamatory
statement are responsible for, and liable to be sued and subject to legal
proceedings as a result of, the defamatory statement.

• The starting point for most contracts is to hold the person responsible for
making the original defamatory statement liable to pay all damages, costs
and expenses including legal costs which arise in the form of a widely
drafted indemnity. Please look at the main clause heading Indemnity in the
A-Z for examples of clauses.

• There may be many cases where a member of the public who has made a
defamatory statement does not have the resources to indemnify the website
company and the company is left bearing the cost of the defamatory
statement.

• The fact that defamation has been raised as an issue in an agreement tends to
make all parties to a contract including online contributors more careful with
the statements they make verbally and in writing.

• Defamation clauses tend to be drafted and adapted quite precisely to fit the
facts and to be clear as to which party is to pay for, or indemnify another for,
any statement which leads to either an alleged claim which is settled without
any legal action or one where legal action is taken and the judgment made by
a court.
• It also raises the question whether the parties should arrange insurance cover
for a defamation claim. For more clauses on insurance cover, policies and
costs please look at the main clause heading Insurance in the A-Z.

• The wording of a contract clause relating to statements and publication is

often much wider than defamation and may also deal with offensive,
derogatory, demeaning and obscene material. As well as the combination of
different types of material, which together creates a negative impression.

• The clauses drafted are often much wider than the legislation and are seeking
to control the risk and exposure of a company or individual to civil and
criminal action. In addition a company may wish to be able to resolve and
get rid of threats and allegations at an early stage to reduce costs.

• It is possible to draft a clause which places a party under clear contractual

obligations which are far broader than the strict legal obligations which may
arise in the context of defamation as defined in law in any jurisdiction.

Basic principles of slander, libel and defamation

• This work is primarily concerned with drafting issues, but there are a few
guiding principles relating to defamation which will assist with drafting of
the clauses and help you understand the broader issues.

• In this context there is no practical difference between the words defamation

and libel. It is not uncommon for a libel to be defined in terms of a
defamatory statement and vice versa.

• Traditionally and historically the word libel was used where the defamatory
statement was expressed in a written or permanent form whereas a slander is
a defamatory statement that is spoken.

• However if a spoken defamatory statement is recorded or broadcast in some

manner for example over the radio or on television then the defamatory
statement is treated as a libel.

• There is a distinction between the concepts of slander as opposed to libel

which has eroded over time but the distinction between libel and defamation
is essentially semantic because a libel is simply a form of defamation; the
relevant distinction is between libel and slander. In other words a defamatory
 statement may take the form of a libel or a slander.

• The Defamation Act 1952, Defamation Act 1996 and Defamation Act 2013
in the United Kingdom are concerned with libel, slander and defamation.

• In terms of what defamatory means in law in the United Kingdom there is no

single test.

• The principle for whether a statement was defamatory or not used to be

whether a statement would expose someone to hatred, ridicule or contempt.

• In general terms whether the statement which could either be made expressly
or by innuendo would lower a person’s or a company’s reputation in the eyes
of the community. The defamatory test rests on therefore on the impression
that is made and not the intention of the person who made the statement.

• Defamation concerns reputation and even someone who has a criminal

conviction or is serving time in jail can be defamed.

• Obviously the question of damages is relevant in such circumstances but it is

easily overlooked that people rarely lose their reputation entirely. If the
defamatory statement makes an allegation which is untrue and not related in
any manner to the previous offence or facts or conduct for which the person
has damaged their reputation. They may still have a successful claim for
damages even if it is only a nominal sum.

• The Defamation Act 2013 in the United Kingdom altered the law in several
significant ways and has had a very large impact.

• In the past under the Defamation Act 1996 actions for defamation were time
barred after one year following publication. However every time a
defamatory statement was published the time period started again as a fresh
period of time. This was a rather glaring loophole and made a mockery of the
perceived one-year rule.

• The Defamation Act 2013 now sets out that:

– the period of one year runs from the date of first publication

– provided that the manner of the subsequent publication is not materially

 different from the first publication and

– the statement complained of is substantially the same

• The Defamation Act 2013 also sets out that a person who seeks to make a
claim for defamation has to establish that the statement which they allege is
defamatory must be capable of causing serious harm. This amendment is
intended to discourage claims which are very trivial or merely technical in
nature.

• The Defamation Act 2013 has also made the defences to defamation to a
large extent broader and clearer. The defences include:

– Truth – which was previously called justification

– Honest opinions

– Many forms of privilege such as various categories of official reports,

fair reporting of judicial proceedings and the new defence of peer
reviews in academic or scientific journals

• Statements made on social media on a website, blog, app or in the form of a

text which is shown on an online television programme or a terrestrial or
cable or satellite programme have no special or different legal status or
protection.

• It should be remembered however that there may be a jurisdiction issue as the

person making the complaint regarding the defamation may seek to make a
claim in one country rather than another. As the website, app or blog has
been distributed to the world as has the defamatory statement.

• The Defamation Act 2013 only applies to the jurisdiction of actions

commenced in the United Kingdom.

• Here it is also relevant to note that it can be stated in an agreement which

governing law or jurisdiction applies to an agreement. For examples please
look at the main clause heading Jurisdiction in the A-Z.

• Therefore an potentially defamatory comment on a website blog, forum or a

text message which is posted online could result in a legal action and a claim
 for damages, legal costs and expenses.

• There is also the possibility of a criminal action where there are threats to a
person and this issue is also covered in the indemnity clause.

• It should be realised that the person or company which owns and controls the
website which publishes a defamatory statement will also be exposed to a
potential claim. Both the Defamation Act 2013 and the associated
regulations address such matters specifically in some detail.

• Contract 91 is a Letter of Complaint in respect of Defamation on the Internet

in The Media and Business Contract Handbook 5th edition by the
authors.

• The chances of the success of a complaint or the defence of a defamatory

statement will depend on the actual real evidence. It will not depend on the
beliefs or thoughts of an individual as to their personal view of a person or
company which is unsubstantiated. Therefore care should be taken not to fall
into the trap of relying on gossip or a general impression of a person to make
a statement which cannot be backed up by any evidence.

Drafting clauses relating to defamation

• As stated above the circumstances in which defamation is most likely to

appear in an agreement is where one party is seeking to place the
responsibility for the statement on the other party so that they are not liable
for any reason.

• The clause can simply state that one party unequivocally assumes
responsibility for such matters, as expressed in A-Z D.217 in Sponsorship.
The sponsor accepts full responsibility for any alleged or proven defamatory
statement and has agreed to pay all the costs where it is caused by an
employee or a third party which it has engaged. Note the clause specifically
states that the company will not pay anything.

A-Z D.217
The [Sponsor] shall be responsible and bear the cost of any allegation
and/or settlement and/or claim in respect of any threat, abuse, violence,
defamation and/or other misconduct caused by any officer of the [Sponsor],
 any employees, casual staff, consultants and/or other third party arranged
by the [Sponsor] for the [Event]. The [Company] shall not be responsible
for nor required to make, any payment for any such matters.

• Alternatively as stated in A-Z D.181 a party can agree or undertake not to

make any such defamatory comments.

• Here name A has undertaken not to make any comment, statement or

innuendo and/or contribute to any material in any form.

• The undertaking is not limited to the words and text but also covers images,
photographs, film, videos, caricatures, gestures, sounds and images. Note
that this clause is not limited to what is covered by legislation in the United
Kingdom. A company can agree with a person whatever they require to
protect their business. This is a contractual binding undertaking by name A
to the company.

• A claim for defamation may arise not just by the use of words and text but
due to the use of images or sounds, or even a subtle juxtaposition of an
image with a caption.

• The undertaking is limited, however, to the contribution to the blog, column

or programme so it is limited to that aspect only.

• The undertaking relates to material which is likely to be defamatory,

offensive, derogatory and/or demeaning which is much wider than the law
relating to defamation.

• The undertaking will apply even if name A knows or believes the material to
be true or not.

• The clause states that the clause will apply even if name A believes the
statement to be true due to the fact that a person who is accused of making a
defamatory remark will resist responsibility. They may seek to express the
view that, even if the statement was wrong, it was an honestly-held opinion
and a widely-held view in the wider community. For this reason name A may
be in breach regardless of the truth or not of the facts.

• The responsibility for the legal consequences of making a defamatory

 statement in A-Z D.181 is achieved by name A agreeing and undertaking not
to make such statements, because if he or she does then they are in clear
breach of the clause.

• There is nothing in this clause which states what will happen to name A if
this clause is breached. It could go on to say that the company will have the
right to terminate the agreement without any liability to pay any further sums
after the date of notice. For such clauses please look at the main clause
heading Termination in the A-Z.

A-Z D.181
[Name] agrees and undertakes not to make any comment, statement,
innuendo and/or contribute any material in any form as text, words, sounds,
images, photographs, film, videos, caricatures, gestures and/or otherwise to
the [Blog/Column/Programme] which is likely to be and/or is in fact
defamatory, offensive, derogatory and/or demeaning of any person whether
or not [Name] knows and/or believes such material to be true or not.

• Most clauses addressing defamatory issues will contain references to a

number of potential legal claims, defamation being only one example as in
A-Z D.218.

• The company is not responsible or liable for any of the matters listed in the
clause which relate to the sponsors products, services or work under the
agreement:

– defamation

– obscenity

– breach of any laws

– breach of any codes of practice or guidelines

– any breach of contract

– civil proceedings

– criminal proceedings
• The sponsor has to deal with and pay for any such matters at its own cost.
Note the company is also not involved in how the sponsors resolves or deals
with any problems which is not always the case in all clauses. Please look at
the main clause heading Legal Proceedings in the A-Z where for instance
the company might want to be consulted or kept informed or have a right of
approval over any settlement.

A-Z D.218
The [Company] shall not be responsible for any legal problems whether
defamation, obscenity, breach of any laws, breach of any codes of practice
and/or guidelines, and/or any breach of contract and/or civil and/or
criminal proceedings which may arise from the products, services and work
provided by the [Sponsor] under this Agreement. The [Sponsor] shall be
entitled to deal with all such matters without the approval of the
[Company] at its own cost. The [Company] shall be entitled to be paid for
any services and/or administrative support that may be requested by the
[Company] together with any legal costs.

• A contract clause may cover matters which are not defamatory but which a
company decides as a matter of policy that it does not want either on its
website or issued as promotional material by its distributor. The company is
therefore, through the use of a contract clause, able to impose control over
another party in relation to all kinds of material which in itself may not have
any legal issues at all.

• The aim of the company is therefore to enforce a positive ethos regarding the
views and attitude of the company and the people and businesses that it
works with. This strategy therefore combines a marketing strategy with the
aim of avoiding any negative comments.

• The institute in A-Z D.225 in University, Library and Educational is

protecting the reputation of the institute. The consultant is required to
confirm that the product of his or her services will not contain any obscene,
offensive or defamatory material.

• In addition the consultant will not expose the institute to civil or criminal
proceedings in the United Kingdom.

• The consultant has also accepted that the institute will not be obliged to
 reproduce, distribute or exploit any material which in the institute’s view is
likely to bring the institute into disrepute, damage its reputation and/or is
believed to be defamatory.

• The clause is purely subjective based on the views of the institute and their
perception of potential harm to their reputation.

• The use of the words ‘into disrepute’ provides a very useful meaning which
has a lot of possibilities. It is wider than a reference to something which is
legally defamatory in the United Kingdom.

A-Z D.225
The [Consultant] confirms that the product of her services will not contain
any obscene, offensive or defamatory material and will not expose the
[Institute] and/or its employees and/or representatives to any criminal or
civil proceedings in the [United kingdom]. The [Institute] shall not be
under any obligation to reproduce, distribute or otherwise use or exploit
any material which in the view of the [Institute] is likely to bring the
[Institute] into disrepute, damage its reputation and/or is believed to be
defamatory.

• A different approach is taken in A-Z D.144 in DVD, Video and Discs. A

company is assigning rights in a film which are to be exploited in the form of
DVDs. The assignee wants to know that the content of the film, packaging,
advertising and marketing material is not going to cause any legal problems.

• The assignor is therefore required to make an undertaking that none of the

DVD’s packaging or associated advertising and marketing will contain any
content which may be considered:

– obscene

– give rise to an allegation of contempt of court

– may be deemed defamatory

– is likely to lead to a civil or criminal action

A-Z D.144
 The [Assignor] undertakes that the [DVDs/Discs], packaging and any
associated advertising, marketing and promotional material will not contain
any material, text, images, words, lyrics, gestures, innuendos or any other
material in sound and/or vision which may be considered obscene, give rise
to an allegation of contempt of court, is and/or may be deemed defamatory
or which is likely to lead to a criminal and/or civil action.’

• There may also be occasions where the concern is about material being edited
by a licensee which in itself creates a problem with a third party. In A-Z
D.154 in Film and Television the licensee is not allowed to edit the material
in any way which is likely to bring the licensor into disrepute or which is
defamatory of a third party.

A-Z D.154
The [Licensee] undertakes not to edit the [Material] in anyway likely to
impair its quality meaning or integrity and not to use or permit to be used
any [Work] in any manner which is likely to bring the [Licensor] into
disrepute or which is defamatory of any person, company or business.

• There are also sometimes issues raised as to how far in terms of territory
there is liability for any potential undertaking or potential defamatory
statements. The undertaking can be limited to the United Kingdom, Europe
or any part of the world.

• This method has been used in A-Z D.157 in Film and Television. The
licensor is limiting the undertaking to the named countries in the clause.

A-Z D.157
The [Licensor] agrees and undertakes that the [Film] is not obscene,
defamatory and/or contravenes any code of practice in any of the following
countries [–] and will not expose the [Licensee] to criminal or civil
proceedings in those countries.

• The parties may also agree that neither of them is responsible for the actions
of a third party even if they have engaged them for the project.

• The sponsor is not responsible for the conduct of the person A or their agent
in A-Z D.016. This applies to behaviour, acts, words and statements of that
 person A even if they are defamatory. The focus of this clause is therefore to
not be held liable by the other parties to the agreement.

A-Z D.016
The [Sponsor] shall not be responsible for the conduct of [Name] and their
agent nor any behaviour, acts, words or statements which are defamatory,
offensive, obscene, threatening, or damages or loss caused directly or
indirectly to any person, company or property. Whether at an event,
conference, press launch, or other occasion organised by or on behalf of the
[Sponsor].

• There are some agreements where the strategy to make sure that the other
party takes out an insurance policy as in A-Z D.165 in Film and Television
to cover an allegation or claim for defamation and all legal costs and
expenses.

A-Z D.165
The [Licensor] undertakes that the [Series] or [Parts] are or will not be
defamatory and that in the event that there is any claim or allegation the
[Licensor] has an insurance policy to cover all such legal costs and
expenses and damages. That the [Licensee] shall not be responsible for any
such sums and shall be entitled to recoup all sums expended from the
[Licensor].

• Where material is uploaded or sent to a website, app or other online of

exploitation. A company will have other areas to consider, not just
defamation. So in A-Z D.178 in Internet and Websites in the first part the
contributor has to agree that they will not submit any material – words,
images, graphics, logos, lyrics, films, sound recordings or otherwise – which
could be construed as:

– defamatory

– derogatory

– insulting

– rude
 – obscene

– violent

– offensive

– or which reveals personal details of a third party which they would not
want disclosed

• The company has the right to erase and delete any such material and also
seek to be paid under an indemnity from the person who submitted the
material for any claim.

A-Z D.178
You agree that you shall not submit, send, or enter any material whether
words, images, graphics, logos, lyrics, films, sound recordings, or
otherwise which could be construed as defamatory, derogatory, insulting,
rude, obscene, violent or an incitement to violence, offensive, or reveal
personal details of a third person which they would not want disclosed.
Where there is any breach of this clause the [Company] shall remove,
delete and erase all such material and shall seek to be indemnified by you
for any claim that may arise from the material you submitted.

• A supplier of products may wish to control its image and reputation by

ensuring that a seller or retailer must provide an undertaking that the
products will not be used on the seller’s website or in its marketing in a
defamatory, offensive, demeaning or derogatory manner.

• In A-Z D.201 the seller is providing assurances about the use not only of the
products but also any images, words and methods of marketing it may decide
to adopt.

A-Z D.201
The [Supplier] agrees that it shall be the decision of the [Seller] as to the
nature of the image, display, text and method of marketing and exploiting
the [Product] in their [Website/shop/other]. Provided that the combined
effect shall not be:

1.1 Defamatory, offensive, demeaning or derogatory of the [Supplier]

 and/or its products and/or any third party.

1.2 Expose the [Supplier] to any allegation of breach of industry standards

and practice by a government agency or authority.

1.3 Expose the [Supplier] to any civil or criminal legal actions, claims or
allegations.

• A person may also want to limit liability for defamation and other matters
and ensure that a company accepts some responsibility as in A-Z D.208.

• The presenter is not liable where material is included at the request of the
company.

• Total liability is limited to a fixed sum and the company must pay all other
sums.

• Although the presenter undertakes that his or her services shall not contain
any obscene or defamatory material or any advertising or promotional
material which would be in breach of the relevant guidelines. In 1.2 the
company agrees that the presenter shall not be liable to the [Company] in
respect of any claim for defamation, libel, obscenity, breach of any laws,
codes or standards, or contract with a third party.

A-Z D.208
The [Presenter] undertakes that all the product of his/her services under this
Agreement shall not contain any obscene or defamatory material or
anything of an advertising or promotional nature for any organisation,
person or body which would breach the codes of practice and standards of
[specify] or expose the [Company] to civil or criminal proceedings except
where work is based on or incorporates material at the [Company’s]
request. The total liability of the [Presenter] shall be limited to
[figure/currency] and any other sums over this amount shall be paid for by
the [Company].

1.1 The [Company] shall be responsible for and shall ensure that there are
no legal problems prior to the use of the material.

1.2 That [Name] shall not be liable to the [Company] in respect of any
 claim for defamation, libel, obscenity, breach of any laws, codes or
standards, or contract with a third party.

1.3 That the [Company] shall bear the cost and indemnify [Name] in
respect of any costs, expenses, damages or legal fees that may arise
from the use of the material by the [Company].

• Defamation is therefore also linked to issues of liability, indemnity and legal

proceedings and how to deal with claims and allegations by third parties.
Please look at the main clause headings in Obscenity, Liability, Indemnity
and Legal Proceedings in the A-Z.
 DELIVERY

• In the A-Z there are just over 100 clauses relating to Delivery from A-Z
D.235 to A-Z D.236.

• Other main clause headings which are relevant in the A-Z include
Acceptance, Carriage Costs, Costs, Cancellation, Damages, Error,
Liability, Loss, Material, Omission, Order, Payment, Quality Control,
Rejection, Risk, Time of the Essence and Waiver.

Essential elements of delivery

• There are a number of factors to consider when thinking about delivery

which are as follows.

The nature of the order

• What has actually been ordered or requested – the detail of the material or
product or service – should be specified the quantity required and content,
quality, as well as the intended use and purpose in detail, including the
colour.

• For more clauses on material please look at the main clause heading Material
in the A-Z.

• For more clauses on quality and content please look at the main clause
heading Quality Control in the A-Z.

• Also consider under this section any ancillary and additional material that
may be needed, such as packaging, publicity and marketing.

Method and place of delivery

• Where is delivery to take place? Specify the address or location or the
manner of delivery.

• The delivery address and method is important and can result in additional
delivery charges if it has to be changed. There are often disputes concerning
delivery and so it is preferable to be specific as to whether it is to be
delivered by a secure service and signed for or not.

Acceptance and delivery

• Will acceptance of the material, product or service take place at the same
time as delivery?

• If not you must specify what constitutes delivery and what constitutes
acceptance. These can be two separate elements or one. There is a main
clause heading on Acceptance and also look at Order in the A-Z.

Delivery date and time of the essence

• If the date of delivery matters then you would need to specify that fact and
state tha time is of the essence in the contract. Alternatively you may agree a
delivery date which is within a certain period, such as seven days or a
calendar month.

• The company may also have an additional clause which allows the delivery
date and time to change or be varied. The company may not be required to
provide a reason for the delay.

Risk and ownership

• You need to consider risk and the point at which the responsibility for loss
and damage and theft passes from the company who owns the product to the
other person.

• Does any title and ownership of the material, product or service or rights pass
to the other party? It may be that ownership does pass but no copyright or
intellectual property rights. Alternatively it may only be that a person
acquires a non-exclusive right of access to a service or buys a product which
is delivered and acquires ownership of that product but no other rights.
Payment

• It is important to establish exactly how much is being paid and when the
payment for the order or delivery is actually completed. The payment details
should also include the currency and the method of payment as well as any
additional charges and costs.

Costs

• Who is paying for the cost of the delivery or freight and when is this payment
made? This is a different cost from the payment for the material, product or
order. They may also be customs duties, taxes and additional charges.

• If there are installation costs and charges or other additional materials or

expenses required then it should be specified as to who pays these costs.

Delivery dates and time of the essence

• Time of the Essence is also a separate main clause heading in the A-Z where
you can find more examples of clauses. An agreement may state that time is
of the essence, but it may also set out the complete opposite that time is not
of the essence. A clause may allow additional extended periods of time to be
added to the existing delivery or completion dates. These periods can be
either fixed and stated in the agreement or not specified in advance.

• If a party breaches a contract delivery date and there is no reference to time

being of the essence. Then the question arises: what consequences, as a
matter of fact, actually follow the breach? There are many circumstances
where late delivery has no little or no real consequence.

• If the words time is of the essence are included in the clause the presumption
is that the delivery date is fundamental to the contract. That a breach of that
term, however slight, will entitle the party who has not received the
requested delivery to end the agreement with no obligation to listen to any
excuses or reasons for the delay.

• So – time is of the essence – is used to highlight and emphasise the

importance of the delivery date. That it cannot be moved or adjusted and that
if the other party fails to comply then it will be a breach of the agreement.
 The agreement will be terminated and the other party may seek to have all
the money they have paid refunded to them.

• It is sometimes more effective to get the party making the delivery to set out
in detail that they accept the consequences of what will happen next if they
fail to deliver by the agreed date. So the termination and repayment by the
party is clear in the agreement and accepted by them as a consequence.

• It is common to see a clause relating to the delivery of a manuscript stating

that ‘time is of the essence’ as in A-Z D.294 in Publishing. This clause
would allow the publisher to terminate the agreement and seek a repayment
of the returnable advance paid if they wish. The publisher may also agree to
waive that date and agree an extension to another delivery date.

A-Z D.294
‘The Delivery Date’ shall be the following date by which the manuscript of
the [Work] is to be completed for publication purposes [date] and delivered
to the [Publisher]. The Author understands that time is of the essence.

• If the original delivery date is delayed and the parties then both agree and
consent to a new delivery date. They could both still agree that the new date
is also subject to the proviso that time is of the essence as with A-Z D.301 in
Publishing.

A-Z D.301
Where there is a new delivery date substituted in the contract whether due
to the [Author] or [Publisher] and a new publication date. There shall not
be any alteration to the duration of the Agreement or any other terms.

• In A-Z D.334 in University, Library and Educational the reference to time is

of the essence is deliberately placed as a marker at the very beginning of the
clause. Note here the institute is only liable for any deterioration loss or
damage after the institute has accepted the delivery. The company delivers
the goods or services at its own risk.

• If the goods or services are not in accordance with the specifications as to

quantity, content, quality, use, colour and/or the delivery dates. The use of
the words ‘and/or’ allow you to rely on either or both grounds.
• The institute can refuse to accept delivery and is not liable for any sums due
for the goods or services which did not adhere to the terms of the agreement.

A-Z D.334
Time shall be of the essence of this order. The [Contractor] shall deliver
the [Goods/Services/Material] at its own risk and expense. The [Institute]
shall not be liable for the deterioration, loss and/or damage to the
[Goods/Services/Material] at any time prior to delivery and acceptance by
the [Institute]. In the event that the [Goods/Services/Material] are not
delivered in accordance with the specifications as to quantity, content,
quality, use, colour, and/or by the delivery dates. Then the [Institute] shall
be entitled to refuse to accept delivery and shall not be liable for any of the
sums due for the [Goods/Services/Material] which did not adhere to the
terms and conditions of the Agreement.

• The time is of the essence provision may be applied to all delivery dates in an
agreement as in A-Z D.257 In General Business and Commercial.

A-Z D.257
Notwithstanding any other provision contained within this Agreement both
parties expressly agree that all relevant dates including, but not limited to
those dates referred to under Clauses [–] shall be of the essence of this
Agreement.

Delivery dates and time is not of the essence

• Although the delivery date may be for guidance only and not fixed. The
method of delivery and whether any additional payments are made for a
secure or fast delivery will affect the agreement between the parties.

• For A-Z D.277 in Internet and Websites next day delivery is only guaranteed
if the customer pays for that extra service. Customers are also asked to pay
for loss or damage while goods are in transit.

A-Z D.277
1.1 The delivery dates for the supply of [Products/Services] are subject to
variation and are only provided as guidance. The [Company] can only
guarantee delivery next day and/or within [number] days if one of the
 following additional sums is paid to be provided with a recorded
and/or registered delivery and/or courier delivery to the specified
address in the [country]. [List price and type of delivery.]

1.2 Any delivery outside [country] will be by [freight/airmail/other] and

the following choices are available at an additional cost. [List price and
type of delivery.]

1.3 Insurance cover may be provided to cover the risk of loss and/or
damage of the [Products/Services] whilst in transit at an additional
cost. [List price and type of cover.]

• A party may wish to state expressly that time is not of the essence as with A-
Z D.333 in University, Library and Educational.

A-Z D.333
The [delivery/availability] dates and times quoted are for guidance only
and may be changed without any notice and shall not be of the essence of
this Agreement. The [Institute] shall not be liable for any loss and/or
damage and/or any costs and expenses which arise directly and/or
indirectly from the failure to deliver and/or non-availability of any
[Service/Product/Article].

• In A-Z D.315 in Purchase and Supply of Products - the delivery address is on

the order form but the delivery date is not confirmed and is for guidance
only. The customer will have 28 days from the date of delivery to notify in
writing any claim in respect of defects and damage.

A-Z D.315
The delivery dates and times quoted are for guidance only and are subject
to further confirmation by the [Company]. Delivery times and dates shall
not be of the essence of the contract. The [Company] shall not be liable for
any loss or damage to the [Customer] arising from the failure to deliver.
Delivery shall be to the name and address in the order form unless the
[Customer] otherwise confirms in writing. The [Customer] shall be obliged
to notify in writing within [twenty-eight days] any claims in respect of
defects, damage and/or deficit in respect of any part of the [Order]. Unless
it has been stated on the [Order] that the order shall be fulfilled in one
 instalment the [Company] shall be entitled to make deliveries by
instalments.

• The delivery dates may also be varied due to adverse conditions which could
be due to failure of material supplies, bad weather, road blocks, or anything
else you wish to add. These grounds would be in addition to anything that
may fall within force majeure.

• The delivery date may not be confirmed by a company until payment has
been received which is the most common approach for online shopping, as in
A-Z D.322 in Purchase and Supply of Products.

A-Z D.322
It is agreed that any requested delivery date cannot be confirmed until the
order is accepted and paid for by the customer. That delivery dates may be
varied due to weather conditions, transport problems, unexpected
manufacture and/or packaging issues and/or any other reason. Where
delivery is delayed more than [number] days you may cancel the order and
be provided with a full refund. No sums are paid for any reason for any
damages, losses and/or costs you may have incurred. The [Company] may
offer at its discretion a voucher and/or discount against a future purchase.

Delivery costs and risk

• There is a main clause heading of Carriage Costs as well as Costs and

Expenses in the A-Z.

• There is a wide variety of terms used by way of abbreviation in the context of

delivery particularly where goods are being transported abroad such as CIF
and FOB. Unless both parties are familiar with such historical terminology
the possibility of misunderstanding is too real to ignore as their meanings are
very precise. It is much better to put in plain language which party is paying
for which costs without reference to these abbreviations.

• If the parties clearly commonly use and have an understanding and practice,
the reference to such terms can be brief which is the intended purpose as in
A-Z D.308 in Purchase and Supply of Products.
 A-Z D.308
The [Company] shall promptly make shipment of the [Products] after
manufacture in each production month as agreed. Delivery terms shall be
on the basis of f.o.b. [Country].

• You could also consider using the expressions but then defining the term
within the agreement as with A-Z D.305 in Purchase and Supply of Products.
So the expression f.o.b. is explained as free on board and all the costs of
arranging for the goods to be placed on the ship is at the sellers’ expense
whatever they may be including export duty. Note that here the risk and
ownership and liability rests with the seller until the goods are actually on
the ship.

A-Z D.305
The carriage and transport of the [Goods] shall be free on board [f.o.b.]
which shall mean that all costs of whatever nature incurred in placing the
[Goods] upon [name of vessel] shall be borne by the [Seller]. The [Seller]
acknowledges that the [Seller] shall be responsible for any and all export
duty. Until the [Goods] are actually on board all property rights, risks and
liabilities with respect to the [Goods] shall remain with the [Seller].

• Another useful resource on this topic are Contract 22 which covers General
Terms and Conditions of Supply and Contract 23 which covers General
Terms and Conditions of Purchase in The Media and Business Contracts
Handbook 5th edition.

• In A-Z D.328 in Sponsorship by the authors the sponsor is responsible for all
the cost, risk and expense of the products in the schedule which it must
deliver to the address of the company. If any copies are damaged or lost in
transit then the sponsor must replace them at its own cost.

A-Z D.328
The [Sponsor] shall arrange delivery of the agreed number of [Products]
specified in Schedule [–] which forms part of this Agreement to the
[Company] at [address] at its sole risk, cost and expense. Where [Products]
are damaged and/or lost in transit and/or lave lost their labels then
additional copies shall be supplied upon request.
• It is possible to use broad language to ensure that one party and not the other
pays all the costs and expenses of all the material to be delivered whatever its
type as in A-Z D.285. The distributor has agreed to pay all such costs and,
where any are incurred by the author or company, to reimburse them.

A-Z D.285
All the costs and expenses of delivery of any material of any nature under
this Agreement shall be paid for by the [Distributor]. Where the
[Author/Company] has incurred any such sums then the full cost shall be
reimbursed subject to the prior production of receipts.

Failure to deliver

• The obvious consequence of a failure to deliver a product or fulfil a service or

to complete work as required under an agreement is that inevitably one party
wants to refuse to pay for the material or work. As they will contend that the
delivery or work or supply of the service has not been carried out as required
by the terms of the agreement.

• That is why it is so important to be specific as to exactly what is to be

supplied, created or developed under the agreement. It is only later that both
parties look at how what was specified under the agreement matches up with
what has actually happened. If you were very vague and left it open to
interpretation as to what was required for the service or products or work
then it will not help your case.

• In order to address the issue of the failure to provide the quantity or quality or
content of the products, work or service to be delivered. The parties may
agree rejection clauses in an agreement to allow one party to reject all or
some of the products or service which are meant to be supplied either as
unsuitable or not of good enough quality or for some other reason. For more
on rejection and quality control please look at the main clause headings
Rejection and Quality Control in the A-Z.

• There need to be clauses in an agreement which set out the consequences of

the fact that a party has not delivered the products or services required under
the agreement or failed to perform the work agreed. There may therefore be
cancellation or termination clauses. Please look at the main clause headings
Cancellation and Termination for more on clauses these topics in the A-Z
 and this book.

• There may be goods which are damaged, or errors in the service or work
provided or losses which have occurred due to theft, fire, or water damage
before delivery takes place. There are main clause headings Damages,
Error, Liability, Loss, and Omission, which are all relevant to the subject
of the failure to deliver, in the A-Z.

• The failure to deliver may have other consequences other than not being paid
for material or services.

• When the sponsor fails to deliver the materials needed to reproduce its logo
and name in A-Z D.331 in sponsorship then the company is not responsible
for the omission of the sponsors’ name from the marketing and promotional
banners for an event.

A-Z D.331
The [Sponsor] agrees that failure to deliver the materials necessary for the
reproduction of the [Sponsors’] name and logo on any marketing and event
banners by the delivery date agreed with the [Company] may result in the
absence of the [Sponsors] details on such material.

• When drafting these clauses you need to consider who you wish to protect
from liability and costs and whether you want very wide grounds to be able
to change the delivery date, material and method or the complete opposite
and to make it very narrow. From one stance or the other flow all the other
clauses which are linked to which party you wish to have liability and
responsibility at any time.

• Where a company fails to deliver a programme to a distributor as in A-Z

D.256 in Film and Television. The distributor has the right to terminate the
agreement and to be repaid all the sums paid for the programme.

A-Z D.256
Where the [Programme] is cancelled due to the failure of the [Company] to
deliver in accordance with the specified dates in clause [–]. Then it is
agreed that the [Distributor] shall have the right to terminate the Agreement
and refuse to arrange further dates for transmission. The Company] must
then return all of the sums paid by the [Distributor] to date to fund the
 [Programme] within [number] months of any demand.

• By way of contrast A-Z D.304 is drafted very much in favour of the

purchaser where the delivery date has been stated as being time of the
essence. If the supplier fails to meet the delivery date then the purchaser may
terminate the agreement unless force majeure clauses apply under the
agreement. The supplier has agreed to be liable for direct and indirect costs
for the failure to deliver. So the supplier would repay the sums paid by the
purchaser but has also agreed to pay the extra costs of finding an alternative.

• It is not likely that many suppliers would agree to pay back the cost of the
order and additional indirect costs in this manner.

A-Z D.304
In the event that the [Supplier] fails to deliver the [Goods] in accordance
with the terms of this Agreement and/or in accordance with Schedule [–] to
this Agreement and/or by the Delivery Date specified under Clause [–]
(time being of the essence). The [Purchaser] shall have the right to
terminate this Agreement forthwith in writing and no further obligations
shall apply to the [Purchaser] unless the force majeure provisions apply. In
the event that this Agreement is terminated on the grounds of non-delivery
of the [Goods] in accordance with Clause [–] of this Agreement the
[Supplier] shall be liable to the [Purchaser] for all direct and indirect loss
incurred by the [Purchaser]. The [Supplier] shall repay all monies paid by
the [Purchaser] to the [Supplier] and all reasonable costs incurred in
obtaining alternative [Goods] and for any increase in the cost of acquiring
the [Goods] on the same or similar terms as contained in this Agreement.

• A supplier may seek not to be liable for failure to deliver where a customer
has not paid for a secure delivery as in A-Z D.241 in DVD, Video and Discs.

A-Z D.241
The [Client] agrees that where delivery is not by registered and/or recorded
delivery and paid for by the [Client] as an additional cost and is sent by
normal post. That the [Company] shall not be liable for the failure of the
order to arrive where the [Company] can produce evidence of posting the
[Disc/other].
• There is a main clause heading on Default in the A-Z. The parties may agree
that where delivery has not taken place due to force majeure or any other
reason. That both parties shall mitigate any costs relating to the impact of the
delay and agree that the party who has not defaulted may terminate the
agreement after an agreed period as in A-Z D.270 in General Business and
Commercial.

A-Z D.270
Both parties agree that where delivery and/or payment is delayed for any
reason due to force majeure and/or any other reason. That they shall as far
as reasonably possible without incurring any additional costs endeavour to
mitigate the impact of the delay. Where the delay continues for more than
[specify period]. Then the party who is not in default shall have the right to
take such steps as may be necessary to terminate the agreement with
immediate effect without prejudice to any outstanding claim under this
Agreement.

• In a merchandising agreement as in A-Z D.286 the licensee has agreed to

deliver certain products to a specified country by an agreed date. The
licensee has agreed to provide the licensor with details of any problems with
production and distribution of the products. If the date for delivery is not met
by the licensee. Then the licensee has agreed that the licensor may terminate
the agreement and find a new licensee.

A-Z D.286
The [Licensee] agrees that it shall ensure that:

1.1 The [Products] of the [Character] are manufactured and ready for
distribution and delivery by [date] in [country].

1.2 That where there is a problem with production, manufacture,

packaging and/or distribution of the [Products] of the [Character] that
the [Licensor] shall be informed and provided with details of the
reasons.

1.3 That where the [Products] are not available before [date] then the
[Licensor] shall have the right to terminate the Agreement and seek to
appoint a new licensee for the same rights.
• A failure to deliver may have also occurred due to the failure of a third party
supplier to one of the parties to the agreement as in A-Z D.325 in services.
Note this clause sets no time limit when the company can terminate the
agreement on the basis of failure to deliver.

A-Z D.325
Where the delivery of material, products and/or services by and/or actions
of a third party engaged by the [Company] has impacted and/or delayed the
completion and delivery of this Agreement by [Name]. Then the
[Company] agrees and undertakes that [Name] will not be deemed and/or
construed as in breach of this Agreement where the delay and/or failure is
due to such third party.
 DISCLAIMER

• The clauses on Disclaimer in the A-Z are from A-Z D.392 to A-Z D.439.

• This section can also be cross referenced to the main clause headings Access,
Confidentiality, Copyright Notice, Copyright Warnings, Defamation,
Downloading, Error, Indemnity, Liability Material, Omission, Product
Liability, Rights and Title in the A-Z.

The purpose of a disclaimer

• The aim of a disclaimer is to give notice and to confirm that you are not
accepting responsibility and also to set out the extent of the facts or
consequences for which you are claiming not to be held liable. The aim is
therefore to exclude or limit liability.

• A disclaimer may arise in very different circumstances because the disclaimer

often takes the form of a unilateral declaration or notice and is not intended
to be altered or negotiated.

• A disclaimer may be placed in a car park to endeavour to exclude liability for

theft or damage to a car and its contents.

• A website may have a disclaimer as a condition of entry to the website and

for use of the website. A disclaimer may state that where a person relies on
information from the site that the website company cannot accept
responsibility and that the person must use any such information at their own
risk and cost.

• Note the use of the words ‘risk’ and ‘cost’. A person may take the risk but not
bear the cost and expense of the consequences.

• Although disclaimers are usually worded as if they are some form of formal
notice which takes effect when you access the premises or website. The most
 common way such in which a disclaimer is made is as a clause in a contract
between the parties.

• Therefore the notice on a wall in car park may also be included in the details
on the entry ticket and in the terms and conditions set out on the machine
where you buy the parking ticket.

• Where a company relies on a notice on a wall in the premises which a person

will see after they have bought their ticket if there is no reference to the
disclaimer before the person has entered the premises and in the terms and
conditions in a very prominent form. Then the company relying on the
disclaimer is not in a strong position and the disclaimer may have no legal
effect.

• The disclaimer must therefore set out:

– which party is not liable or responsible

– to whom the disclaimer applies – which person or company

– the scope of the subject matter which is covered by the disclaimer

– where the liability for the subject matter then falls – namely the other
person or company

– whether there are any situations in which the disclaimer will not apply
such as personal injury or death

• The scope of any subject matter not covered by the disclaimer is not
necessarily mentioned in the disclaimer and may be left open for the person
against whom the disclaimer is made to work out for themselves.

• In the United Kingdom and Europe you cannot disclaim liability for personal
injury or death if it is caused by the company or person against another
whether it is caused by negligence or not. There are no exceptions to this
rule.

• However, there may be circumstances where an individual has full

knowledge of all the facts and dangers and potential consequences and has
agreed to put themselves at risk.
• Where for instance a person took part in a high risk sport despite the risks.
Even then the burden would be on a company to provide evidence that all the
health and safety precautions had been carried out to a sufficient standard to
protect the person and reduce the risks. The company would not be able to
rely on a disclaimer as a reason for not accepting liability for any personal
injury or death. It would require an undertaking from the person concerned
that they accepted the risks and possibility of personal injury and death. Even
then there may be an apportionment of liability between the parties.

• The fact that personal injury and death cannot be excluded in the United
Kingdom and Europe does not mean that the disclaimer cannot be very wide
and have very serious consequences.

• Many household, technology and software manufacturers have very extensive

disclaimers and also confirm that they are not giving warranties and
undertakings into many aspects of the functions of the products they are
supplying. Where products are being supplied, whether for a company or a
consumer, then product liability should also be considered.

• It is worth noting that a disclaimer is also often used with other undertakings
and acknowledgements.

• The website company may therefore not only have a disclaimer on its website
regarding the use of the information and data but also another clause in the
terms and conditions of access which reiterate this fact and make it clear that
no undertaking is given as to factual accuracy. The terms may also require
the person accessing the information and data to acknowledge this fact.

• So the disclaimer may not be used in isolation but as part of a strategy to get
a person to agree and accept that no liability is accepted by the company for
the use of the information and data by the person.

• There may however be circumstances where there is simply no obvious

contract document and the disclaimer must be incorporated on the
company’s website; in its marketing material; product labels and instructions
for use. The aim is to avoid misleading a person or company who may use
the product as to the purpose for which it can be used and the results that it
will achieve. A company may specify the stated purpose and use of the
product and service and prohibit any other type of use. They may include a
 disclaimer in the instructions and packaging as well as the marketing.

• A disclaimer and other contract clauses may also address the issue of
variations in the quality of the content of material; compliance with product
labels, content list and trade descriptions. For this purpose please look at the
main clause headings Quality Control and Product Liability in the A-Z.

• However, the general principles are the same – be as clear as possible as to

the intended effect of the disclaimer and always make sure it is in a
prominent position. Then take as many steps as you reasonably can to ensure
that the provision was brought to the notice of the party to whom it is
intended to apply.

Drafting a disclaimer

• A disclaimer may appear on the website or app of a company as well as their

terms and conditions of access. There will also be other clauses which relate
to the limitation of liability and the reproduction and use of content from the
site.

• In A-Z D.430 in Internet and Websites the name A have made it clear:

– that name A is not qualified

– that person B must seek expert advice based on their situation

– that person B uses the advice at their own risk

– that person B uses the advice at their own cost if anything is wrong

– that name A does not accept liability to person B

– that person B is specifically told not to follow any advice if certain facts
apply

A-Z D.430
Any advice, recommendations, exercises and proposals made in this
[Work] are the opinion of [Name] who is not a qualified practitioner of
[subject]. You must take advice from an expert who can advise on your
personal circumstances. If you decide to proceed without expert advice
 then you do so at your own risk and any consequences shall be at your own
cost and no liability can be attributed to [Name]. If you have any of the
following conditions you are advised not to follow any part of this [Work]:
[specify].

• Where a company allows and encourages contributions from the public of

comments which can appear on its website, Twitter account, Facebook
account and its Instagram. There will be concerns regarding potential claims
for defamation against the company and maybe also any parent company.

• A disclaimer notice may appear on the website in a prominent position and a

disclaimer may also be included in the terms and conditions of access by the
person seeking to use the site. The disclaimer would therefore be in a
contract between the parties. The issue would then be one of what is the
consideration for the contract. The consideration would be the access and
benefit of use of the site if there is no payment or subscription.

• In A-Z D.401 in Internet and Websites the company has disclaimed

responsibility to any person who may want to access the website and any
links. Note in this clause there is no reference to other online forms of
promotion. This is quite a limited form of disclaimer.

• All content is only included if accepted by the editor of the site and anything
can be deleted at any time. The public are warned not to post material which
is defamatory or in breach of copyright. The material must be their own or
cleared for use on the site.

• The disclaimer is intended to be part of the general terms and conditions of

access although it could also be used as a notice between the company and
the users of the website.

A-Z D.401
We disclaim responsibility for any consequences arising from your access
to or use of this website or any links. All content which is included is
entirely at the sole discretion of the [Editor/Webmaster] and may be altered
or deleted at any time. Any material which you add to the site by way of
postings or otherwise shall not be defamatory, in breach of copyright and
shall either be cleared for use in this manner or shall be your own original
material. You agree that we shall have the right to use any such material in
 our publicity, advertising, newspapers and magazines.

• It is however a fundamental point that if the disclaimer is to have a legal

effect in a contract. The disclaimer must be a clause or sseries of clauses
which are incorporated into an agreement by which the other party has
agreed to be bound.

• Again in by A-Z D.432 the clause could be used both as a form of notice and
as a form of disclaimer clause in an agreement.

• Here four parties wish to disclaim responsibility the parent company, the
sponsor, the distributor and the organiser. This is done in the following
manner:

– No liability accepted for entry or taking part in the event

– Seek medical advice

– No responsibility for travel and accommodation

– Participation at your own risk and cost

– No undertaking that website accurate – guidance only

– Dates, times and locations may be changed

– No liability for damages, costs and expenses

– Condition of entry that no claim to be indemnified unless personal injury

caused by negligence of four parties

A-Z D.432
The [Parent Company], the [Sponsor], the [Distributor] and [Organiser]
cannot accept liability for your entry into and/or taking part in the [Event].
You are advised to take medical advice as to your health before making
any payment for your entry. No responsibility cannot be accepted for any
travel, accommodation, food, insurance, telephone and mobile costs and
charges that may arise as a result of your entry and participation in the
[Event] which you do at your own cost and risk. There is no undertaking by
the [Parent Company], the [Sponsor], the [Distributor] and/or the
 [Organiser] that any part of the [Website] is accurate, complete or up to
date and this site must be used for guidance only. Data, information times
and dates may be changed and amended and/or the location and/or dates
changed at short notice due to unforeseen circumstances and/or weather
conditions. No liability is accepted by Parent Company], the [Sponsor], the
[Distributor] and [Organiser] for any damages, losses, costs and/or
expenses which arise as a result. You accept as a condition of your use of
the [Website] and entry to the [Event] that you will make no claim or seek
to be indemnified for any loss, damage, expenses or other consequences
that may arise unless it is for personal injury caused by the negligence of
the [Parent Company], the [Sponsor], the [Distributor] and/or the
[Organiser].

• A disclaimer may also appear on the front or back or the inside of a book as
in A-Z D.428 in Publishing. The aim is to exclude liability for both the
publisher and the author for any claim which may arise directly and
indirectly from the use of the book and the associated disc.

• The purchaser is advised to seek expert independent expert advice.

• The intended aim is that the disclaimer will provide both a contractual
defence and a defence to a claim in negligence on the grounds that there was
no negligence or a breach of any duty of care as the purchaser has consented
to the risk.

A-Z D.428
Neither the [Publishers] nor the [Authors] can accept any responsibility for
any losses, damages costs, expenses and/or legal or other consequences
that may arise directly or indirectly as a result of the use or adaptation of
this book and/or any associated disc and/or material. You are advised to
seek independent legal advice before entering into any agreement whether
based on a contract from this book or not.

• Any form of notice regarding a disclaimer – however expressed – should be

clearly and prominently displayed so that the purchaser has the opportunity
to be made aware of it preferably before the purchase is made.

• Where a book is unauthorised such as a biography or even a picture book

 featuring a well-known group or football team. The function of the
disclaimer and the use of the words unofficial or unauthorised are to
discourage a purchaser feeling misled by the possible impression that the
book is indeed official. In addition it is an endeavour to avoid a passing off
claim by the owners of rights in the group or teams’ official products. The
aim is to avoid an accusation that there is a misrepresentation – namely that
the book is official or authorised when it is not.

• The relevance of the disclaimer in such circumstances is that it is seeking to

act as a shield against a claim not only from the purchaser who may be a
person or business but also any third party who alleges that their intellectual
rights in the property have been infringed or that there has been an implied
endorsement.

• Where a website, content provider or other resource supply reports, analysis

and data to third parties as well as access to an archive. Then the company
will want to control and reduce the risk and their liability of the use of such
material of any nature by third parties.

• The distributor A-Z D.423 in Merchandising provides:

– No undertakings as to reliability and accuracy

– Informs any third party they use the material at their own risk

– Accepts no liability for any reliance on material

– Accepts no liability for damages, losses, costs and expenses.

– Sets a fixed maximum liability to any third party in any event

A-Z D.423
The [Distributor] supplies corporate information, data, maps, financial,
insurance and analytical reports, podcasts, films, reviews and archive
service to any third party at their own risk and provides no undertakings
and/or confirmation as to the reliability, accuracy and/or impact of any of
the material and/or any recommendations. Any decisions, investment,
strategies and development proposal cannot rely on this material and all
losses, damages, expenses and costs will not be paid for [Distributor] who
disclaims all liability of any kind at any time which may arise whether it is
 directly and/or indirectly related to any material obtained from the
[Distributor]. That in any event the total liability of [Distributor] to any
third party is fixed at a maximum of [figure/currency].

• A licensor may also expect a distributor to accept all responsibility and

liability for the exploitation of a product as in A-Z D.417 in Merchandising.
The onus is on the distributor to ensure that the product is tested properly and
to arrange insurance cover for both the licensor and distributor for any future
claims including those arising from personal injury and death. Note this
clause does not cover who is to be named on the policy, its value or who will
benefit. Please look at the main clause heading Insurance in the A-Z for
other clauses.

A-Z D.417
The [Licensor] does not accept any responsibility for any legal action,
losses, costs and/or liability for the [Product] manufactured and distributed
by the [Distributor] at any time. The [Distributor] shall ensure that the
[Product] is tested and sampled regularly so that it complies with all
legislation, regulations, directives and policies in any part of the world in
which the [Product] is to be sold, supplied and/or distributed. The
[Distributor] shall arrange insurance cover to meet any potential liabilities
from such exploitation.

• A company may also seek to advise a consumer or other purchaser how to

use a product in order to limit the liability and risk taken by the company as
in A-Z D.422 in Merchandising. This type of clause is often found in a
brochure after a purchase has been made and so it is not likely that it can be
relied upon by a company to any extent to absolve it of liability in any
manner.

A-Z D.422
The [Company] and/or [Distributor] will only accept responsibility for any
injury and/or death arising from the use of this [Product] where it is used in
accordance with the [Instruction Manual] and the injury is caused as a
direct result of the negligence of the [Company] and/or [Distributor]. No
liability for any consequences is accepted where the [Product] in used in an
unauthorised manner and/or in any way in which the [Product] was not
intended to be used. This [Product] is not a toy and should not be used by
any person under [number] age.
 EDITORIAL CONTROL

• In the A-Z there are 136 clauses relating specifically to Editorial Control A-
Z E.001 to A-Z E.136.

• Editorial control can also be cross-referenced to the main clause headings

Adaptation, Advertising, Compliance, Consultation, Copyright
Clearance, Copyright Notice, Credits, Defamation, Endorsement,
Indemnity, Legal Proceedings, Liability, Marketing, Material, Moral
Rights, New Editions, Quality Control, Rights, Sub-Licence, Title and
Variations in the A-Z.

The significance of editorial control

• The company or person who has the final decision in respect of editorial
control is in control of the content of the project or work.

• An editorial control clause may also however be subject to other clauses in

the agreement. These clauses may impose restrictions as to what can be done
– such as limit editing to only minor deletions – or may create procedures for
approval of material or allow for consultation.

• The company or person with final editorial control may have the power and
control to make the decision as to:

– what content is included or excluded

– who may contribute to the project or work

– the credits and copyright notices and other trade marks and logos that
may be used

– when to decide that the project or work is complete and ready for use
• There may be no obligation by the company or person to consult with a party
that supplied the material or work as to the editorial decisions that are
proposed or made.

• There may be no obligation to supply any samples or copies in advance of

reproduction and manufacture for a licensor to approve.

• There are many different versions of editorial control – and although one
party A may have the final decision there may be clauses added which
strengthen the position of the other party B.

• Although you may have agreed and accepted that the other party has the final
editorial decision as a matter of fact. There can still be clauses added which
ensure that there are sufficient mechanisms in place for you to be involved
and to make a contribution to the creation of the final product as well as the
packaging and marketing material.

• That is not to say that the party with the control will agree to every
suggestion and change but it is a step towards working together in a positive
manner on a project.

• The clauses would therefore confirm that one party is obliged to supply
samples of:

– prototypes in the exact form that it will be reproduced

– proposed final versions of the product before manufacture

– draft packaging and the final version

– draft marketing and the final version

• Editorial control is also relevant in respect of any adaptation of a product,

film or book – whether it be in the form of toys and merchandising based on
the story – or the use of a character. A licensor will often want to retain
editorial control of the adaptation. Whereas the licensee will want to have the
editorial control to create and market the product of its choice.

• If the payment by the licensee is sufficiently large the licensor may agree that
the licensee shall have the final editorial control subject to following other
 clauses regarding credits, copyright notices and trade marks and other
matters which would be set out as an attachment to the agreement.

• Where there is an assignment rather than a licence then the assignee would
want a clause which confirms in the agreement that the assignee has editorial
control in the work and any adaptation and that the assignor shall have no
rights or control. This type of clause would be included for the purpose of
clarity.

• The issue of editorial control can create very strong reactions where a person
who has created the work or film or product does not want to concede any
sort of editorial control to a third party.

• Therefore instead of agreeing to permit a licensee or company to have control

there may be clauses which make it clear that the other party has no editorial
control or discretion. The clause may for instance require the other party to
undertake not to delete from or add to or vary or adapt the material supplied.
Please look at the main clause headings Adaptation and Variations on this
subject in the A-Z.

• Note here that consent must be given for adaptations which any licensee may
seek to make which are not in the original licence agreement. There is often
a clause in agreement that the licensee cannot in fact make any adaptations
of the licensed product or work.

• The most common way of moving forward from a dispute about the right to
make changes is to make any changes subject to the other party’s approval
which may be verbal or written.

• A clause in an agreement may also state that a licensee or distributor may be

permitted to edit and change the book, film or product due to a potential
threat of a civil or criminal action, or to comply with a relevant code of
practice or industry guidelines or due to the legal advice of its own advisors.

• The other route is where there is a legal problem and material must be
changed. The onus will be on the licensor, supplier, author or production
company to make the necessary changes at their own cost based on the
adjustments requested by the other party. Failure to comply with the
requested changes may result in the termination of the agreement and the
repayment of the sums paid to date.
• The actual mechanics of the editorial process can sometimes end up being a
collaborative process where material needs to be deleted or edited rather than
a detailed instruction by one party to the other.

• There may also be circumstances where products, films, books and other
material are exploited and sold worldwide. Adjustments and editorial
decisions may need to be made for individual markets due to the difficulties
with the meaning of translations of titles, names, gestures and lifestyles into
varying cultures in different countries. The point here is to look ahead and
see this issue will arise and to put a clause in the agreement which creates a
procedure for dealing with such matters.

• Consideration must also be given to editorial control in respect of third

parties engaged to work on a project by a licensee. If you have permitted the
licensee to appoint sub-licensees and sub-agents the question is what
authority if any do they have to make changes to any content or packaging or
marketing material. If you do not want them to make any changes then this
needs to be made clear in the agreement with the licensee. The licensee must
be obliged to have such a condition in its arrangements with the sub-
licensees and agents.

• There is a middle ground between an obligation to make no changes and the

right to do so, and this path is the most common way forward for most
parties.

Drafting editorial control clauses

• There may be cases where the decisions regarding material and content are
also artistic ones. So A-Z E.050 in General Business and Commercial deals
with that issue. Company B has the final and sole decision. It has no
obligation to seek approval or consult with name A but has agreed to
consider requests in good faith.

A-Z E.050
The artistic and editorial control of the [Work] shall be at the sole
discretion and decision of the [Company]. The [Company] shall in good
faith consider the requests and suggestions of [Name] in respect of content,
interpretation and presentation.
• In A-Z E.089 in Publishing the publisher has agreed to consult with the
author regarding the artwork and design of the cover.

A-Z E.089
The [Publisher] agrees that the [Author] shall be entitled to be consulted in
relation to the artwork and design of the cover of the [Work] and in relation
to the marketing of the [Work].

• Another style of approach is to get the other party to agree that they must not
edit and adapt the material. In A-Z E.071 in Merchandising the distributor
has confirmed that it will not:

– edit

– adapt

– alter

– add to

– the material

– unless the Licensor has provided approval

• Note here therefore is no reference to deletion of material. Although it could

be argued it is implied.

• The approval does not state it must be in writing.

• If the licensor provides approval it is also clear that any costs incurred must
be met by the distributor.

• The distributor cannot seek to recoup such costs from money due to the
licensor.

A-Z E.071
The [Distributor] confirms that it will not edit, adapt, alter or add to the
[Material/Article] without the prior approval of the [Licensor] and that any
such changes shall be at the [Distributor’s] sole cost and shall not be offset
against any sums due to the [Licensor].
• It is possible to include a very detailed editorial control clause which relates
to different types of material that are to be created for a project as in A-Z
E.073 in Merchandising. The benefit of this clause is that it is made clear
that either name A or company B have the final decision in respect of
editorial matters not only for the original work or character but also all the
new content, packaging and marketing.

A-Z E.073
The decision of [Name/Company] shall be final in respect of the
[Work/Character]:

1.1 Production, manufacture, and approval of the final prototype of the

Article, packaging and labels, and release dates to the public.

1.2 Appointment of all third parties including artwork, graphics, computer

generated material, agents, distributors, printers, suppliers.

1.3 Promotion, marketing, advertising, editorial, sponsorship,

endorsements, and cross promotion.

1.4 The adaptation, alteration, variation, translation, and development.

• Agreement to a clause which permits editorial control to be held by the

assignee of a film for distribution may be contingent on the fact that the
assignee pays for the cost of any changes required which are not in the
budget as in A-Z E.003 in DVD, Video and Discs.

A-Z E.003
The [Assignor] accepts that all editorial decisions in respect of the
[DVD/Disc] are at the [Assignee’s] sole discretion and agrees to carry out
all such requests as may be made provided that the [Assignee] shall bear
the cost whether included in the Budget or not. The [Assignee] agrees that
where editorial changes are requested by the [Assignee] that affect the
Budget and will result in additional costs, the [Assignee] shall be
responsible for the cost of the additional work.

• Whereas in A-Z E.014 in Film and Television the television company has the
 sole discretion to:

– edit

– adapt

– make changes

– deletions

However this is only if required for:

– programme policy regarding suitability of material

– demands of accurate timing

– presentation

• This clause which at first seems very wide is then narrowed by the caveat of
the reasons it can be done.

• The television company shall not exercise the right unreasonably or

unnecessarily.

• Note the editing or deletions must be of a minor nature and not impair
continuity.

A-Z E.014
The [Television Company] may at its sole discretion and cost, edit, adapt
and make such changes and deletions in respect of the [Series] as may be
required in pursuance of its programme policy governing suitability of
material contained therein and/or demands of accurate timing or
presentation. The [Television Company] shall not exercise this right
unreasonably or unnecessarily and any editing or deletions shall be of a
minor nature and not impair continuity.

• It is accepted practice to permit a television or media company to make such

changes as are necessary to conform to their licence, sponsorship and
product placement guidelines and other policies issued by any regulating
body and to assist with the changes required by their legal advisors.
• A company, whether a publisher, distributor or any other party, who may be
exposed to legal claims of one type or another will usually as a matter of
good practice reserve the right either to make changes or insist upon changes
being made if there are legal concerns.

• In A-Z E.088 in Publishing the author has agreed to amend, alter or edit the
work at the request of the publisher. Where the publishers’ legal advisors
believe the work contains material which is likely to result in legal
proceedings.

A-Z E.088
The [Author] agrees to amend, alter or edit such parts of the [Work] as the
[Publisher] may request in the event that its legal advisors consider that the
Work contains material which is likely to result in legal proceedings
against the [Publisher].

• A clause may permit the distributor of a film to make changes by editing,

dubbing and other alterations to a film as in A-Z E.006.

• The distributor is not allowed to change the copyright notices, credits and
trade marks.

• The distributor can also remove content based on the advice of its legal
advisors for different countries.

A-Z E.006
The [Distributor] agrees that it shall not distort or significantly change the
[Film] in the event that any editing, dubbing or other alterations are
required to exploit the [Film] and shall not add any additional material nor
change the credits, copyright notices and trade marks. The [Distributor]
shall, however, be able to change any material which its legal advisors
have recommended be removed in order to avoid the likelihood of criminal
or civil proceedings against the [Distributor] in any country to which it
markets the [Film].

• A distributor may have the right to edit, alter and delete and change parts of a
film but may also agree to consult with the licensor. In A-Z E.008 the
distributor has agreed to provide an advance copy to the licensor at the
 distributors cost.

A-Z E.008
The [Company] agrees that the [Distributor] may edit, alter, delete and
change parts of the [Film], the sound track and the title in order to adapt the
[Film] for different countries, markets, formats and languages. Provided
that the [Distributor] shall consult with the [Company] in advance and
provide a copy of each different version which may be created at the
[Distributor’s] cost.

• Another brief example this time requiring written approval would be A-Z
E.129 in University, Library and Educational.

A-Z E.129
The [Licensee] undertakes not to edit, alter, delete, amend, alter, add to
and/or change in any way the [Work/Film/Article] without the prior written
approval and consent of the [Institute].

• Often the use of the word ‘approval’ is itself qualified – so that it must not be
unreasonably withheld or delayed.

• This form of words, in the context of approvals generally is usually an

acceptable way through what might have appeared at first sight to be a very
difficult issue for the parties.

• An example of this wording appears in A-Z E.078 in Publishing of a new

edition which would require the author’s approval not to be unreasonably
withheld or delayed over the choice of the person who revises the work and
the fee to be paid.

A-Z E.078
The [Publisher] shall at its sole discretion be entitled to edit and revise the
[Work] either before the [Work] is ready for first publication or thereafter
before a new edition is issued. The [Publisher] shall notify the [Author] in
writing specifying the editing, revision and new material required and shall
stipulate a reasonable date for completion of such work. In the event that
the [Author] shall neglect or be unable for any reason to edit or revise the
Work or supply new material to the satisfaction of the [Publisher] the
 [Publisher] shall be entitled to procure some other competent person to
carry out such work and any fee or other payment made to such person
shall be payable by the [Author] and deducted from the Royalties due
under this Agreement. The choice of such person and the fee to be paid to
such person shall be subject to the [Author’s] prior approval and such
approval is not to be unreasonably withheld or delayed.

• The editorial control provision may extend not just to a film, book or product
but also a research project, a work schedule or a projected plan or any other
matters you wish to include. In A-Z E.054 in General Business and
Commercial the company has agreed not to make any changes to the work
plan or schedule without the prior approval of the originator.

• The originator therefore has control of the project, but it is clear that changes
may be made if approved.

A-Z E.054
The [Company] agrees that no alteration shall be made to the Work Plan or
the Work Schedule without the prior approval of the [Originator].

No editorial control

• There are many circumstances and occasions where one party may quite
reasonably insist that no changes are to be made.

• For example if there is a trade mark user licence agreement in which case any
change – however minor – may cause issue with a tightly controlled use of a
very specifically designed trade mark.

• One party in an agreement may acknowledge the fact that they have no
editorial control in respect of the project as in A-Z E.072. The licensor has
acknowledged that the distributor has the sole discretion regarding decisions
relating the production, manufacture, distribution, marketing and promotion
of the work.

A-Z E.072
The [Licensor] acknowledges that the [Distributor] shall have the sole
discretion as to the manner and method to be used in the production,
 manufacture, distribution, marketing and promotion of the [Work].

• In a sponsorship agreement in clause A-Z E.121 the sponsor acknowledges

that the television company has sole control regarding editorial, scheduling
and programming decisions.

A-Z E.121
The [Sponsor] acknowledges that all editorial, scheduling and
programming decisions concerning the [Programme] are entirely at the sole
discretion of the [Television Company].

• Where the sponsorship is of an event as in A-Z E.124. The sponsor agrees

that it has no editorial control over any part of the event, the content,
agreements with third parties, the brochure or any media coverage.

• The clause also makes it clear there is no requirement to seek approval or to

consult with the sponsor.

A-Z E.124
The [Sponsor] agrees that it shall have no editorial control over any part of
the [Event], the content, agreements with third parties, the brochure and/or
any media coverage arranged and/or organised by the [Company]. Nor
shall the [Sponsor] have any right of approval and/or to be consulted.

• In A-Z E.075 in Merchandising the editorial clause is very specific in its

nature and relates to the name, logo and image of the licensor. The licensee
cannot make any changes as set out in 1.1 and 1.2.

• I.3 makes it clear that the licensee has no authority for the name, logo and
image to be used by a third party.

A-Z E.075

1.1 The [Licensor] does not grant the [Licensee] any right to adapt,
change, alter and/or vary the colour of the [Name/Logo/image] which
is set out in Schedule [–].

1.2 The [Licensee] agrees that it must reproduce, distribute and supply the
 [Name/Logo/Image] which is set out in Schedule [–] in the exact
shape, form and size and without any changes however minor.

1.3 The [Licensee] agrees that it has no authority to permit, allow and/or
represent to any third party that they may use, reproduce and/or supply
the [Name/Logo/image] which is set out in Schedule [–] for any
reason. That all third parties including agents, marketing and publicity
companies and distributors must be authorised directly and personally
by the [Licensor].

• It may be that once approval for any content, packaging and marketing
material has been provided as in A-Z E.130 in University, Library and
Educational. After that approval has taken place no further changes can be
made.

A-Z E.130
The [Licensee] agrees and undertakes that the [Work/Film/Article] shall
only be reproduced, distributed, supplied and sold in the exact form and
with the same content, packaging, marketing and promotional material as
approved by the [Institute].

• Sometimes there is a reluctance to provide any opportunity for further

editorial changes or alterations where the material in question is likely to
have already undergone a rigorous process of assessment and approval by a
company. The labels and warnings may have legal significance in some
circumstances. So there would then be no reason to allow a third party to
seek to change any packaging or marketing materials as in A-Z E.101 in
Purchase and Supply of Products

A-Z E.101
The [Product] shall not be changed, altered, added to, adapted or varied in
any way by the [Distributor] and shall be kept in the exact same form,
content and packaging in which it is delivered by the [Supplier].

• A clear contractual obligation not to make changes often appears where the
restriction is intended to apply primarily to third parties. In such
circumstances the contracting party acquiring rights needs to be placed under
a clear obligation to maintain the integrity of the product or the material and
 prevent changes by a third party as under clause A-Z E.035 in Film and
Television.

A-Z E.035
Neither the [Company] nor any sub-licensee nor any other third party
engaged to market, promote, distribute and/or exhibit the [Film] at any time
shall be entitled to make any changes, alterations and/or add any material
and/or music and/or sounds to the [Footage] supplied by the [Licensor]. No
copies of the [Footage] shall be reproduced and/or supplied to any third
party which has not been specifically approved and authorised by the
[Licensor] in advance. Failure to adhere to this procedure shall entitle the
[Licensor] to terminate the Agreement by notice by email to [Name] with
immediate effect.

• An editorial control clause may address the issue of third parties making
changes to material.

• There may be a very short reference to changing material and the right to edit
which covers a licensee and any third parties as in A-Z E.052 in General
Business and Commercial.

• Neither the licensee nor any third party may edit, adapt or alter the work
unless the prior consent of the licensor is obtained. Here consent could be
verbally by email or in writing.

A-Z E.052
The [Licensee] shall not be entitled itself or to authorise any third party to
edit, adapt or alter the [Work] without the prior written consent of the
[Licensor].

• Another form of editorial control is to prevent material being added by third

parties which was not part of the original work.

• In A-Z E.056 in General Business and Commercial the company does not
have the right to either instruct a third party to contribute to the original work
or to publish, distribute or market the original work so that it appears with
the another work by someone else.
• The company must obtain the prior written consent of Name A in each case.

A-Z E.056
The [Company] shall not have the right to instruct, permit or allow any
third party to contribute to the [Work] or to publish, produce, distribute or
market the [Work] together with other works or for any material in any
format in any medium to be added to, appear with or be attached to the
[Work] unless in each case the prior written consent of [Name] have been
provided for such purpose.

• A company which owns or controls a website as in A-Z E.059 in Internet and

Websites may make it clear on their site and in their terms and conditions of
use and access to any contributor – whether text, images, photographs or
music or lyrics. That the company has the final decision as to any editorial
content and links.

• Here the company also makes it clear that they may edit, delete, comment
upon, endorse or even develop all material of any nature which is displayed
or posted on the website.

A-Z E.059
The [Company] shall have the final editorial decision in respect of the
content of and links to this [Website]. The [Company] shall be entitled to
edit, delete, comment upon, endorse, or develop the subject matter of any
material which is displayed or posted on this [Website].

• The clause in A-Z E.060 goes further and the website master and the
company are asserting:

– editorial control to delete, edit, adapt and vary any material in any format
which is displayed or added to the website

– sole discretion to reproduce the material in another section or license or

distribute it to another third party or to amend, translate, publish or issue
it as part of a press release

A-Z E.060
The [Webmaster] and the [Company] have the right to control all material
 of any nature on this [Website] and at their sole discretion either of them
may without notice to you delete, edit, adapt, vary, reproduce in another
section, license, distribute to another third party, or amend, translate,
publish, issue as part of a press release any material in any format or
medium which is contributed to, displayed on, communicated to or added
to this [Website] by any person, company or organisation.

• The debate may concern editorial control in some form as to the type of work
and contributions which a person is required to make. In A-Z E.111 the
manager accepts that the sportsperson may refuse to carry out work which he
or she decides in their opinion is in conflict with his or her image, religious
beliefs and reputation.

• The sportsperson may also refuse work on the grounds that it is offensive,
demeaning, hazardous, conflicts with the code of conduct of any body of
which he or she is a member or due to other work, family commitments or
contracts.

A-Z E.111
The [Manager] accepts that the [Sportsperson] shall be entitled to refuse to
carry out any work which he/she deems to be in conflict with his/her
image, religious beliefs and reputation or which is offensive, demeaning,
hazardous or conflicts with any code of conduct of any [professional body]
of which he/she is a member or other work or family commitments or
contracts.

Does new editorial input create a new copyright?

• Concern is sometimes expressed as to whether editorial additions or changes

have the effect of creating a new claim to copyright ownership either from
the freelance editor or the publisher who employs an editor. While such
concerns are to be taken seriously, in practice and in theory they are unlikely
to be sustainable.

• Editorial practices concerning developing and editing the story line, resolving
inconsistencies, making deletions of repetitive or incoherent text, corrections
to grammar, syntax or spelling do not create a claim by the editor or the
company to any rights which have not been set out in the agreement.
• The reason for this is that, on the basis that the work being edited is an
original work such additional wording or deletions are unlikely to be –
substantial – in fact or law.

• In addition, even if the qualitative substantiality legal test in the United

Kingdom was in theory overcome, the new copyright could not be protected
as it is unlikely to be treated an original work in itself.

• In extreme cases where two people have worked extensively together on a

project and collaborated from an early stage on its development there may be
an argument that the final work is in law in the United Kingdom a work of
joint copyright ownership.

• Section 10 (1) of the 1988 Copyright, Designs and Patents Act as amended
states:

– work of joint authorship means a work produced by the collaboration of

two or more authors in which the contribution of each author is not
distinct from that of the other author or authors’

• If there are concerns over the copyright position then the best way to deal
with this issue is to state who owns any copyright in any new material and
intellectual property rights as in A-Z E.047 in General Business and
Commercial.

A-Z.E.047
The [Company] acknowledges that all such adaptations, variations, edits or
developments of the [Work] as are permitted have the effect of creating a
new copyright or any other intellectual property rights, patents, computer
software, trade marks or domain names shall belong to the [Assignee].
 EXCLUSIVITY

• In the A-Z there are 162 clauses relating specifically to Exclusivity from A-Z
E.207 to A-Z E.368.

• This section can be cross referenced to other relevant subjects in the main
clause headings in the A-Z: of Adaptation, Advertising, Assignment, Buy-
Out, Compliance, Confidentiality, Consultation, Copyright Clearance,
Copyright Notice, Credits, Defamation, Distribution Expenses,
Endorsement, First Refusal, Gross Receipts, Indemnity, Legal
Proceedings, Liability, Licence Period, Marketing, Material, Moral
Rights, Net Receipts, New Editions, Novation, Option, Quality Control,
Restraint of Trade, Rights, Sub-Licence, Term of the Agreement,
Territory and Variations.

The meaning and purpose of exclusivity

• In this main clause heading the word exclusivity provides many choices.

• If you wish to ensure that an agreement is exclusive then it must be done in

writing and stated in the agreement that the arrangement is exclusive.

• You must also state which matters covered by the agreement are exclusive.

• If an area of the agreement is not exclusive then that should also be stated as
this helps make it clear that the parties knew what they were doing.

• You may also wish to add a clause where the person or company who has
agreed that their material or services are exclusive acknowledges this fact in
an additional clause.

• There may be no exclusivity in which case an agreement is non-exclusive.

• An agreement may be exclusive for a fixed period but then become non-
 exclusive for a later period.

• For example a retailer may have an exclusive launch of a product in its

outlets which lasts for six weeks. After that period the supplier can supply
third parties and the agreement is then drafted so that it is non-exclusive.

• An agreement may also be exclusive or non-exclusive for the supply of

services or the performance of work or the distribution of a product.

• Within the same agreement one party – the presenter – may be supplying
their exclusive services but the agent or company are only providing their
non-exclusive services in return.

• An exclusive licence means essentially that one person or company has the
sole right to control and exercise the copyright or intellectual property rights
in respect of a work in which rights may be recognised and exist.

• Alternatively it may mean that a person has agreed that an agent or company
shall have the sole and exclusive right to exploit the services of the person to
third parties.

• A writer may, for instance, agree with an agent that the agent is the only one
to exploit the work of the author. The author is therefore agreeing to provide
his or her exclusives services to the agent.

• The author will therefore be unable to provide services for any other third
party without the consent of the agent.

• An exclusive licence or an agreement to supply services does not have to

continue indefinitely and may only be for a limited fixed period. For further
clauses on this issue please look at the main clause headings Licence Period
and Term of the Agreement in the A-Z.

• If an agreement involves an assignment then there is no reference to

exclusive or non-exclusive as whatever is being assigned is being given in its
entirety for those copyright and intellectual property rights being assigned to
the other party.

• The licensee which has acquired an exclusive licence or an agent who has
acquired the exclusive services of an artist will have sole authority and
 control to the exclusion of all others.

• An exclusive agreement by its very nature means that one person or company
holds those rights to the exclusion of anyone else or any third party.

• That does not mean however that the exclusivity cannot be limited to only
certain specified copyright and intellectual property rights.

• The use of the word exclusive may also apply to the provision of services by
a consultant under an agreement or for the supply of products to a company.

• Where an agreement is to be exclusive it may be limited by the duration of

the period in which the agreement is exclusive.

• The length of the period for which the agreements lasts and in which the
agreement is exclusive is often by reference to the defined Licence Period or
Term of the Agreement.

• Where there is an assignment then the duration is usually drafted as for the
full period of copyright and any extensions and renewals.

• The words ‘and in perpetuity’ may also be added.

• An agreement does not have to be on an exclusive basis for the whole term of
the agreement.

• It could for instance be exclusive for the first six months or a year and then
non-exclusive thereafter.

• Agreements may be exclusive and limited by the types of:

– copyright and intellectual property rights granted; or

– by the duration; or

– by the country or territory; or

– by the type of services or work to be provided; or

– by the types of products or other material covered; or

 – for use in conjunction with another product or service

• Agreements may also be hybrid in nature, being exclusive in some respects

and non-exclusive in others or an agreement may start off as exclusive and
after a period of time become non-exclusive. The fundamental commercial
issue is that any form of exclusivity should carry a premium, however
expressed.

• Often an exclusive element is used to protect a company and to prevent its

employees leaving to work for a competitor. For more on Restraint of
Trade please look at the main clauses heading in the A-Z.

• Where a zero-hour employment contract exists and a person has no

confirmed regular hours of work each month in the agreement. Then a
company is prohibited from issuing contracts to an employee on those terms
in the United Kingdom on an exclusive basis.

• Where there is an exclusive agreement for the supply of one person’s work or
services to another agent or company. It is possible to draft the agreement so
that it does not cover all the creative output by that person but only makes
specified areas of work exclusive.

• For instance an author may agree that an agent can deal with his or her
writing and books on an exclusive basis but not any material relating to
plays, musicals, television, radio art, photographic or film scripts.

• Similarly a television presenter may agree that his or her agent can act on
their exclusive behalf relating to work for television, radio, writing articles,
charity appearances and talks but not for their children’s books,
merchandising, advertising, brand promotion appearances and product
placement or sponsorship agreement.

• When you do not want a person or company to act on your behalf in relation
to certain work or rights. Then it is always better to state in the agreement
that these rights and work are reserved and are not covered by this
agreement.

• It is a mistake to assume that because any matter has not been mentioned it is
therefore obviously excluded.
• There have been many disputes where one party has argued that of course
certain rights or work were included in an agreement. This may relate to a
sequel or new edition or work to be created in the future or even to rights or
technology which did not exist at the time the agreement was signed.

• For more on this issue please look at the main clause heading Rights in the
A-Z.

Drafting an exclusive clause

• Many agreements are drafted to appear exclusive but are in fact limited in
some sense. These are dealt with below in the section on drafting a limited
exclusive clause.

• In the United kingdom the Copyright Designs and Patents Act 1988 as
amended actually defines the term ‘exclusive licence’ as opposed to the word
‘exclusive’.

– An exclusive licence shall mean a licence in writing signed by or on

behalf of the copyright owner which authorises the licensee to whom the
licence is granted. A right which the licensee can exercise to the
exclusion of all others including the licensor

• A version of this is reflected in A-Z E.243 in Services.

A-Z E.243
‘Exclusive Licence’ shall [be defined in accordance with the Copyright,
Designs and Patents Act 1988 as amended in respect of dealings with
design right] and shall mean a licence in writing signed by or on behalf of
the [Design Right Owner] authorising the [Licensee] to the exclusion of all
other persons including the person granting the Licence to exercise a right
which would otherwise be exercisable exclusively by the [Design Right
Owner].

• An agreement may be for full-time employment and the person may also
write, run another business or have a second job provided it does not create a
problem or conflict with the main job.

• That is often the case despite the fact that the agreement provides that the
 person must provide their exclusive services to a company.

• There may be clauses in an agreement which address the issue of what a

person may do outside of their work hours. Some clauses specifically prevent
additional work hours with an agency or private work.

• Many employment agreements which have restraint of trade clauses which

apply not only during the period of the agreement but also for a period
afterwards fail due to the excessive nature of the restrictions. So care needs
to be taken not to impose unreasonable restrictions on a person’s life that
could not be enforced.

• The main issue may be that a person can work for a competitor or not rather
than just whether an agreement is exclusive or not.

• The employee may agree not to take any other employment outside his or her
working hours or get involved in any project which competes directly or
indirectly with the business interests of the company as in A-Z E.217 in
Employment.

• This clause would be used as well as an exclusive employment clause.

• This clause applies to the main company which employs the person and any
subsidiaries.

• If the consent is granted for the work by the company then this clause does
not apply.

A-Z E.217
The [Employee] warrants that he/she will not undertake any other
employment outside his/her working hours whether remunerated by
payment or benefits in kind or otherwise, nor will he/she have any interest
in any business or project which directly or indirectly competes with the
business interests of the [Company], its subsidiaries or associates without
the prior written consent of the [Managing Director].

• In A-Z E.220 in Employment the executive has agreed that he or she will
provide their services on a full time and exclusive basis.
• It is important here that a detailed job description is attached and not just a
title or role.

• 1.3 makes it clear that the company cannot expect the executive to fulfil a
management role for the Board of Directors where the requests fall outside
the scope of his or her job description.

A-Z E.220
During the continuance of the appointment the [Executive] shall provide
his/her services to the [Company]:

1.1 In a professional manner, on a full-time and exclusive basis and shall

perform his/her duties diligently and in good faith so that his/her
services are satisfactorily performed under this Agreement.

1.2 Carry out the duties described in the [Executive Job Description] in
Schedule [–].

1.3 Undertake such other duties and exercise such powers in relation to the
conduct and management of the [Company] and its associated
businesses as the [Board of Directors] may request, direct and resolve
provided that the additional matters are not major changes and
effectively a new job description.

• An additional clause is A-Z E.221 in Employment where the executive

agrees that he or she shall not have the right to supply services to another
company which would either be prejudicial to the company or within his or
her working hours. Any such work has to be approved and would require the
prior consent of the company.

A-Z E.221
The [Executive] agrees that he/she shall not at any time during the course
of this Agreement supply services to any third party without the prior
written consent of the [Company] for duties which would be either
prejudicial to the interest of the [Company] and/or be performed during
working hours.

• An exclusive licence for the grant of all media rights in a film as in A-Z
 E.233 in Film and Television follows a specific pattern.

• The consideration is the licence fee which is defined in the definitions.

• The company grants the television company:

– the sole and exclusive rights

– in all media

– whether now known or hereafter discovered

– in the film

– and/or

– parts

– including the soundtrack

– throughout the territory – which is defined in the definitions

– for the term of the agreement – which is defined in the definitions

• Then a list of rights is given by way of example. Note the use of the words:

– For the avoidance of doubt it is agreed that such rights shall include but
not be limited to…..

A-Z E.233
In consideration of the Licence Fee the [Company] grants to the
[Television Company] the sole and exclusive rights in all media whether
now known or hereafter discovered in the [Film] and/or part(s) (including
the soundtracks) throughout the Territory for the Term of this Agreement.
For the avoidance of doubt it is agreed that such rights shall include, but
not be limited to the [Television Rights, DVD Rights, Theatric and Non-
Theatric Rights, Library Rights, Publication Rights, Merchandising
Rights].

Drafting a limited exclusive clause

• There are far more types of agreements which are not completely exclusive.
This may be because the exclusive period is followed by a non-exclusive
period or only certain rights are granted and not others which are reserved by
the licensor.

• In A-Z E.368 in University, Library and Educational the institute A only has
a limited duration where the agreement is exclusive. After the end date the
institute agrees that any licence is non-exclusive.

• In addition the institute A agrees that in the non-exclusive period that name B
can have the work reproduced by any third party.

• Note no consent is required from the institute.

A-Z E.368
The [Institute] agrees that it shall only have exclusive rights to the [Work]
from [date] to [date]. After [date] then the [Institute] agrees that any licence
granted to it by [Name] shall be non-exclusive and that [Name] may
appoint other parties to reproduce and exploit the [Work] in any form.

• Where a person uses the services of an agent as in A-Z E.330 in Services. It

is often confusing because in reality both parties are providing services from
one to the other but only one is agreeing that his or her services will be
exclusive.

• Actor A has agreed that agent B can be his or her exclusive agent but only for
the type of work listed.

• In this list of work it would be arguable both ways as to whether a book and
writing fell within merchandising. If not then the agent would not represent
the actor. Please look at the main clause headings Rights and Work in the
A-Z for more descriptions of areas of rights and work.

• The exclusive agreement is also limited to the term of the agreement and the
territory which is defined in the definitions.

A-Z E.330
The [Actor] agrees that the [Agent] shall be his exclusive agent in respect
of all work in respect of appearances and performances in satellite, cable,
 digital and standard television programmes, theatre, national and local
radio, commercials on radio and television, feature films, corporate and
educational DVDs, voice-overs, and merchandising for the Term of the
Agreement throughout the Territory.

• In A-Z E.361 in University Library and Educational where author A is

granting an exclusive licence to institute B for them to publish a work and
any parts in any media. The licence is again restricted by territory and the
licence period, both of which are defined in the definitions.

• Term of the Agreement, Territory and Licence Period are all main clause
headings in the A-Z.

• Note in this clause the rights granted are in all media for the whole work and
parts.

• The consideration is the Author’s Royalties and the Advance. These are
both defined in the definitions of the agreement and are also in the main
clause headings of the A-Z.

A-Z E.361
In consideration of the [Author’s] Royalties and the Advance the [Author]
grants to the [Institute] the sole and exclusive right to publish and exploit
the [Work] and any parts in All Media throughout the Territory for the
duration of the Licence Period.

• It is useful to combine a clause where the exclusive services are provided in

one part and in another section it makes it quite clear what a person must not
do unless they have been given consent as in A-Z E.323 in Services.

• In 1.1 presenter B agrees to provide his or her exclusive services to company

A.

• The role is as presenter for a series and such as work and contributions as
company A may reasonably require.

• The exclusive agreement is limited to the defined term of the agreement and
the territory.
• As there are particular areas of work which the company specifically does not
want the presenter to do without prior consent. There is also 1.2 where the
presenter agrees not to provide his or her services to any other television,
website, radio or publishing company whether for money or charitable
purposes during the term of the agreement.

• The only exception to 1.2 should be where company A provides its prior
written consent.

A-Z E.323
1.1 The [Company] and the [Presenter] agree that in consideration of the
[Presenter’s] Fee the [Presenter] shall provide his/her exclusive
services to the [Company] as presenter of the [Series] and provide such
other contributions as may reasonably be required by the [Company] in
respect of recordings, films, photographs, appearances, meetings and
other work directly related to presenting and promoting the [Series] for
the Term of the Agreement throughout the Territory.

1.2 The [Presenter] agrees not to provide his/her services for any other
[television/radio/telephone/internet and website/publisher/other]
whether educational, non-commercial or commercial business and
specifically not [–] during the Term of this Agreement without the
prior written consent of the [Company].

• A clause may be exclusive but limited to the duration as in A-Z E.304 in the
Purchase and Supply of Products. Note here there is no limitation to any
country. The distributor is appointed an exclusive supplier for a fixed period.

A-Z E.304
The [Company] agrees to appoint the [Distributor] as the sole and
exclusive supplier of [Product] and any other products in the category of
[specify] to the [Company] from [date] to [date].

• There may be a situation as in A-Z E.314 in Services where the services of

agent A are non-exclusive as in 1.1.

• In 1.1 the agent agrees that he or she will only provide their services for the
defined term of the Agreement.
• Whereas artist B has agreed to engage the exclusive services of agent A to
commercially exploit the name, image, services and work of the artist in all
media.

• This does not mean that the agent accepts that he or she will not be entitled to
money after the end of the agreement. This matter needs to be dealt with as a
separate issue. Please look at the main clause headings on Accounting
Provisions, Payment and Royalties in the A-Z.

• Although the artist has permitted the agent to have his or her exclusive
services. In 1.3 the agent cannot commit to any services or work without the
prior consent of the artist.

• The artist can refuse to agree to any work or services and the agent has
agreed to this scenario and cannot make any claim for compensation, losses
or damages.

A-Z E.314
1.1 In consideration of the [Agent’s Commission] the [Agent] agrees to
provide his/her non-exclusive services to the [Artist] for the Term of
the Agreement throughout [country].

1.2 In consideration of the Net Receipts the [Artist] engages the exclusive
services of the [Agent] for the Term of the Agreement throughout the
Territory to engage and commercially exploit the [Artist] their name,
image, services and work in all media including, but not limited to, all
forms of sound, vision, interactive, image, text, icons, film, video,
DVD, television, radio, theatre, telephones, merchandising, publishing,
biography, endorsements, advertising, commercials, promotional work
and on the internet and websites.

1.3 The [Agent] agrees that any form of exploitation of the [Artist’s]
services, name or work shall require the prior consent of the
[Artist].The [Artist] shall be entitled to refuse to agree to any work or
to carry it out or for the use of his/her name for any reason and the
[Agent] shall not be entitled to seek any compensation, loss or
damages or otherwise which arises from the failure of the [Artist] to
provide consent and/or provide his/her services.
• In a merchandising agreement there may be an exclusive licence and then a
non-exclusive licence. The licence may only relate to a particular sample and
prototype based on a character from a story in a film or book and nothing
else as in A-Z E.274 in Merchandising.

• This clause would allow the licensor to then appoint another company to
reproduce a new version of the character after the end of the exclusive period
with the licensee. This would therefore increase the potential revenue to the
licensor.

A-Z E.274
In consideration of the Advance and the [Royalties/Unit Payments] the
[Author] grants to the [Company] the sole and exclusive right to reproduce,
supply and sell a toy product in the form of a [specify] based on the
character called [name] from the [Book/Film] entitled [specify]. The
licence shall be exclusive from [date] to [date] and thereafter the licence
shall be non-exclusive until expiry on [date]. The licence shall be for the
Territory.

• An agreement may be exclusive in relation to specific rights. The rights

would be defined in the definition section and then used in the clause such as
the Television Rights, Publishing Rights, Merchandising Rights.

• Alternatively the copyright and intellectual property rights and the material
are listed in the clause as in A-Z E.214 in DVD Video and Discs.

• Name A is granting distributor B the exclusive right to reproduce, sub-licence

and exploit the performance and appearances of name A in any material
created under the agreement.

• The exclusive agreement is for ten years from a fixed date in 1.1.

• There is an option to extend the period for an additional extra fee.

• In 1.3 it is made clear that if the agreement expires or is not extended then
neither party has the right to exploit the material unless the parties reach a
new further agreement.

A-Z E.214
 1.1 In consideration of the [Fee] and the royalties due in clause [-] [Name]
grants to the [Distributor] the exclusive right to reproduce, exploit and
sub-licence the performance and appearances of [Name] in all films,
sound recordings, photographs, computer generated images and any
other associated material created and/or developed under this
Agreement which features [Name] throughout the world. [Name]
grants such exclusive rights to the [Distributor] for a period of
[number] years from[date].

1.2 There after the [Distributor] shall have the right and/or option to renew
the exclusive period of rights for an additional period of [number]
years subject to a further non-returnable fee which cannot be offset
against royalties of [number/currency].

1.3 In the event that the exclusive period is not extended then neither party
shall be entitled to exploit any of the material created under this
Agreement and/or the rights set out in 1.1 unless both parties agree
terms and conditions.

• The old adage in the context of rights is to grant narrowly and acquire
broadly. In A-Z E.366 in University Library and Educational the aim is to
make the exclusive agreement very narrow and limited.

• The distributor only has the right to exploit the work:

– in an agreed format

– in a specified list of countries

– for a fixed period

• The distributor has no right to sub-licence the work to any third party.

• The reproduction and sales of the work must be in accordance with the
samples and drafts and quality agreed and approved by the institute.

• For more clauses on this topic please look at the main clause headings
Material and Quality Control in the A-Z.
 A-Z E.366
1.1 The [Institute] grants the [Distributor] the exclusive rights to exploit
the [Work] in the following format [specify] in the following countries
[list] from [date] to [date].

1.2 The [Distributor] shall not have the right to sub-licence the [Work] to
any third party at any time.

1.3 The reproduction, manufacture, distribution and sales of the [Work]

must be carried out by the [Distributor] in accordance with the
samples, drafts and to the quality agreed and approved with the
[Institute].

Non-exclusive

• If the intention is to grant rights on a non-exclusive basis then state the

position unequivocally.

• It seems obvious to suggest that if rights are to be granted on a non-exclusive

basis then it is best to be clear about the position such as with A-Z E.296 in
Publishing.

• The non-exclusive licence granted by author A to publisher B is for a limited

number of words for a quote for a book.

• The licence is limited to one language and the specific book and is limited to
hardback, paperback and audio.

• There are no ebook or digital book rights or downloading rights or electronic

rights granted.

• The licence is for an agreed period and agreed countries only.

• In 1.2 the author reserves all other rights which are not granted.

A-Z E.296
1.1 In consideration of the [Fee] the [Author] grants the
[Publisher/Distributor] the non-exclusive licence to use [number]
words on pages [specify] as a quote from the [Work] reference ISBN
 [specify] to be included in the Book entitled [specify] in the [specify]
language which is to be sold in printed form in hardback, paperback
and as an audio disc throughout the [world/Territory] from [date] until
the expiry of a period of [number] years.

1.2 All other rights are reserved by the [Author] and no rights are granted
to sub-licence, and/or assign the extract from the [Work] and/or to
exploit the [Work] in any other media at any time. Nor is any right
granted to register any right and/or interest in any part of the [Work]
and/or the title and/or any character.

• Another example is A-Z E.294 in Publishing where although it is a non-

exclusive licence. The focus is on ensuring that the copyright notice and title
are on all copies. As well as the words‘all rights reserved’.

A-Z E.294
In consideration of the [Fee] the [Author] grants the [Company/Name] the
non-exclusive right to scan [number] copies of [number] pages of the
[Work] onto the hard drive of the computer temporarily and to supply and
distribute by means of an email attachment the same material to [number]
persons over the internet during the licence period from [date] to the
completion of the task but no late than [date]. The [Company/Name] agrees
and undertakes to ensure that the correct copyright notice and title shall be
on the front of all copies in any email attachment together with the words
‘All rights reserved. No permission is granted to store permanently on your
hard drive and/or to supply copies to others. Please print only one copy.

• Where a person provides their non-exclusive services as in A-Z E.335 in

Services the detail of the work to be carried out and the attached schedule are
important and should be specific. These subjects are then limited by the term
of the agreement and the territory.

• Do not confuse this clause with an exclusive licence for the exploitation of
the rights because this clause does not do that. Another additional clause
would be needed which is either an exclusive licence or an assignment to
licence or assign rights and confirm what the company can do with the
product of the services of the work of the artist and what they have actually
acquired and own.
 A-Z E.335
In consideration of the Fee and Repeat Fees the [Artist] agrees to provide
his non-exclusive services to the [Company] to promote and advertise the
[Company’s] Products by personal appearances, performances, voice-
overs, for advertisements, for television, radio, newspapers, magazines,
promotional films and events in accordance with the Work Schedule
attached to this Agreement and on such other occasions as may be agreed
for the Term of this Agreement throughout the Territory.

• Instead of using the term non-exclusive from one party to another the person
who is paying for the work or services may confirm that they accept the
arrangement is not exclusive as in A-Z E.224 in Employment.

A-Z E.224
The [Company] agrees and acknowledges that there is no exclusive
arrangement for the services of [Name]. That [Name] is at liberty to work
with, endorse, promote and/or advertise any other company, service and/or
product at any time. The [Company] agrees that there are no verbal and/or
written restrictions, and/or codes of practice and/or guidelines to which
[Name] must adhere. Nor is there any requirement by the [Company] that
[Name] should notify and/or seek the approval of the [Company] at any
time prior to any commitment to a third party.

• Where the services of a contractor are to be provided on a non-exclusive

basis a company may want the contractor not to engage in any activity which
would conflict with or be detrimental to the interests of the company as
expressed in A-Z E.240 in General Business and Commercial.

A-Z E.240
During the continuance of this Agreement the [Contractor] is not required
to make its services available exclusively to the [Company] but at all times
the interests of the [Company] shall prevail. The [Contractor] shall not
undertake any engagement or activity which is liable to detract from its
ability to render its services hereunder or impair its efficiency to do so or
which would conflict with or be detrimental to the interests and operation
of the [Company].
• Whether a right is granted on an exclusive basis or a non-exclusive basis a
right has of course been granted.

• If a right is granted exclusively that does not mean all other rights have been
granted non-exclusively.

• This may seem obvious but there can be differences between what the parties
intend to agree and what the agreement actually states.

• Therefore it is good practice to state for the avoidance of doubt that rights are
not granted. This reservation of rights should be included where necessary
for an exclusive or non-exclusive agreement.

• A licence may authorise the non-exclusive reproduction in printed form of an

image and text as in 1.1 of A-Z E.213 in DVD Video and Discs.

• In 1.3 the copyright owner makes reference to the fact that no rights were
granted to:

– electronic or digital rights

– add to, vary, change or delete - from the image and text

– translate the text

– adapt the image and text

A-Z E.213
1.1 The [Copyright Owner] grants the [Licensee] the non-exclusive right
to include the [Image/Text] known as [specify/reference] in the [Work]
and [Film] to be reproduced in the form of a printed [Report] and
[Disc] in [country] from [date] to [date].

1.2 The [Licensee] shall only be entitled to make copies and/or reproduce
the [Image/Text] for the purpose of producing the [Report] and [Disc]
which shall only be used to submit for [specify reason] purposes to
[specify organisation].

1.3 No right is granted to create an electronic and/or digital version and/or

to licence and/or authorise any third party to make copies for any
 reason. Nor is any right granted to add to, vary, change and/or delete
from the [Image/Text] which should remain unchanged, in content,
colour and layout. Nor is any translation and/or adaptation authorised
and all other rights are reserved to the [Copyright Owner].

• Another example of the reservation of rights in relation to an agreement is

provided by A-Z E.237 in Film and Television.

• The rights not granted in the non-exclusive licence are reserved by the
copyright owner. This includes rights and technology which did not exist at
the time of the agreement.

A-Z E.237
The grant of the non-exclusive right in clause [-] to the [Licensee] shall not
entitle the [Licensee] to exploit any other rights which are reserved by the
[Copyright Owner]. Where the rights have not been created and/or the
technology developed at the time of this Agreement. Then any such rights
shall belong to the [Copyright Owner] and not the [Licensee].

• A very general and intentionally blunt reservation of rights is provided by A-

Z E.259 in Internet and Websites.

• In this clause the author is granting a non-exclusive licence for music, lyrics
and the sound recordings to be used for an online promotion on the internet
for a limited period.

• The reservation in 1.3 ensures that the company realises that it cannot use the
music, lyrics and sound recordings on the television or radio. If it did so then
it would be in breach of the agreement.

A-Z E.259
1.1 In consideration of the payment of [figure/currency] by [date]. The
[Author] grants a non-exclusive licence for the [Music/Lyrics] and the
Sound Recordings to the [Company] to use for a banner advertisement
for the [Company] on the [Website] on the internet in any part of the
world from [date] until [date].

1.2 The [Company] shall only be entitled edit the [Music/Lyrics] and the
 Sound Recordings and shall not be entitled to add any new material
without the prior written consent of the [Author].

1.3 All other rights are reserved. No right is granted to make advertisement
for television and/or radio and/or to grants any rights to third parties at
any time. Nor is there any right to substitute another person for the
[Music/Lyrics] and the Sound Recordings and/or to make any
translation.

• A sponsorship agreement may only have a non-exclusive clause as the

organisers want to be able to enter into contracts with other third parties for
funding and products for an event or festival.

• A company which has its own range of brands and products may engage the
services of a person to appear in their advertising campaign in a variety of
different formats.

• The company is unlikely to be able to secure the exclusive services of an

artist who is well-known for such a campaign and the agreement is likely to
be non-exclusive as in A-Z E.350 in Sponsorship.

• In this clause the company is engaging the non-exclusive services of the

sportsperson to promote and endorse the sponsor’s product which is defined
in the definitions.

• The non-exclusive arrangement is only for the defined territory and is limited
by the definition of the licence period.

E.350
The [Sponsor] agrees to engage the non-exclusive services of the
[Sportsperson] to promote and endorse the [Sponsor’s Product] throughout
the Territory for the duration of the Sponsorship Period.

• In A-Z E.351 in Sponsorship the sportsperson has agreed not to enter into a
sponsorship agreement with any third party concerning the same or similar
items in respect of the sponsor’s product. The detail of the generic types is
set out in the agreement. It may specify a range of products or other brands
or other companies.
• Although the agreement is non-exclusive there may also be a period during
which the sportsperson has agreed they will not enter into other types of
sponsorship agreements. The restriction could be also drafted much wider to
cover advertisements, magazines articles and promotional appearances.

• Note the restriction only applies in this clause for the duration of the defined
sponsorship period. The restriction could be for a much shorter period than
the term of the main agreement.

A-Z E.351
The [Sportsperson] undertakes not to enter into any other sponsorship
agreement with any third party concerning the same or similar items in
respect of the [Sponsor’s Product] namely [–] for the duration of the
Sponsorship Period.

• Another alternative approach to take is to list the exact products which you
do not want a person to promote or endorse for a fixed period as in A-Z
E.352 in Sponsorship.

A-Z E.352
The [Sportsperson] undertakes not to enter an agreement to promote or
endorse the products of the following companies for the duration of the
Sponsorship Period [–].

• In contrast, it may also be useful for a sponsor or other company to

acknowledge in an agreement that the contract is not exclusive as in A-Z
E.353.

• The clause may also make it clear that funds can be raised from any third
party and no prior consent or consultation with the sponsor is necessary.

A-Z E.353
The [Sponsor] agrees that it does not have any exclusive rights in respect of
the [Event/Programme] and the [Company] shall be entitled to receive
and/or arrange such other forms of funding, endorsement, product
placement and sponsorship with any third party it thinks fit. That no
consultation with and/or approval by the [Sponsor] is required prior to the
conclusion of any agreement.
• There may be any number of additional conditions which can be used to
surround a non-exclusive clause in order to restrict the other party or the
complete opposite to confirm that there are no restrictions.

• Some conditions will relate to the ranking and recognition of one party as
opposed to another in marketing and promotional material where new funds
are introduced to a project from a third party. Please look at the main clause
headings Marketing and Material in the A-Z for other clauses.
 FORCE MAJEURE

• There are over 90 clauses on Force Majeure in the A-Z from A-Z F.074 to
A-Z F.170.

• There is a separate main clause heading for Act of God in this work and in
the A-Z A.386 to A-Z A.410 which are also relevant.

• The other main clause headings in the A-Z which may be cross-referenced
from Force Majeure include Arbitration, Break Clauses, Costs,
Damages, Insurance, Legal Proceedings, Liability, Loss, Mediation,
Novation, Product Liability, Quality Control, Suspension and
Termination.

What does force majeure mean?

• The concept of force majeure has always been consistent in its main aim
which is to absolve one or more parties from their inability to perform
contractual obligations in the event of an unforeseen event which could not
have been prevented and was beyond their reasonable control.

• Examples of force majeure include a variety of events which could be

described as Acts of God which would cover:

– natural disasters

– extreme weather conditions

– volcanoes

– hurricanes

– tsunamis
 – earthquakes

– extreme storms with thunder and lightning

– floods

• Some force majeure clauses also include:

– war

– riots

– civil unrest

• Some force majeure clauses either include or exclude grounds such as:

– equipment and machinery defects

– failure of supplies of materials

– disruption of energy and service supplies

– blockades, strikes, industrial action and disruption by third parties

• Force majeure is generally considered to address the consequences of Acts of

God, war and industrial action, but that is a very simplistic view and the
precise wording to be used in different contexts can vary a great deal.

• There are also situations where it could be argued that the circumstances that
have arisen were foreseeable given the history of the matter. If for example
the factory or business is in an existing flood zone it is arguable that the
breach could have been foreseen and prevented.

• The purpose of a force majeure clause is allow one or more of the parties not
to be held liable for the consequences of a breach of the agreement if the
breach has occurred due to something which could not have been foreseen or
was beyond their reasonable control.

• The aim is to try to ensure that there is either no liability for the breach
caused by force majeure or a very limited liability.
• The argument would be that the party in breach due to the force majeure
could not have foreseen the circumstances that have arisen.

• That in any event the circumstances were outside the control of the party in
breach and beyond their control from the very start.

• So that there was nothing that the party in breach could have done to avoid
the breach or to prevent the consequences.

• Here the parties may disagree as to the steps that could have been taken to
avoid any problems.

• The aim however is to make it clear in a force majeure clause that there are
occasions where there is not a deliberate and planned breach of the terms and
that these events may arise due to external factors.

• The parties will therefore be trying to protect their financial exposure both in
terms of risk and cost from an agreement where there is such a breach where
it occurs due to one or more grounds of force majeure.

• It is often wrongly assumed that force majeure clauses are fairly standard or
simply boilerplate wording which should be added in at the end without a
great deal of thought. This presumption is wrong and force majeure clauses
should be reviewed and adapted to suit the precise circumstances of the
agreement.

• The force majeure clauses should be examined in conjunction with any

clauses relating to Arbitration, Mediation, Suspension and Termination in
the agreement. All of these topics are covered as main clause headings in the
A-Z.

• Where an event which is considered to fall within the agreed terms of force
majeure takes place. The parties still need to have agreed in advance what
they will do about the fact that the agreement cannot be performed for one
reason or another.

• The parties may agree to suspend the agreement for a fixed period and to wait
and see if the facts which have caused the problem will cease.

• One party A may give the other notice of a fixed period to remedy the
 situation beyond which party A may decide to serve notice of termination to
party B.

• It is unlikely that either party will want the situation to continue indefinitely
and unless the situation can be resolved one or both will want to terminate
the agreement.

• There is not only the question of how to bring the agreement to an end but
also the question of payments, costs and expenses which one party may have
to make to another.

• The force majeure clause may limit the liability of one or both parties to a
fixed sum or the facts may require the negotiation of a settlement.

Drafting force majeure clauses

• A force majeure clause can be quite short as stated in A-Z F.099 in General
Business and Commercial.

• Where one or both parties cannot

– perform or fulfil its obligations

– for any reason

– beyond the reasonable control of either party

– as a result of events such as war, industrial actions, floods or Acts of God

– then such non-performance or failure shall be deemed not to be a breach

A-Z F.099
In the event that this Agreement cannot be performed or its obligations
fulfilled for any reason beyond the reasonable control of either party to this
Agreement as a result of such events as war, industrial action, floods or
Acts of God. Then such non-performance or failure to fulfil its obligations
by any such party shall be deemed not to be a breach of this Agreement.’

• Note this clause applies to both parties.

• There are no details as to how to notify the other party that force majeure is
being relied upon.

• Nor are there any details in this clause which set out how long the situation
can continue before one or both parties can end the agreement.

• The clause is quite wide and allows either party to argue that the facts upon
which they are relying do constitute grounds for force majeure.

• It is much better to adapt a clause to suit the facts either to widen the grounds
for force majeure even more than exist in this very basic clause or to exclude
certain situations from being used as a ground for force majeure.

• The parties are therefore looking at situations which they would accept as
force majeure at the time of the negotiation of the agreement and not after
the event.

• There may be different force majeure clauses applicable to different parties to

an agreement.

• The force majeure clause may be drafted so that it applies only to one party
and not the other.

• Force majeure may result in different consequences for each party to an

agreement.

• The wording of a force majeure clause may be adjusted to focus on benefiting

one party more than another in an agreement.

• In A-Z F.130 in Publishing the force majeure clause is drafted very widely so
that the publisher shall not be in breach of the agreement where any of the
grounds listed arise. For example, if the publisher has not published the work
or book referred to in the agreement.

• Here force majeure is defined by reference to an Act of God and a list given
which includes, but is not limited to:

– fire

– flood, earthquake, storm or other natural disaster

 – war, invasion, act of foreign enemies, hostilities (whether war be
declared or not), civil war, rebellion, revolution, insurrection, military or
usurped power or confiscation

– nationalisation

– requisition destruction or damage to property by or under the order of

any government or public or local authority

– or imposition of government sanction, embargo or similar action

– law, judgment, order, decree, blockade, labour dispute, strike, lockout,

boycott

– interruption or failure of electricity, gas, water, telephone or internet

service

– Failure of the supply of any equipment, machinery or material required

by the [Publisher] for publication of the [Work]

– Breach of contract by any key personnel

– or any other matter

A-Z F.130
‘Force Majeure’ shall mean any Act of God including, but not limited to,
fire, flood, earthquake, storm or other natural disaster, war, invasion, act of
foreign enemies, hostilities (whether war be declared or not), civil war,
rebellion, revolution, insurrection, military or usurped power or
confiscation, nationalisation, requisition, destruction or damage to property
by or under the order of any government or public or local authority or
imposition of government sanction, embargo or similar action: law,
judgment, order, decree, embargo, blockade, labour dispute, strike, lockout,
boycott, interruption or failure of electricity, gas, water or telephone
service; Failure of the supply of any equipment, machinery or material
required by the [Publisher] for publication of the [Work]; Breach of
contract by any key personnel or any other matter or cause beyond the
control of the [Publisher].
• In another clause the focus may be on war, riots, hazardous chemicals and
risk to health, damage to equipment through sabotage and criminal acts as
well as epidemics and disease as in A-Z F.098.

A-Z F.098
Force majeure shall mean any circumstances beyond the reasonable control
of either of the parties including but not limited to:

1.1 War, acts of warfare, hostilities (whether war be declared or not)

invasion, incursion by armed forces, act of hostile army, nation or
enemy.

1.2 Riot, uprising against constituted authority, civil commotion, disorder,

rebellion, organised armed resistance to the government, insurrection,
revolt, military or usurped power, civil war.

1.3 Acts which hinder the course of or stop, hinder, prevent, interrupt or
breach the supply and/or provision and/or distribution of any material
and/or power and/or resource which is required under this Agreement.

1.4 Any hazardous, dangerous, perilous, unsafe chemical, substance,

material, property, use or adaptation which threatens or poses a risk to
the health, safety or liability of either party or the general public.

1.5 Flood, fire, arson, storm, lightning, tempest, hurricane, accident, or

other Acts of God.

1.6 Epidemic, disease, earthquake, landslides, avalanches, acts of

terrorism, hijacking, sabotage, vandalism, and other criminal acts
which cause destruction.

1.7 Damage of equipment, machinery, master material or property.

1.8 Chemical, nuclear or other warfare, insurgence, attack and/or accident.

1.9 Death, injury or illness of key personnel.

• The wording of the force majeure clause may aim to be in clear favour of one
party and not the other as in A-Z F.166 in University, Library and
 Educational. Here the institute is using the clause where it enters into
agreements with a range of third parties.

• The clause applies not only to the institute but also its employees and others
which it chooses to include.

• In this clause the institute shall not be liable for the:

– failure to perform

– failure to deliver

– failure to pay

– failure to carry out work

– failure to provide services

– failure to provide facilities

– or any other circumstances beyond the reasonable control of the institute

• Note the words ‘including but not limited to’ are used in line 3 of this clause.
The examples given are not intended to be an exhaustive list and other
situations may fall within the scope of the clause.

• Here the examples of force majeure include:

– war, hostilities, invasion, terrorism, riot, civil war and/or any other
uprising, takeover, or attack whether caused by the public, army, an
enemy or military, chemical, nuclear or other warfare and/or accident

– the failure, interruption, non-availability of water, gas, electricity, oil,

light and any other material and resources

– any health and safety issue

– flood, fire, arson

– storm, lightning, tempest, hurricane, accident, epidemic, disease,

earthquake, landslides, avalanches
 – acts of terrorism, hijacking, sabotage, vandalism, and other criminal acts
which cause destruction;

– damage of equipment, machinery, master material or property

– death, injury or illness of key personnel

A-Z F.166
The [Institute] [and its employees, sub-licensees, sub-contractors, agents or
otherwise] shall not be liable for the failure to perform, deliver, pay, carry
out work and/or provide a service and/or facilities and/or any other
circumstances beyond the reasonable control of the [Institute] including but
not limited to war, hostilities, invasion, terrorism, riot, civil war and/or any
other uprising, takeover, or attack whether caused by the public, army, an
enemy or military, chemical, nuclear or other warfare and/or accident; the
failure, interruption, non-availability of water, gas, electricity, oil, light and
any other material and resources; any health and safety issue; flood, fire,
arson, storm, lightning, tempest, hurricane, accident, epidemic, disease,
earthquake, landslides, avalanches, acts of terrorism, hijacking, sabotage,
vandalism, and other criminal acts which cause destruction; damage of
equipment, machinery, master material or property; death, injury or illness
of key personnel.

• The wording of the clause may seek to lay down some general or specific
time limits and may also seek to address the consequences in the agreement
of the force majeure provision being relied upon.

• In particular if one party or both wish to reserve the right to terminate the
agreement if the force majeure events continue for an extended period. It is
best to introduce tailored and unequivocal wording which deals with that
point.

• After a specified period of time both parties would have the right to serve
written notice terminating the agreement in A-Z F.074 in DVD Video and
Discs. This clause applies to both parties.

• In this clause the duration of different periods of force majeure can be

combined. This clause would not apply if payments had been made or the
master material delivered. There would be no right after the expiry of the
 agreed period to terminate by notice in writing although a party could not be
prevented from doing so. It is likely the parties would have to negotiate a
settlement.

A-Z F.074
In the event the Agreement cannot be performed or its obligations fulfilled
for any reason beyond the reasonable control of either party including war,
industrial action, floods for a period of [duration] [which need not be
continuous] then either party may at its discretion terminate this Agreement
by notice in writing at the end of that period provided no payments have
been made and no master material delivered.

• Whereas A-Z F.077 in DVD Video and Discs only applies to one party the
licensee and not the licensor.

• If the licensee cannot produce, manufacture, supply and distribute the DVDs
for any reason beyond the control of the licensee.

• The licensee may send written notice to the licensor to suspend the
obligations of both parties until both parties can perform and carry out the
agreement.

• The licensee and licensor have agreed to extend the licence period for the
period which the agreement is suspended.

• The grounds for force majeure are very varied and include delays in delivery
of materials and supplies.

• There may be separate grounds for termination in another clause in the

agreement.

A-Z F.077
Where the [Licensee] is prevented from fulfilling the terms of this
Agreement and is unable to produce, manufacture, distribute and supply
[DVDs] of the [Film] for any reason beyond the control of the [Licensee].
Whether caused or due to an Act of God or other force majeure such as
war, fire, earthquake, strike, lockout, death or incapacity of the artist(s),
labour controversy, civil commotion, act of any government, its agencies or
officers, or any order, regulation or ruling thereof, or action by any union
 or trade association of artists, musicians, composers or employees or by
delays in the delivery of materials and supplies The [Licensee] shall have
the right by written notice to the [Licensor] and without liability to suspend
the obligations of both parties and the terms of this Agreement until such
time as the circumstances have changed and the parties can perform and
carry out this Agreement. The parties agree that the Licence Period shall be
extended by the period for which the Agreement was suspended and not
fulfilled.’

• In contrast in A-Z F.105 the licensor has the right to terminate the agreement
based on the grounds of force majeure whether the grounds themselves arise
from events which are beyond the reasonable control of the licensor or the
licensee.

• If the licensor terminates the agreement which it can do immediately without

notice. The licensee has agreed that it has no claim on the licensor for
remuneration, expenses, costs, damages or otherwise. The limit of any claim
is the total amount of fees the licensee has already paid to the licensor.

A-Z F.105
If in the opinion of the [Licensor] the performance of this Agreement shall
for reasons arising from state of war, civil commotion, lockout, strike,
industrial action, breakdown of equipment, natural disaster or other
abnormal circumstances become impractical or if the complete
performance of the Agreement shall be prevented by force majeure or any
other cause beyond the reasonable control of the [Licensor] or the
[Licensee] the [Licensor] may terminate the Agreement immediately. In
this event the [Licensee] shall have no claim on the [Licensor] for
remuneration, expenses, costs, damages or otherwise except for such
proportion of the total fees as may already have been paid to the [Licensor]
by the [Licensee] under the terms of this Agreement.

• Therefore it should not be taken for granted that force majeure provisions, by
their nature, are reciprocal and it is not uncommon for the effect of the clause
to be weighted towards one party as opposed to the other.

• Where there is no time limit in a force majeure clause. Then the question
arises as to how long one party may rely on that clause and the grounds of
 force majeure?

• Unless there is a maximum agreed period in the clause for which the grounds
of force majeure may continue to apply. During which although the
performance cannot take place it is not a breach of the agreement. If there is
no end date when one or both parties have waited long enough and no
progress has been made. Then at what point can the agreement be terminated
and how can the matter be resolved?

• One option is that both parties may reasonably be absolved for the inability of
one or both to perform the agreed terms of the contract but only for a
specified period of time.

• After that period despite the fact that the force majeure continues the
agreement has to be brought to an end as in A-Z F.093 in Film and
Television.

• Note here there is only one party which can terminate the agreement, that
being the company buying the film.

• This clause also allows for an extension of the licence period where the
broadcast of the film is delayed due to force majeure. Note there is however
a date beyond which the licence period cannot be extended.

A-Z F.093
Notwithstanding any other term of this Agreement if either party for any
cause beyond its reasonable control cannot perform this Agreement then
such non-performance shall be deemed not to be a breach of this
Agreement. If any such event occurs to prevent the performance of this
Agreement for a period in excess of [four] months this Agreement may
then be terminated at the end of such period by notice in writing by the
[Company]. If the [Company] is unable to broadcast/transmit the [Film] for
any reason beyond its reasonable control then the Licence Period shall be
extended for such period as may be necessary to enable it to be
broadcast/transmitted but in any event the Licence Period shall not be
extended beyond [date].

• Where the agreement relates to the supply of products the emphasis of the
force majeur clause may relate to the disruption of the completion of any
 order placed with a company as in A-Z F.079 in DVD Video and Discs.

• Here the clause makes it clear that the company shall not be liable for any
delay or failure to fulfil any order arising from any cause beyond the
company’s reasonable control. This is in essence a weak force majeure
clause.

A-Z F.079
The [Company] shall use its reasonable endeavours to fulfil orders
accepted by it for the manufacture of videos and DVDs of the [Film] within
a reasonable time of receipt thereof. Provided that the [Company] shall not
be liable for any failure or delay in the fulfilment of any order or any
part(s) resulting from any cause beyond the [Company’s] reasonable
control.’

• Whereas in A-Z F.116 in Internet and Websites in the context of a website

the website company has excluded liability to the customer and any business
they may operate as well as any equipment and software.

• The website company has a right to terminate the agreement and has limited
liability to the cost of the order by the customer.

• In this context the main clause headings Disclaimer and Liability in the A-Z
would be relevant for consideration.

A-Z F.116
The [Website Company] shall not be liable to the [Customer] and/or any
associated business and/or equipment and/or software for any sums, costs,
expenses, charges, penalties, interest, damages, losses, and/or other claims
that may arise as a result of force majeure. Force majeure shall include but
not be limited to power failure, equipment failure, accident, fire, lockout,
strike, labour dispute, riot, civil commotion, failure of technical and
payment facilities, state of war, lockout, strike, industrial action, natural
disaster, perils of the sea or air, fire, flood, drought, explosion, sabotage,
accident, an order or directive of a national government or local authority,
and embargo. The [Website Company] shall have the right to terminate the
Agreement without notice and to only be liable to pay back to the
[Customer] the sums received for any delivery which has not been made.
• Therefore both parties should think through what may be of real concern to
their particular circumstances in the event that some catastrophic event or
events take place. There may be a number of scenarios relating to the
agreement which could be considered.

• Where a company is sponsoring an event the company may accept that an

accident or equipment failure may be used as a ground for force majeure by
either party. However it is not acceptable if it is shown to be caused by the
negligence of a sub-contractor as in A-Z F.100 in Sponsorship.

A-Z F.100
No party to this Agreement shall be held in any way responsible for any
failure to fulfil its obligations under this Agreement if such failure has been
caused (directly or indirectly) by circumstances beyond the control of the
defaulting party. This shall include accident or equipment failure, war, riot,
industrial action or act of terrorism (except where such accident or
equipment failure has been caused by the negligence of the defaulting
party, its employees, sub-licensees, sub-contractors, agents or otherwise).

• It may be necessary where there is a festival or a major tour for the parties to
an agreement to agree more practical grounds for force majeure as in A-Z
F.165. All these grounds are beyond the reasonable control of the organisers
and depend on an Act of God or third parties providing consent or
permission which had not been obtained at the time of the agreement or
relate to sanitation, health, safety and disease. This list could also be
expanded significantly to cover other matters.

A-Z F.165
The [Sponsor] agrees that the following circumstances shall constitute
force majeure for the purposes of this Agreement:

1.1 The location and venue is not available due to adverse weather
conditions, floods, fire, security and/or health and safety matters.

1.2 [Name] has withdrawn from the [Event] and a new performer is
required.

1.3 There has been an outbreak of some disease and/or virus which has
resulted in restrictions on people, animals, traffic in and/or near the
 location and/or venue.

1.4 Lack of sanitary and water facilities at the location and/or venue.

1.5 Failure to be granted any relevant licence, planning permission and/or

insurance cover.

What is not covered by force majeure?

• In the same way that a clause may define what is actually covered by force
majeure, it may also define what is not covered.

• Many agreements fail to look at this issue as the force majeure clause is
overlooked in many ways, as being unlikely to have effect. The fact is
however that when an unexpected and unforeseen event does take place then
this clause in an agreement is very important.

• One or both parties may therefore want to exclude certain situations as not
falling within the grounds of force majeure. Either because one party has
already had experience of a similar claim or because one party does not want
the other to rely on a myriad of excuses for reasons for delays and the failure
to fulfil the agreed work.

• In A-Z F.094 in Film and Television both parties have agreed that the
situations specified will not constitute grounds for force majeure under the
agreement.

• This clause therefore excludes:

– a fire at the main place of business

– an industrial dispute which is in mediation or arbitration

– the failure of the gas electricity and water for less than a week

– the removal or suspension of a person who is named actor or director

who is important to the project

– a delay or failure due to breakdown or maintenance of equipment

 – a delay or failure due to failure to comply with health and safety
legislation

A-Z F.094
The parties both agree that the following circumstances shall not be
considered force majeure under this Agreement:

1.1 A fire which is contained and which does not prevent the operation of
the main business of the [Company] from the premises.

1.2 An industrial dispute which is in arbitration and/or mediation.

1.3 Failure and/or suspension of gas, electricity, water for less than [one
week].

1.4 The removal and/or suspension of [Name].

1.5 Breakdown and/or maintenance of equipment.

1.6 Failure to comply with health and safety legislation.’

• This approach may be very helpful in ensuring that there is no debate as to

whether an intervening act should or should not have been reasonably
foreseen and also to ensure that specific acts or omissions are not
retrospectively argued to be have been covered.

• A clause such as A-Z F.081 in DVD Video and Discs may also be used to
exclude other matters which neither party wishes the other to use as an
excuse for a delay or failure to comply with a delivery date. This type of
clause makes it clear that there are some events for which the other party
must find, or pay for, a solution if they can be resolved. These excluded
issues relate to competent administration and effective planning for a project.

• Therefore this clause excludes:

– failure to obtain copyright clearance and other consents and licences

– maintenance and security

– lack of compliance with legislation

 – postal strikes, internet service, telephone service

– heavy snow

A-Z F.081
The parties both agree that the following matters shall not be considered
force majeure under this Agreement:

1.1 The failure to clear and/or pay for the necessary copyright, moral
rights, waivers, licences and/or any other contracts and/or consents
required from third parties.

1.2 Any failure due to poor maintenance, lack of security, non-compliance

with any legislation and/or inadequate planning.

1.3 Postal strikes, slow and/or suspended internet service, failure of the
telephone system and/or heavy snow.’

• Where software or technology such as computers and mobiles is involved as

in A-Z F.121 in Internet and Websites the parties may make it clear that a
virus or hacker causing a site to crash is not a ground to rely upon within
force majeure.

A-Z F.121
Force majeure shall not include:

1.1 Viruses, hacks and security breaches by third parties.

1.2 Failure to renew and/or register any domain name, copyright, trade
mark and/or other rights held by [Name].

1.3 Failures and/or delays due to failure to comply with custom, border
control and other duty, taxes and government legislation, regulation
and policies.

• In a sponsorship agreement a sponsor may want to make sure that an

organiser cannot use a failure to complete administrative tasks or to organise
transport or to comply with health and safety legislation and policies as a
ground for force majeure. So these topics are excluded in A-Z F.164 in
 Sponsorship.

A-Z F.164
The parties both agree that the following facts and circumstances shall not
be considered force majeure:

1.1 The suspension and/or failure of the electricity, gas, water, sewage,
drainage, and/or heating for the [Venue] provided that it is for less than
[number] hours.

1.2 The failure to obtain a licence from the local authority to sell and/or
supply alcohol.

1.3 The disruption, suspension and/or blockade of the local roads,

motorway, rail, airport and/or transport links.

1.4 The identification of a health and safety hazard at the [Venue] which is
being investigated by the local authority and/or government agency.
 FORMAT

• In the A-Z there are 18 clauses relating to Format from A-Z F.171 to A-Z
F.188 under the sub-heading of General Business and Commercial.

• Note that the subject of formats and rights is also addressed within the main
clause heading Rights in the A-Z.

• This topic can also be cross referenced with the main clause headings in the
A-Z of Assignment, Confidentiality, Exclusivity, Films, Indemnity,
Material, Quality Control, Recordings, Sub-Licence, Sound Recordings,
Rights, Third Party Transfer and Title.

The background to format

• You will not find any definition in any copyright or media related legislation
in the United Kingdom which describes format rights.

• That does not mean however that such format rights cannot be defined in an
agreement between two parties nor does it mean that a format cannot be
protected.

• The failure of the legislation to recognise it as an independent right does not

mean that, as a matter of principle, there cannot be any grant of rights in a
format or a licence for the exploitation of a format.

• It is not in fact much different from those rights which are defined in
legislation. As in any agreement it is unlikely that the best wording to choose
to use is the wording of the legislation. Such wording may either be too wide
or not have the intended meaning which you want to achieve for the purpose
of the agreement.

• Formats for television programmes and quizzes have been exploited for many
years worldwide. Despite the fact that there was a strong argument that the
 existence of such rights has not at any time received legal recognition.

• There have been many successful programmes, series, films, radio, books,
talent competitions, events and other projects for which the format rights
have been licensed for exploitation in another medium or in another
jurisdiction worldwide.

• The point here is that one party may choose for instance to acquire a licence
to use a format rather than be sued for the passing off of another programme
which was very much the same or similar as their own. Especially when it
would be quite clear that the new programme had copied a format from
another programme.

• Successful television programmes, particularly game shows, international

competitions, sitcoms and numerous magazine type programmes, will have a
defined structure. The detail may apply to for example to:

– the title

– the music and lyrics

– the colour and layout of the set

– the presenter

– a competitive team element

– public or celebrity participation

– telephone voting by the public

– elimination rounds

– achievable target scores with rewards

– the costumes worn by participants

– the scoring system

• The combination of a number of original factors creates a successful format

which can be repeated with adjustments in different countries and languages
 worldwide. The exploitation of formats is a very lucrative market – the
programmes can be broadcast on a weekly basis or can be redesigned and
updated to take place on an annual basis or as a series for a reason.

• The scope of a format is a combination of factors but starts with a strong title.

• The title of a programme or project and the structure may be adjusted and
changed from one country and market to another. This is needed to ensure
that there are no issues with the translation of the language but also to
broaden the appeal and improve the ratings of the programme or project.

• For example the United States version of the United Kingdom show ‘Strictly
Come Dancing’ is known as ‘Dancing with the Stars’. However the title ‘The
Apprentice’ was used both in the United Kingdom and United States and
even adapted for a celebrity edition.

• There have been a number of disputes where one party has sought to create a
programme based on a format used in another, older, programme. It then
becomes a matter of expensive litigation and evidence as to the originality of
the new format and the differences and similarities which exist between the
new and old formats.

• It will be crucial as to whether there is evidence to prove that the format for
the older programme was not original in the first place but a copy or series of
copies of elements from elsewhere.

• Note that the issue of originality here in relation to formats is not based on
any relevant legislation in the United Kingdom. Any claim, if it were to be
made and a legal action pursued, would have to be grounded on a case for
passing off.

• Where you clearly realise that the format for your new programme or project
is derived from an earlier programme. Then the smart course of action is to
seek a licence – not to take a chance that the other party will not take any
legal action.

Drafting clauses relating to formats

• The challenge when drafting a clause relating to a format in an agreement is

to capture and define exactly what is meant by the term ‘format’ in the
 context of that agreement.

• The definition of the format will have some of the same basic principles to
cover but will not always be the same as regard content.

• The scope of a format and the amount of detail which is copied when a
format is adapted will vary. In any agreement you would describe and define
the original format which is due to be reproduced and adapted by the other
party.

• You would also set out in the agreement as to how the format may be used
and adapted and describe the intended new programme or format that will be
developed.

• You may wish to limit and ring-fence the scope of what the other party is
permitted to do with the new adapted format.

• Here the issue of protecting the brand and integrity of the original format may
apply. To prevent a third party adapting the format in such a way as to have a
negative impact on future forms of exploitation of the original format.

• There will also need to be clarification in the agreement as to which party

owns the new adapted format or whether the licensee acquires any rights or
interests in the new adapted version.

• The parties may acknowledge that there is no recognised legislation which

applies to formats in the United Kingdom or any other specified country or
jurisdiction as in A-Z F.177.

• Despite this fact the parties may still wish to enter into a commercial
arrangement. In this clause there is an exclusive licence to exploit the game
show which is likely to have a very specific format.

• The licensee is acquiring the exclusive right to produce, reproduce, distribute,

sell and exploit certain rights relating to television, DVDs, merchandising,
and publishing.

• Note there is no mention of the consideration and payment in this clause, but
there is likely to be an advance and royalties set out in another clause.
• Note the rights do not cover the internet, websites, gambling, musicals and
theme parks directly – but the merchandising rights could be extended to
cover them or a new rights definition added.

• For more on clauses relating to rights definitions and exploitation please look
at the man clause heading Rights in the A-Z.

A-Z F.177
The [Licensor] and the [Licensee] both acknowledge that although there is
no recognised copyright in the Format of the [Game show] which is
acknowledged in law in this country, they wish to transfer the right to
exploit such elements of such rights as do exist or may be created in the
future. The [Licensor] grants to the [Licensee] the exclusive right to
produce, reproduce, distribute, sell and exploit the [Television Rights, the
DVD Rights, the Merchandising Rights, the Publishing Rights] in the
[Game show] throughout the [world] for the duration of the Term of this
Agreement.

• The original format would be defined in an agreement. There is no single

definition that would suit all circumstances and it must be drafted to fit the
facts.

• There may be a very detailed description drafted of the important elements

which contribute to the format. These details are then attached and form part
of the agreement as in A-Z F.175.

• This is a useful tool as it clarifies the basis of the format. Examples could
also be provided including text, images and photographs of existing uses of
the format.

A-Z F.175
‘The Format’ shall be the original concept and novel idea for and structure
of a [Television Programme] which is briefly described as follows
[specify]. Full details of which are attached to and form part of this
Agreement.

• In A-Z F.172 the format is defined widely for a series for television to
include not only the description but also the rights to the music, sound
 recordings and intellectual property rights if any and the goodwill.

• 1.3 the basic idea could be expanded to set out a description and to attach
documents with further details to form part of the agreement.

A-Z F.172
‘The Format’ shall mean in respect of the [Series] the following:

1.1 The goodwill and reputation.

1.2 The title, slogan, logo and image.

1.3 The basic idea.

1.4 The original manuscripts, drafts, scripts, characters, plots and

storylines of the Series including the general location and dramatic
sequences.

1.5 The music, sound recordings, advertisements and promotions, jingles

or otherwise.

1.6 All intellectual property rights of whatever nature in any media at any
time.

• There is a different approach in A-Z F.173 where the format relates more to
how the format may be exploited under an exclusive licence. Here the
licensor will grant the licensee an exclusive licence to produce, reproduce
and distribute a new series based on existing films.

• The licence is limited by territory and the countries which are covered are
defined it is also lilmited by the term of the agreement – the period for which
the licence will exist.

• For other clauses on these topics please look at the main clause headings
Territory, Licence Period and Term of the Agreement in the A-Z.

• The exclusive licence for the format includes the right in association with the
series to:

– make trailers and advertisements and publicity

 – use the title and any associated logo and mark and artwork

– reproduce the set and any signs and equipment

– use any questions and answers, rules and catchphrases

– reproduce costumes and outfits

• 1.7 and 1.8 are more unusual clauses as the licensee gets the opportunity to
exploit any goodwill and copyright, design rights, trade mark, logo, literary,
musical, dramatic, artistic and all other intellectual property rights in the
series based on the original films.

• It is to be expected that the licensor would be remunerated and paid a share of

any revenue. Please look at the main clause headings Payment and
Royalties in the A-Z for more on this subject.

• The agreement may also make it clear that at the end of the licence period the
licensee cannot produce or reproduce any new series without an additional
licence.

• If there is no agreement that the licensor will share in any revenue from the
exploitation of the new series. It would be advisable to include an
assignment clause between the licensor and the licensee for any rights the
licensor may hold in the new series. So that the licensee owns and controls
the new series and that the licensor agreees that the licensee retains all sums
from any form of exploitation.

A-Z F.173
‘The Format’ shall mean the exclusive rights granted by the [Licensor] to
the [Licensee] to produce, reproduce and distribute another [Series] based
on the [Films] in the Territory for the Term of the Agreement and to
appoint third parties to do so as sub-licensees and sub-distributors. The
format shall include, but not be limited to:

1.1 The right to copy, reproduce and exploit the [Series] and any
associated trailers, advertising, publicity and other material.

1.2 The right to use the title known as [specify] and the associated trade
mark, logo and artwork.
 1.3 The right to reproduce the design, layout, colour, signs, scoreboards,
and equipment of the studio set.

1.4 The right to use and reproduce both in the studio and for distribution
the rules, procedures, catchphrases, slogans, questions and answers.

1.5 The right to use and reproduce the costumes and outfits.

1.6 The right to reproduce and exploit copies of all running orders, scripts
and other written material.

1.7 The right to exploit the goodwill and reputation.

1.8 The right to exploit the copyright, design rights, trade mark, logo,
literary, musical, dramatic, artistic and all other intellectual property
rights.

• Another version of a format clause is set out in A-Z F.180 where a detailed
description and even examples would be attached to the main agreement.
The description would cover all the topics listed in the definition clause as
were relevant and those that were not would be deleted. This type of clause
would be appropriate for a game show format.

A-Z F.180
‘The Format’ shall be the original concept and novel idea for and structure
of a series of films which is briefly described as follows [specify] full
details of which are attached and form part of this agreement in Appendix
[–]. [Title, script, characters, plot, storyline, location, intellectual property
rights, running order, sequence, design and layout of set, presentation of
questions and answers, score system, prizes, slogans, graphics, costumes,
advertising, publicity, trade marks, service marks, logos, icons, domain
names, credits, copyright notices, music, photographs, stills, images,
graphics, text, computer generated material, interactive website and
telephone line material].

• A substantial attempt at capturing every single detail of a format down to the

precise lighting directions and the exact synchronicity of music and sounds
to minute gestures and cues could be described if that degree of detail is
relevant. Normally however it is usually limited to an analysis of the basic
 structure which is consistent as to the running order, the layout, the design of
the set, music, questions and system of scores.

• The point to realise that, when you are attempting to define the format, is that
you are describing all the elements which you claim are the subject of
protection which you own.

• For some quiz formats there may be interaction between the public and a
company via a website as well as through a premium line telephone which
incurs charges for an additional prize as in A-Z F.184.

A-Z F.184
‘The Quiz Format’ shall mean the original concept and idea for a [Quiz].
The material shall include the title, logo, slogan, scripts, design and layout
of the set structure, presentation of questions and answers, list of prizes,
graphics, images and text, score system and charts, running order, music,
sound effects, sound recordings, gadgets, advertising and publicity
campaign and promotional material, [trade marks, service marks, icons,
domain name] credits, copyright notices, computer generated material,
[interactive website], premium rate telephone line questions and answers,
[and call centre plan] and contributions by presenters. Full details of which
are attached and form part of this Agreement in Appendix [A].

• A licensor is often concerned that a licensee will seek to exploit or register a

domain name or trade mark or logo or any copyright. So it is useful to
include a clause in the agreement that the licensee agrees they are owned by
the licensor and that the licensee has no such rights as in A-Z F.186.

A-Z F.186
The [Licensee] agrees and acknowledges that it shall not register and/or
attempt to register the domain name, trade mark, service mark, community
mark, logo, slogan, music, sound recordings, copyright and/or any
intellectual property rights in respect of any part of the [Format] with any
company, trade organisation, collecting society, copyright organisation
and/or otherwise. The [Licensee] agrees that all such rights are owned
and/or controlled by the [Licensor].

• There may be situations where an agreement requires that it is made clear

 that:

– no format rights granted

– no rights that can be transferred or sub-licensed to or exploited by a third

party

– no rights created in the new version of the format are transferred and that
all rights must be assigned back to the licensor

• In A-Z F.187 it is made clear that no format rights or the right to adapt,
distort or reproduce the film or work is granted by the licence.

• Note that the clause is drafted to include any character, name, logo, image or
text.

A-Z F.187
No format rights and/or right to adapt and/or distort and/or to authorise the
reproduction and/or to licence any characters, logos, names, images and/or
text in respect of this [Film/Work] are granted under this licence.

• A-Z F.183 states that no format rights to appoint or authorise any third party
at any time are granted.

A-Z F.183
There is no right granted to license, appoint, authorise or to engage any
third party to exploit the [Format] at any time.

• A licensee may also confirm as set out in A-Z F.178:

– that it has not acquired any interest in the format

– that it can only exploit the rights granted

– that all new adaptations or developments of the format must be assigned

by the licensee to the licensor

– that the licensee shall not have any claim, interest or rights
A-Z F.178
The [Licensee] agrees and undertakes that it shall not acquire any rights or
interest in the concept or [Format] owned or controlled by the [Licensor]
whether in existence now or created in the future. The [Licensee] shall be
limited to the exploitation of the rights specifically granted in this
Agreement for the Licence Period. Further, in the event that there are any
adaptations, translations, variations or developments or alterations of the
[Format] created or commissioned by the [Licensee] pursuant to the
exercise of the rights granted the [Licensee] agrees to assign and transfer
all such rights in any such adaptation, translation, development, variation
or alteration back to the [Licensor] entirely and the Licensee shall have no
claim or interest or rights and shall not seek to register any rights.
 GROSS RECEIPTS

• The A-Z contains nearly 100 examples of definitions of Gross Receipts from
A-Z G.034 to A-Z G.129

• This subject should be read in conjunction the main clause headings in the A-
Z of Accounting Provisions, Budget, Costs, Distribution Expenses,
Expenses, Insurance, Legal Proceedings, Liability, Net Receipts,
Payment, Royalties, Sell-Off Period and Set-Off.

The meaning and purpose of gross receipts

• Gross receipts is one of the most critical clauses in an agreement as how the
definition is defined can make the difference between receiving royalties and
not.

• The impression created by the use of the term gross receipts is intended to
mean all sources of income and revenue relating to a project or the
exploitation of a product or the supply of a service.

• The income or revenue which falls within the gross receipts should include
all sums received by the licensee or assignee B.

• As well as those payments received or owed by third parties C to the licensee

or assignee B.

• This may include third party agents, distributors, sub-licensees, parent

companies subsidiaries and associated companies.

• It should be noted however that some supposedly gross receipts definitions

seek to exclude such payments from third parties from the calculation of the
gross receipts.

• Please be aware of the fact that a definition of ‘gross’ may not actually
 amount to a gross figure at all.

• The issue always is not what a term or definition or agreement is called but
what it means as a matter of interpretation.

• Do not let the use of the words ‘gross receipt’ as a heading for a definition or
clause make you falsely assume that it is correct when you look at the words
which have been drafted.

• You may not – based on the definition drafted – actually in fact receive a
percentage based on the total of all the money received. The gross receipt
definition may be drafted with so many deductions that in fact it is a net
receipt figure from which you receive a percentage.

• Therefore in the drafting section later on this topic we shall look at gross
receipts definitions with no deductions except taxes as one topic and gross
receipts with deductions as another.

• A company or licensee B is perfectly entitled to draft a gross receipts clause

with deductions and to call it gross receipts. However you as the licensor A
have to appreciate what figure the royalty you will receive is derived from as
a base sum.

• There are many cases in agreements where in fact the gross receipts clause is
not a genuine gross receipts with no deductions except taxes due to a
government for the sale or supply of goods or services.

• The gross receipts are often in fact net receipts as the definition allows for the
deduction of a number of costs and expenses.

• If you want to draft a wide gross receipt clause then it should:

– cover all potential sources of money both direct and indirect.

– cover all countries

– cover all the forms of exploitation in any medium which exist in the
copyright and intellectual property rights and any material

– cover all rights and material which do not exist now but may be
 developed or created in the future

– not be limited to payments received within the term of the agreement, but
apply to any sum at any time

– include payments which are credited and may fall due

– include payments which are paid and received after the termination or
expiry of the agreement

– include any interest

– include payments received in the country of business of the licensee or

assignee as well as those withheld for any reason in another country

– include payments for product placement, sponsorship, licensing of

characters, title and names as well as trade marks which may surround or
be associated with the work, service or product

– include any other form of exploitation of any nature in any medium

– be based not only on the original work, product or service but also any
adaptation, translation or development of the whole or any part

• If the gross receipt clause is drafted very narrowly or permits large

deductions the amount of royalties that you will receive will be considerably
less. For more on the subject of royalties please look at the main clause
heading Royalties in the A-Z.

• There are and always have been two extremes when it comes to the detail of
the clause or series of clauses which address gross receipts. The minimalist
approach and the other extreme which is often intended to be so complicated
that the only real function it serves is to obfuscate the need to make any
payments at all.

• Making the basis for accounting overly complicated is a common tactic in

many industries. If you cannot understand someone else’s basic definitions
and accounting provisions, then this should act as a warning sign that key
financial provisions which run to several pages and detail many areas for
deductions are there to avoid payment.
• If a project is a success and there is a perception that significant monies are
due then it is absolutely critical that the core terms are expressed in a manner
which avoids lengthy and costly disputes.

• An agreement may have a definition for the gross receipts and the
distribution expenses. So that the net receipts are the gross receipts minus the
authorised distribution expenses.

• Some gross receipts are defined so that there are subject areas of deductions
which are permitted. The clause may, for example, permit the deduction of
discounts, currency costs, bank charges, commission, agency fees, customs
duties and costs of postage and packaging and other freight costs,
production, manufacture, administration, marketing costs and distribution
costs.

• The main clause headings of Net Receipts, Accounting Provisions,

Inspection of Accounts and Records, Budget, Distribution Expenses,
Costs and Expense are all covered in the A-Z.

• In reality often none of these deductions which may legitimately be made will
have any financial limit in the definition. This will mean that the licensee
could deduct whatever marketing and other costs they thought were
connected to the project.

• One must always be wary of making any presumptions in an agreement

which you are assured is based on a percentage of gross receipts – examine
the clauses and go through the financial reality of the deductions which are
requested.

• There is a common misconception that net receipts agreement are invariably

less advantageous than gross receipts agreements. Where a gross receipts
agreement has many deductions then you may be unlikely to receive any
royalty payments at all.

• You can only weigh up the merits of one agreement as opposed to another if
you understand how the clauses have been drafted and you work through
potential figures using the percentages and the likely deductions.

• The challenge is to determine, following a careful analysis, whether for

example a relatively small share or percentage based on gross receipts is
 more likely to be profitable than a far higher percentage of a net receipts
agreement.

• In some circumstances a small percentage of a genuine gross receipts

agreement is better than any net receipts arrangement but each scenario has
to be carefully thought through.

• You also have to factor in the fact that in some circumstances a net receipt
arrangement will mean that the product or rights are more likely to be
exploited in a country outside the home territory.

• It is also worth considering whether or not any clause relating to liability,

product liability or legal proceedings under the agreement allows the other
company to set off or recoup other costs and expenses which arise under
those clauses. If so, those sums may be paid from the gross receipts or net
receipts before any royalty is accounted for to a licensor assignor or other
person.

• For more on these subjects please look at the main clause headings Liability,
Product Liability and Legal Proceedings in the A-Z.

Drafting gross receipt clauses with no deductions except taxes

• The parties may agree a gross receipts clause as in A-Z G.066 in General
Business and Commercial for the exploitation of a defined product.

• The gross receipts are defined as:

– all the sums received

– from the commercial exploitation of the product

• Note this definition makes no reference to the original copyright and

intellectual property rights granted or assigned by the licensor or assignor A
to the licensee or assignee B.

• The gross sum only relates to the commercial exploitation of the defined
product.

• If other copyright and rights are exploited or there is a new product, then the
 licensee or assignee B may not receive any royalties from that exploitation.
As those areas were not covered in the definition of gross receipts.

• This definition could therefore be expanded to cover a much wider area of the
source of the money.

A-Z G.066
‘Gross Receipts’ shall mean all sums received from the commercial
exploitation of the [Product] including all taxes of any nature.’

• There is a wider definition in A-Z G.035 in DVD Video and Discs.

• The gross receipts are:

– the gross monies received by licensee B

– directly or indirectly

– from the exploitation of the DVD of the film

– howsoever arising

• The sums receive relate to the DVD of the film, but the use of the words
directly and indirectly seek to cover associated forms of exploitation which
may arise from the DVD of the film.

• It would be much better if this clause made it absolutely clear what other
areas are covered even if these are only given as examples.

• For this you would be able to use the words including but not limited to.

• It may be that publishing, merchandising, sponsorship and product placement

rights have not been granted to the licensee – in which case this should be
made clear elsewhere in the agreement.

• The definition only allows for the deduction of value added tax and other
taxes due to be paid by the licensee.

• There are no deductions for commission, agency fees, reproduction costs and
other matters.
 A-Z G.035
‘Gross Receipts’ shall mean the gross amount of monies received by the
[Licensee] in any quarter directly or indirectly in respect of the exploitation
of the [DVDs/Videos/Discs] of the [Film] howsoever arising after the
deduction of any value added taxes or similar taxes to be borne by the
[Licensee].’

• The definition of gross receipts in A-Z G.046 in Film and Television is

wider.

• In this definition the gross receipts are defined as:

– the aggregate proceeds

– of the exploitation of the rights in the film and/or parts

– in any media

– received by the licensor and/or a distributor and/or a third party

– at any time

• Note this definition is not limited to just the film or product but the
exploitation of the rights in the film and any parts in any media.

• The money can be received at any time and is not limited to the term of the
agreement.

A-Z G.046
‘The Gross Receipts’ means the aggregate proceeds of the exploitation of
rights in the [Film] and/or part(s) in any media actually received by the
[Licensor] and/or an appointed distributor or any other third party at any
time.

• A definition of the gross receipts may be concerned not just with sums
received from the transmission or broadcast of a film or programme, but also
any associated advertising, sponsorship, product placement, competition and
premium rate phone lines and other forms of revenue.
• In A-Z G.045 in Film and Television the gross receipts is defined to include:

– all sums received by the distributor

– from the exploitation of all rights in all media in the programme

– and all material

– including any advance, fees and royalties

– and any sums received from simultaneous relay on cable television

intended for reception in the United Kingdom

– and any sums received from advertising, product placement, sponsorship,

endorsements, premium rate telephone line services, competitions,
promotions which are before or after or in between or during a
programme

• If this definition was drafted without the reference to the wider sources of the
money to fall within the gross receipts. The licensee or assignee may seek to
argue that the licensor or assignee was not entitled to any royalty from those
sums in 1.1 and 1.2.

A-Z G.045
‘Gross Receipts’ shall mean all sums actually received by the [Television
Company/Distributor] from the exploitation of all rights in all media in the
[Programme] and all material therein including for the avoidance of doubt,
any advances, fees, royalties and:

1.1 Any sums received by the [Television Company/Distributor] from the

simultaneous relay by cable television (wherever occurring) of any
broadcast programme service intended primarily for reception in the
[United Kingdom] which includes the [Programme] [or any other
person or business with which there is an annual agreement for access
to material].

1.2 Any sums received in respect of advertising, product placement,

sponsorship, or endorsement of any person, product or services or
premium-rate telephone line service and any viewer information
services or competitions or promotions which are or will be included at
 the beginning, in, during or after the [Programme] or any breaks.

• In an agreement for the distribution of a disc as in A-Z G.042 in DVD Video

and Discs the focus is instead on the sources of money from third parties.

• The gross receipts are defined as follows:

– in respect of the exploitation of the Disc

– all sums received by the company

– or any agent, sub-licensee and/or distributor and/or third party

– and/or any associated and/or parent company

– at any time

– in any part of the world

– in the currency in which it is received

– whether or not it has been paid to the company

• The definition makes it clear that the sums received are before the deduction
of any commission, discounts, bank charges, currency charges, expenses or
other costs.

A-Z G.042
‘The Gross Receipts’ in respect of the exploitation of the
[CDs/Discs/Project] shall mean all sums received by the [Company] and/or
any agent, sub-licensee and/or distributor and/or any other third party
and/or associated and/or parent company at any time in any part of the
world in the currency in which it is received whether or not it has been paid
to the [Company] before the deduction of any commission, discounts, bank
and/or currency charges, expenses and/or any other costs.

• The definition of gross receipts for a project between an enterprise company

and an institute is drafted widely in A-Z G.127 in University, Library and
Educational.
• The gross receipts shall be:

– all sums, credits and/or gains of any nature

– received by the enterprise A and any parent, subsidiary, affiliate,

associate or business partner or consortium member

– relating directly or indirectly

– to the project

– from the exploitation in any form and any part

– and any adaptation, development and/or variation

• Note the very wide definition in the first part of the clause is limited by the
fact that the gross receipts are limited by a start and end date. This could be
changed to the words – at any time.

• In addition it is limited to a licensed area. This could be changed to in any

part of the world or universe.

A-Z G.127
‘The Gross Receipts’ shall be all sums, credits, and/or gains of any nature
received by the [Enterprise] and any parent company, subsidiary, affiliate,
associate or business partner or consortium member relating directly or
indirectly to the [Work/Service/Product] from the exploitation in any form
and any part and/or any adaptation, development and/or variation from
[date] to [date] in the [Licensed Area].

• The definition of gross receipts in A-Z G.039 in DVD Video and Discs
follows a similar pattern but is not limited by duration of time or any
country.

• The gross receipts shall be:

– all sums or benefits paid to, received by or credited to

– the company and any parent company, subsidiary, affiliate, associate,

sub-agent, sub-licensee, sub-distributor or any other third party
 – in respect of the DVD rights in the film and any part of any nature

– at any time

– in any country

– whether during the term of the agreement or thereafter

• This definition applies to the exploitation of the rights granted which is wider
and not limited to just the film or product.

• It covers payments received and credited by more than just the company.

• It includes payments received after the agreement has ended.

A-Z G.039
‘Gross Receipts’ shall mean all sums and benefits paid to, received by or
credited to the [Company] and any parent company, subsidiary, affiliate or
associate, or any sub-agent, sub-licensee, sub-distributor or other third
party in respect of the exploitation of the [DVD/Video/Disc] Rights in the
[Film] and any parts of any nature at any time in any country whether sale,
supply, distribution, rental, subscription or otherwise whether during the
Term of this Agreement or thereafter.

• A gross receipts clause may be defined to cover only money actually received
by a company as in A-Z G.059 in General Business and Commercial.

• The gross receipts do not start to be calculated until any money to be paid is
received by the company in sterling. The conversion costs may therefore
have been absorbed into the original payment. So that what the company
receives is actually a net figure after conversion of the currency and
deduction of bank charges.

• Note that the definition only relates to the exploitation and/or use of the
music in the defined territory. Any sums paid which fall outside the defined
countries will not be within the gross receipts.

• The gross receipt definition is not however limited by the term of the
agreement. Money will fall within that definition which is received by the
 company at any time.

A-Z G.059
‘Gross Receipts’ shall mean [one hundred per cent] [100%] of all sums
actually received by the [Company] in sterling in the [United Kingdom]
arising directly and identifiably from the use and/or exploitation of the
[Music/other] in the Territory by the [Company] at any time.

• In A-Z G.074 in Internet and Websites the only authorised deductions are
sales tax and value added tax. However the base figure is derived from the
total sums received or credited by the licensee or any sub-agent, sub-licensee
or third party.

A-Z G.074
‘The Gross Receipts’ shall be the total sums from the exploitation of the
[Product/Work/Service] throughout the [world/universe] at any time
received by or credited to the [Licensee] or its sub-agents or sub-licensees
and/or any authorised third party after the deduction of sales tax, and any
value added tax paid. There shall be no right to deduct any other sums of
any nature.

• There is a quite different definition of gross receipts in A-Z G.080 in

Merchandising. The money is all revenue generated through the exploitation
of the character in any form.

• The gross receipts cover any money generated at any time and in any country
under the terms of the agreement.

• There is no right to make any deductions of any type before the gross receipts
are calculated except taxes which have to be paid to the government on the
sale or supply of products.

• Corporate tax and personal tax are specifically excluded.

• Despite the fact that deductions are not permitted it is likely that there will be
bank charges and currency conversion costs. These would have to be paid for
by the licensee.

• Note this definition makes no direct reference to future developments, but it

 covers any form of exploitation of the character.

• What it does not cover is other characters, titles and names that may be
created and this would need to be the subject of a new agreement.

A-Z G.080
‘Gross Receipts’ shall mean all revenue generated through the exploitation
of the [Character] in any form at any time in any country under the terms of
this Agreement less any value added tax or other tax on sales or supply of
goods which is not retained and is repaid to a government body or agency
under any legislation, policy or practice, but not corporate or personal tax.

• The definition of gross receipts in A-Z G.093 in Publishing is not a usual

one. As most such agreements limit the gross receipts to the original work
and the defined subsidiary rights for which there is a fixed royalty.

• That is why it is so important when there is a long list of forms of

exploitation and rights for any agreement with fixed royalties that you
reserve all the other forms of exploitation and rights.

• In this definition the money received covers all sums, credits, benefits or
financial gains of any nature.

• The definition refers to the receipt of the money by the company and any
parent company, subsidiary, affiliate, associate or business partner or
consortium member.

• The sums received may be directly or indirectly related to the:

– work and any part

– title

– character

– format

– name

– image
 – logo

– music

– lyrics

– any adaptation

– translation

– and/or development

– and/or all rights in any media in any format

• At the end of this definition by way of example intellectual property rights,

computer software, patents, trade marks, domain names and merchandising
are listed.

• The money will fall within the definition whether it arises during the term of
the agreement or not.

• The definition applies to money from all countries in the world.

A-Z G.093
‘The Gross Receipts’ shall be all sums, credits, benefits or financial gains
of any nature received by the [Company] and any parent company,
subsidiary, affiliate, associate or business partner or consortium member
relating directly or indirectly to the [Work] and any part and title,
Character, format, name, image, logo, music, lyrics or any adaptation,
translation and/or development and/or all rights in any media in any format
including intellectual property rights, computer software, patents, trade
marks, domain names and merchandising at any time whether during the
Term of the Agreement or not and in any part of the world, air, sea or
otherwise

• Where a sportsperson has a manager as in A-Z G.110 in Services the

definition of gross receipts will focus on the sources of the money.

• So in this definition the gross receipts are defined as the proceeds from all
events, competitions, promotions, sponsorship fees, public appearances and
 performances, television and radio appearances, recordings, endorsements,
publications, merchandising or other sums from the commercial exploitation
in any form in any media of the sportsperson.

• The proceeds are however qualified by a caveat that it is throughout the

defined territory which may not be the world.

• The manager may only be authorised to act in certain countries or for certain
subject areas in some agreements.

• The definition applies to all money received directly or indirectly by the

manager.

• The definition applies to money which is actually received or credited to the

manager which can include a third party acting on the managers behalf.

• No deductions are allowed except government taxes such as value added tax
and others which must be charges on the supply of services.

• The definition does not limit the sums to the term of the agreement but
applies it to any time thereafter.

A-Z G.110
‘The Gross Receipts’ shall be the total proceeds from all events,
competitions, promotions, sponsorship fees, public appearances and
performances, television and radio appearances, recordings, endorsements,
publications, merchandising or other sums from the commercial
exploitation in any form in any media of the [Sportsperson] throughout the
[specify countries/Territory] at any time directly or indirectly received by,
credited to the [Manager] [or any third party acting for or on behalf of the
Manager] after the deduction of [value added tax/other].

• The definition in A-Z G.106 in Services is much wider and detailed.

• The definition covers all the proceeds from the exploitation in any form of
the sportsperson whether commercial or not, so will include charity events.

• The gross receipts definition is limited to payments received for the defined
territory.
• The sums apply to those received or credited to the manager as well as any
sub-agent or sub-licensee.

• No deductions are permitted except government taxes on the supply of goods

and services such as value added tax and sales tax.

• There is a list of examples at the end of the clause which covers the sort of
matters which fall within the definition of money for the gross receipts.

• In 1.1 the examples include sponsorship payments, endorsements of products

and services, appearances on television and radio, an advance and royalties
from any publications or a biography. As well as any work for a website or
distributor whether for a personal appearance or to promote their site or to
endorse a product or brand.

• In 1.2 the gross receipts are to include prize money and professional fees for
sporting events.

• In 1.3 the gross receipts are to include the use of the name of the sportsperson
and any associated logo, trade mark and brand whether or not it is registered.

• This is a very wide definition and if these matters are not to be included then
they should be specifically excluded both from the services covered by the
manager but also under the gross receipts definition.

A-Z G.106
‘Gross Receipts’ shall mean the total proceeds from the exploitation in any
form of the [Sportsperson] whether commercial or not throughout the
Territory at any time received by or credited to the [Manager] or any sub-
agent or sub-licensee after the deduction of any value added tax or sales tax
whether received during the Term of this Agreement or any time thereafter
including:

1.1 Sponsorship, endorsements and promotion advances, fees and

royalties, payments for public appearances and performances, satellite,
cable, digital, terrestrial television, DVDs, videos, radio, the internet,
live and pre-recorded radio, recordings, films, biography, publications,
articles.

1.2 Prize money and appearance fees for performances at professional

 sporting events.

1.3 The name of the [Sportsperson], and any associated logo, trade mark
and/or brand whether registered or not.

Drafting gross receipt clauses with deductions

• A gross receipts definition can still be defined as gross receipts even though
there are deductions. Despite the fact that in reality the final figure is a net
one and not a gross one. This is very common in agreements. It creates an
impression that you getting something more because you focus on the words
gross receipts and not the actual figures and the calculation.

• Gross receipts may be defined to limit deductions to currency conversions

and government taxes for supply, distribution, import and export as in A-Z
G.041 in DVD Video and Discs.

A-Z G.041
‘The Gross Receipts’ shall mean all the sums received in [sterling] after
conversion from any other currency in the [country] by the [Company]
from the exploitation of the rights granted in respect of the [Images, Text
and Music] on the [Disc]. No deductions shall be made of any nature
except costs incurred in currency conversion and exchange, sums payable
to governments for taxes for the supply, distribution and/or export and/or
import of the [Discs].

• In an agreement for the transmission of a series on television as in A-Z G.044

in Film and Television.

• The gross receipts are:

– the total proceeds

– from the exploitation of the series and any parts

– throughout the defined territory

– at any time
 – received or credited to

– the company and its authorised sub-agents and other third parties

• Note here the total proceeds are after the deduction of taxes, commission,
material costs and any other matters listed.

• Note there is no limit on the total of the deductions.

A-Z G.044
‘The Gross Receipts’ shall be the total proceeds from the exploitation of the
[Series] and any parts throughout the Territory at any time received by or
credited to the [Company] and its authorised sub-agents, and other third
parties acting on its behalf after the deduction of
[taxes/commission/material costs/other].

• The gross receipts may be defined to only apply to sums received between a
start and end date as in A-Z G.057 in Film and Television.

• There are a number of deductions which can be made before the final figure
of the gross receipts is calculated:

– commission

– agent’s fees

– freight

– insurance

– material

– marketing

– legal and bank costs and charges

• However in this definition there is a fixed limit on the total financial amount
of the deductions by the use of the words:

– but which shall be limited to no more than [number/currency]

 A-Z G.057
‘The Gross Receipts’ shall be the total amount of all sums received by
[Name] in [country] in [currency] between [date] and [date] from the
exploitation and licensing of the [Film/Work] after deduction of
commission, agents fees, freight, insurance, material, marketing legal and
bank costs and charges that may be due and/or paid which directly arise
from any agreement that may be concluded but which shall be limited to no
more than [number/currency].

• The gross receipts clause may be drafted in such a way as to look perfectly
reasonable as A-Z G.067 in General Business and Commercial. This is until
you realise that the definition allows the agent to deduct all the cost and
expenses which arise listed in 1.1 to 1.9 from the actual money the agent
receives before it falls within the final sum which is the gross receipts in the
nominated account.

• There is often not an additional clause which authorises these deductions it is

written within the definition.

• So the agent will receive money from the exploitation of a work or services
and then deduct costs and expenses of:

– all import, export, supply taxes, duties, sales tax, value added tax or any
other government charge

– all currency conversion or exchange costs or losses, any insurance, bank

or transfer costs or commissions

– all agent, or third party commission, fees, expenses, royalty, consent or

performance or mechanical reproduction payments or waiver costs

– all damage, loss, error, legal proceedings, product liability, fines,

discounts, returns, errors, replacement, remainder, packaging, and freight
costs

– all editing, translations, censorship, credits, copyright notices and

copyright protection, marketing, promotional and advertising material,
labels, website material and mobile phone promotions
• Note there is no limit set for either individual subject area deductions or the
total limit in all of the money that can be deducted.

A-Z G.067
‘The Gross Receipts’ shall be defined as all sums which the [Agent] is able
to receive and retain and deposit in the nominated account and shall not
include the following costs and expenses which may have to be deducted:

1.1 Any import, export and/or supply taxes, duties and payments.

1.2 Any sales tax or value added tax or any other government charge on
goods or services [excluding personal and corporation tax].

1.3 Any currency conversion or exchange costs or losses.

1.4 Any insurance, bank or transfer costs or commissions.

1.5 Any agent, or third party commission, fees, expenses, royalty, consent
or performance or mechanical reproduction payments or waiver.

1.6 Any damage, loss, error, legal proceedings, product liability, or fines.

1.7 Any discounts, returns, errors, replacement, remainder, packaging, and

freight costs.

1.8 Any editing, translations, censorship, credits, copyright notices and

copyright protection.

1.9 Marketing, promotional and advertising material, labels [including

website material and mobile phone promotions].

• In this definition of gross receipts in A-Z G.048 in Film and Television the
deductions are also wide but not listed.

• The deductions are authorised to cover all costs and expenses of and relating
to the reproduction, supply, distribution, sale or other exploitation of the
film.

• The deductions are then listed by way of example and it is not an exhaustive
list. This allows deductions to be made which are not listed.
• The deductions include:

– commission, agency fees

– reproduction costs, editing

– translations

– packaging and freight

– advertising and promotional material

– copyright clearance fees, royalties

– recording, performance and transmission of any music, composition and

lyrics

– refunds, discounts and deductions

– legal costs

– and under other sums paid under indemnity or otherwise incurred relating
to the exercise of the rights under this agreement

A-Z G.048
‘Gross Receipts’ shall mean the gross proceeds of the exploitation of the
[specify rights] in the [Film] actually received by the [Company] in freely
convertible currency after there shall have been deducted from such
proceeds all costs and expenses of and relating to the reproduction, supply,
distribution, sale or other exploitation of the [Film] including, but not
limited to, commission, agency fees, reproduction costs, editing,
translations, packaging and freight, advertising and promotional material,
copyright clearance fees, royalties, recording, performance and
transmission of any music, composition and lyrics, refunds, discounts and
deductions, legal costs, and under other sums paid under indemnity or
otherwise incurred relating to the exercise of the rights under this
Agreement.

• Where a company is exploiting a work or service through its website or app

and is paying a royalty based on gross receipts. It is likely that there will be
 third party affiliates and other involved in the promotion of the website as
well as the distribution and supply.

• In A-Z G.073 in Internet and Websites the company can deduct a number of
specific costs and expenses before the figure is calculated for the gross
receipts from which the royalty is paid.

• Note this definition is limited to the sums received from the sale, supply,
rental and distribution relating to the website. It does not have the wider
forms of exploitations included in the other definitions.

• It only applies to the specific work or product and not any new developments.

• There is no limit set for any deductions either by accounting period, or by

subject or as a total financial limit.

A-Z G.073
‘Gross Receipts’ shall mean the sums received and retained by the
[Company] relating to the sale, supply, rental and distribution of the
[Product/Service/Work] on the [Website] after the deduction of the
following costs:

1.1 Commission.

1.2 Agency fees.

1.3 Currency exchange costs and losses.

1.4 Bank charges and fees.

1.5 Administration costs and charges.

1.6 Any import, export and/or supply taxes, duties and payments.

1.7 Any sales tax or value added tax or any other government charge on
goods or services.

1.8 Any insurance costs and charges.

1.9 Copyright and consent fees and royalties; usage; performance;

 mechanical reproduction payments and/or waiver.

1.10 Any costs for damage, loss, error, legal proceedings, product liability,
and/or fines.

1.11 Any discounts, returns, errors, replacement, remainder, packaging,

and freight costs.

• This definition of gross receipts is quite different in A-Z G.090 in

Merchandising.

• The definition is for all sums of any nature.

• The sums will be those received by the distributor as well as any parent
company or associated company.

• The subject matter of the definition includes:

– the original work

– and/or any part

– and/or any character, name, image, logo and/or text of the original

– and/or any adaptation

– and/or any developed by the [Distributor]

• In 1.1 the agency fees are limited by percentage.

• No deduction may be made for marketing, legal, supplying material in any

format, administration and insurance costs.

A-Z G.090
‘The Gross Receipts’ shall mean all sums of any nature received by the
[Distributor] and/or any parent and/or associated company from the
exploitation of the [Work] and/or any part and/or any character, name,
image, logo and/or text of the original and/or any adaptation which is
owned and controlled by [Name] and/or developed by the [Distributor]
and/or from any registration, licence, supply, sale, rental and/or
reproduction subject only to a deduction of:

1.1 Agents fees of no more than [number] per cent.

1.2 Commission to the [Distributor].

1.3 No marketing costs.

1.4 No legal costs.

1.5 No costs of supplying material in any format.

1.6 Taxes which relate to supply and/or transfer of rights but not corporate
and/or personal tax.

1.7 No costs of administration.

1.8 Custom duties.

1.9 No insurance costs.

 INDEMNITY

• The A-Z contains over 160 examples of indemnity clauses from A-Z I.026 to
A-Z I.187.

• This section can be read in conjunction with the main clause headings in the
A-Z of Copyright Clearance, Costs, Default, Disclaimer, Distribution
Expenses, Expenses, Insurance, Legal Proceedings, Liability, Rights,
Risk, Settlement, Territory and Termination.

What is the meaning and purpose of an indemnity clause?

• An indemnity in any contract or licence is an undertaking which acts as a

form of protection or security against losses, damages, costs and expenses. In
many older style contracts you will see the words ‘to hold harmless’.

• The exact wording of any indemnity is crucial as it confirms what the

indemnity covers and whether there are any limitations on the indemnity.

• If you agree to a wide indemnity with no limitations with a company or

person in a contract you are agreeing to pay to the company or person at any
time in future such sums as they may claim. There is no limit as to the total
due which may arise which is based on the scope of the undertaking set out
in the indemnity.

• Therefore you are exposed to a future claim for costs and expenses, losses
and damages which is unknown and unquantified.

• Indemnity clauses are very significant in any agreement whatever its nature
as they are an undertaking to reimburse a named party for the sums due
which arise out of an agreement.

• If you are asked to sign an indemnity it makes sense to make every effort in
negotiations either to provide no indemnity or to limit the subject matter,
 duration and total sum of the indemnity.

• The whole tactic in drafting indemnity clauses is to reduce the areas covered
by the clause, the duration and also how a claim is made.

• There is usually no limit to the number of claims that can be made under an
indemnity provided that any procedure to make a claim is complied with and
no capped total financial limit is exceeded.

• There may be only one indemnity in an agreement from one party licensing
the copyright or intellectual property rights in an agreement to another.

• However there may be circumstances where the parties provide mutual

identical indemnities in relation to the work and material and clauses which
relate to them in an agreement.

• There may also be situations where there are very different indemnities which
relate to different facts within the same agreement. For instance where
person A enters into a merchandising agreement for the distribution of an
adaptation of a character which he or she has designed. The person A may
provide an indemnity in relation to the artwork and material he or she has
provided to the distributor.

• If the distributor has created and developed the product then the distributor
should also provide a different indemnity to person A. This indemnity may
cover not only the product and product liability, but also acceptance of
responsibility to pay all sums due which are not received by them from any
sub-licensee, agent or other third party.

• For more clauses on these topics please also look at Liability and Product
Liability in the A-Z.

• There are some areas where, for instance, an indemnity covers plagiarism or
defamation which can give rise to a large potential claim.

• If author A enters into a publishing agreement for his or her work to be

published by company B. Author A will confirm in the agreement that the
work is original. This clause and undertaking would also be covered by the
indemnity clause in the agreement. If after the work is published company B
is sued by another person on the basis that the book was not original but
 adapted from their book. The author may have to pay the publisher all the
legal costs incurred in resolving the matter in addition to any damages and
legal costs paid to the person that made the claim.

• The liability of the author under the indemnity is not based on the merits of
the claim but is an automatic liability because a third party has made a claim
or taken legal action.

• The wording of an indemnity provision is often incorporated in a written

form in an agreement which is presented as a pro forma or standard
document and the impression provided that it is not negotiable. That in itself
is a tactic used by many companies to avoid negotiation and amendment of
their documents. This is true of many software companies,
telecommunication, media, insurance, mobile phone companies, gambling
and social media sites, competitions and travel companies.

• The company may often endeavour to ensure that there is no indemnity to

you at all except for personal injury or death. They may limit the total sum
which may be paid by reference to a code of practice or international
guidelines.

• There are even some companies which may seek an indemnity from you
despite the fact that they are being paid by you for use of their services. It is
not unreasonable to delete such references in an agreement.

• It may be that there are indemnity clauses which both parties find
objectionable. Then the solution may be found by amending the clauses and
assessing the risk to both parties. In addition an insurance policy could be
taken out for the project which benefits both parties.

• There may also be circumstances where for instance a shell company has just
been incorporated for a project and has no trading record. Then an additional
indemnity may be sought from a parent company or other associated
organisation to add additional security and protection.

• Where a new product or service is being distributed to the public then the risk
can also be reduced by building in clauses which make it compulsory for a
distributor or content provider to carry out certain tests, evaluations and
assessments at certain stages and to share those reports with all the parties to
the project.
• Where there may be concerns about any legal threats regarding defamation,
privacy, plagiarism or allegations of breach of a previous contract or passing
off. Then the parties may agree that one or both shall ensure that the work is
reviewed by a legal expert to assess any potential future risk of a claim and
to write a report.

• There may be circumstances where both parties to an agreement agree that

neither shall provide any indemnity to the other under the agreement. Each
party would therefore bear its own costs and expenses and damages and
losses for any claim that may be made or any breach by either party. It would
be best to therefore have a clause which states that there is no indemnity by
either party.

• The indemnity could be limited to specific clauses in the agreement, or

specific products or even specific services. There is no limit to the extent of
the subject matter to which an indemnity can theoretically be capable of
applying.

• Where material or content is being supplied which is not original, where the
source is not known and there is no clarity as to transfer of ownership or
authority to reproduce it. It may be prudent to ensure that such material or
content is specifically excluded from any undertakings and indemnity
clauses. This should be done in the form of a disclosure and
acknowledgement in the agreement. In other words set the details out in the
agreement and get the other party to agree the basis on which any physical
material or copies are provided and that there is no indemnity.

• If you are the party providing the indemnity then it may make commercial
sense to investigate insurance cover for that potential liability.

• You may decide to assume the risk for the indemnity if you are the creator of
the original work and are confident that there are no potential threats of any
legal actions or claims.

• An indemnity clause may be drafted so that you must pay the cost of all the
legal proceedings for both the company to whom you have given an
indemnity and the third party with the claim. The clause may be drafted to
cover not only claims where legal action is started but also allegations which
the company then decides to settle. The company may settle a claim not
 because it has any merit but because the possibility of legal action would be
a more costly and time consuming route. The costs for legal proceedings
may include the cost of all legal advisors, experts and other professional
advisors and the scope of roles covered will depend on the drafting of the
clause.

• This is an area of high potential risk under an indemnity where the other
party instructs multiple legal advisors and either does not notify you of the
potential claim or refuses to cooperate and share information. The other party
may then seek to incur costs in different countries on the basis that at later
date they believe they can claim the expenditure under an indemnity.

• There are some issues which cross between indemnity and the main clause
headings Legal Proceedings and Liability in the A-Z.

• You may wish to try to negotiate that the liability under an indemnity is
limited. This may be achieved by setting a limit on the value of each
individual claim for legal costs and expenses. You may also limit the total
liability for the indemnity under the agreement. In addition you may limit the
indemnity to only specific clauses in the agreement.

• There is normally an undertaking in an agreement that the party has not

entered into, and will not enter into, any agreement or arrangement which
would conflict with the present agreement.

• If there are previous agreements which conflict then they should be disclosed
and the clause regarding no conflict deleted.

• Disclosure is a very effective and constructive method of limiting an

indemnity regarding an undertaking for previous agreements.

• There may be agreements where it is appropriate for both parties to provide

the same reciprocal indemnities to each other. This should only be done
where there are clear undertakings and obligations which can be justify an
indemnity. It should not be done merely to provide consistency in the
agreement where there are many parties such as in a consortium. It may be
much better to draft individual indemnities to the other parties based on the
contribution of that party.

• When you are drafting an indemnity clause consider the basic route you are
 taking and the outcome you hope to achieve. There are three directions – a
wide indemnity, a narrow indemnity and no indemnity.

• All the parties to a consortium agreement or both the licensor and distributor
may provide indemnity undertakings to the other. The wording may be
identical or vary drastically different based on the facts and relative
bargaining strength of the parties.

• The indemnity may apply only to certain clauses or the whole contract.

• The indemnity may apply only to certain work, services or rights and may
also be limited by the length of time it will be in effect for someone to claim.
The indemnity may specify the countries to which it will apply or the total
amount which can be claimed under the indemnity.

• You need to look at the practicalities of the agreement and assess which areas
create the most risk for your company or you as an individual.

• Relevant topics which may give rise to a claim under an indemnity include:

– problems with faulty goods; or

– the failure of a company to actually own copyright; or

– unauthorised use of a name, logo or image which is in fact a registered

trade mark; or

– an allegation of defamation; or

– failure to fulfil the orders on time; or

– failure to comply with the budget

• There may be several areas of high risk. You do not want to be indemnifying
a third party for a claim which should have been dealt with before the
agreement was signed.

• It can be a very disturbing thought to realise that the indemnity being

provided covers, either expressly or by implication, the entire world.
• An author or distributor or company may be fairly confident that it has
complied with legislation in one or two countries but may feel less confident
in making such a commitment in respect of every single jurisdiction
throughout the world.

• This is a very real issue, for example in the context of a broad range of laws
such as: defamation; data security; health and safety and privacy. Therefore
there are valid reasons to try to limit the potential territorial ambit of the
indemnity to reduce the risk of future liability.

Drafting a wide indemnity clause

• Although the general principle of an indemnity clause is essentially the same,

there are many variations and even minor editing of a clause can
fundamentally alter the effect of the consequences of an indemnity.

• An indemnity can be drafted widely so that it covers the whole breadth of the
agreement and all the clauses and all new copyright and intellectual property
rights and material created in the future under the agreement.

• In order to create the maximum benefit you would have more than one party
provide the indemnity to you. So that if one party could not pay then you
could seek to be reimbursed by the other. Therefore you would ensure that
the indemnity is provided by not only the contracting party but also any
parent company.

• The indemnity can be provided by not only the person granting the licence or
assignment but also by the parent company, the copyright owner of the work
and any other third party involved in the project.

• It is necessary to evaluate who will be able to pay for any sums that may be
claimed at a later date and if possible to seek an indemnity from that
associated company. If a company has been created specifically for a project
but has a large and successful institute, business or global business
associated with it then it makes sense to seek additional protection. It may be
refused, but parent companies quite often provide additional undertakings for
a subsidiary.

• There may be no limit on the number of claims which can be made or the
 total sums that can be claimed under the indemnity.

• An indemnity can be used to recover both direct and indirect costs which
have been incurred by a contracting party B from the person or company A
who provided the indemnity. A distributor, manufacturer or promoter may be
just one part of a larger group of companies under a brand name and so some
time spent understanding the corporate family tree may result in additional
support being provided in the form of indemnities from them for the
undertakings in an agreement. This particularly applies to future payments
and royalties where there is a new company set up for a project.

• An indemnity whether in relation to certain clauses or the whole agreement

can be stated to survive the expiry of the agreement or the termination of the
agreement. The indemnity may apply to those surviving clauses indefinitely.

• The criteria is for party B making the claim under the indemnity to show that
the sums due arose directly and indirectly from the subject matter and fell
within the scope of the clause as set out in the agreement.

• Therefore for a wide indemnity you would not want the other party to amend
this to only cover direct costs.

• Nor would you want the word ‘reasonable’ to be added before the costs and
expenses and sum to be claimed in the clause.

• A wide indemnity clause would be drafted to cover not only legal matters
which have been instigated by the issue of a writ or summons but also
allegations and threats of legal action.

• If you were the company to whom the indemnity is provided you would want
to be able to settle the matter with the other party who is making the claim
under the indemnity without any consultation or approval regarding the sums
involved or the terms of the settlement

• To draft the indemnity clause to cover the list of additional types of costs and
expenses including more than one legal advisor, counsel, expert witnesses,
administrations costs, charges and registration costs, travel and
accommodation, bank charges, reproduction of material. This list is
effectively as wide as you wish provided that the other party agrees to the
extent of the indemnity.
• It is possible to seek an indemnity which applies to the whole agreement,
which survives after the agreement comes to an end or is terminated and is
not limited by any cut off point, and which is very extensive applying to a
wide range of directly, as well as indirectly, relevant matters which may arise
with existing material and rights as well as those created at a later date. This
is the popular American approach – to draft indemnities which are very long,
cover topics in an encyclopaedic fashion and create a liability to the other
party which creates an enormous potential cost risk for them.

• In A-Z I.029 in Employment the employee is providing an unlimited

indemnity to the employer for any breach of any part of the agreement by the
employee. This clause is very wide and is not linked to the term of the
employment nor is there a total limit of liability.

A-Z I.029
The [Employee] undertakes to indemnify the [Company] against all
liabilities, claims, demands, actions, costs, damages or loss arising out of
any breach by the [Employee] of any of the terms of this Agreement
including the [Employee’s] negligence, recklessness, dishonesty and/or
defamation.

• In an agreement for the exploitation of rights in A-Z I.107 in Merchandising.

The grant of rights are being provided by the licensor. In this clause the
licensee has agreed to indemnify the licensor for the:

– total cost of any actions, demands, claims, settlements, criminal and/or

civil proceedings

– of any nature

– at any time

– which are made against or incurred by the licensor

– under the terms of this agreement or

– on behalf of the licensee with any third party

– in respect of the exploitation of the rights granted under this agreement

• This clause is very wide and extends to not only the main agreement but
those with third parties.

• There is no limit on the nature of any claim or the total amount of the claims
that can be made or any time limit.

A-Z I.107
The [Licensee] agrees to indemnify the [Licensor] and bear the total cost of
all actions, demands, claims, settlements, criminal and/or civil proceedings
of any nature at any time that are made against, and/or incurred by the
[Licensor] as a result of any breach and/or alleged breach by the [Licensee]
of any of the terms of this Agreement and/or any other agreement made for
or on behalf of the [Licensee] with any third party including, but not
limited to any sub-distributor, agent, sub-licensee, exhibitor or others in
respect of the exploitation of the rights granted under this Agreement.

• In A-Z I. 048 in Film and Television the licensor indemnifies the Licensee
under the agreement. This clause also applies to all successors in title and
sub-licensees of the licensee. The indemnity would apply after an assignment
by the licensee to a third party as it includes successors and assigns.

• The use of the word ‘reasonable’ before the legal fees does not really do
much to improve and limit the liability of the clause.

• The indemnity applies to all terms which apply to the licensor in the
agreement.

• There may be a claim under the indemnity which relates to an alleged breach
or a claim by a third party.

• There is no time limit when the indemnity ends.

• There is no limit to the indemnity by countries.

A-Z I.048
The [Licensor] will at its own expense, indemnify, save and hold harmless
the [Licensee] and its successors, licensees, assigns and employees, from
and against any and all liability, loss, damage, cost and expense (including
without limitation reasonable attorneys’ and legal fees) incurred by them
 by reason of or resulting from any alleged breach, actual breach or claim
by a third party with respect to any of the warranties, undertakings or terms
made by the [Licensor].

• In A-Z I.077 in General Business and Commercial the company has agreed
to indemnify not only the licensee but also its officers, directors, employees
and agents.

• The indemnity applies to the whole of the agreement.

• The indemnity has no total financial limit and has no end date when it will
not apply. It is however not clear that the indemnity clause will exist after the
end of the agreement.

A-Z I.077
The [Company] shall indemnify and keep indemnified the [Licensee]
including the [Licensee’s] officers, directors, employees and agents against
all liabilities, claims, costs, damages, expenses and legal fees reasonably
and properly incurred arising out of any breach of any representation,
warranty, undertaking or obligation on the part of the [Company] contained
in this Agreement.

• Where there is an assignment from an assignor to an assignee then the

indemnity may be wide as in A-Z I.084 in General Business and
Commercial.

• The indemnity applies to a breach of any of the terms of the agreement by the
assignor.

• The assignor is liable to pay any sums awarded against the assignee or
incurred by them or paid by them as a result of any breach or alleged breach
by the assignor.

A-Z I.084
The [Assignor] will keep the [Assignee] indemnified from and against all
liabilities, actions, claims, proceedings, damages and loss suffered or
incurred by the [Assignee] or awarded against the [Assignee] and any
compensation agreed and paid by the [Assignee] in consequence of any
 breach and/or alleged breach of the terms of this Agreement by the
[Assignor].

• In A-Z I.179 in University, Library and Educational the company has

provided the indemnity to both the institute and its commercial enterprise
trading body.

• In this clause the indemnity is extended to officers, employees and any

agents.

• The indemnity relates to both direct and indirect liabilities. It has also been
extended to apply to damage to equipment and facilities.

• The indemnity also covers allegations which are settled without any legal
action.

A-Z I.179
The [Company] shall be solely responsible for and shall indemnify the
[Institute] and/or the [Enterprise] and its officers, employees and/or agents
against all direct and/or indirect liabilities, losses, damages, actions, injury,
damage to equipment and/or facilities, claims, demands, civil and/or
criminal proceedings, administrative costs, charges, interest, court fees and
legal expenses incurred by the [Institute] and/or the [Enterprise] including
any matter settled on the advice of a legal advisor by the [Institute] and/or
the [Enterprise] as a result of a breach or alleged breach by the [Company]
of its obligations under this Agreement.

• In a distribution agreement for a product in A-Z I.109 in Merchandising. The

distributor has agreed to provide an indemnity to the licensor.

• The indemnity applies to any breach or alleged breach by the distributor and
any third party engaged by the distributor.

• The indemnity applies to:

– any damages, losses, costs, expenses, legal fees

– and loss of profit and royalties and rights

 – whether directly or indirectly arising from the breach or alleged breach

• Note there is no total financial limit set.

• Examples are provided of situations where the indemnity may apply under
the clause in 1.1 to 1.4. This is done by the use of the words including but
not limited to before setting out the examples.

• The reason for doing this is that it makes clear that if there is a product recall
then the distributor must indemnify the licensor for any costs and expenses
incurred. This topic also relates to the main clause heading Product
Liability in the A-Z.

A-Z I.109
The [Distributor] agrees to indemnify the [Licensor] for any damages,
losses, costs, expenses, legal fees, and/or loss of profit and/or royalties
and/or rights whether direct or indirectly arising from the breach and/or
alleged breach of the terms of this Agreement by the [Distributor] and/or
any third party appointed or engaged by the [Distributor] including but not
limited to:

1.1 Failure to by a third party to account or transfer any sums due.

1.2 The recall of the [Product] for health and safety reasons, and/or quality
control reasons.

1.3 The delay, cancellation and/or alteration of the proposed launch date.

1.4 Any personal injury, death, or other matter relating to the use, and
fitness for purpose of the [Product] its content and packaging and any
other product liability or compliance required under any legislation,
directive, regulation, policy or code in any country.

Drafting a narrower and more limited indemnity clause

• If you are asked to provide an indemnity then there are always ways to seek
to limit the indemnity or have it deleted entirely.

• The indemnity may be limited to an agreed number of clauses and

 undertakings in the agreement.

• The indemnity may be limited to only those clauses which relate to a specific
work, product or service.

• An indemnity can be for a fixed period with a start and end date.

• The indemnity can be for the duration of the licence period or it can be until
the date of termination.

• An indemnity can be drafted very narrowly and a total sum set out which sets
a limit on the liability under the indemnity.

• The amount may be calculated by reference to the value of the cover for an
insurance policy or the total sum of the payments due under the contract or
by an arbitrary figure which in the circumstances both parties agree.

• It is acceptable to agree a maximum fixed liability and indemnity to the other

party under the agreement which effectively limits the potential threat to a
company. However death and personal injury may not be excluded and
particular attention needs to be paid to the legal requirements which apply
relating to product liability and health and safety matters. A high duty of care
is owed to the consumer and the public as well as employees.

• It can be made clear as to which type of payments may be claimed and which
may not by either including or specifically excluding them.

• The indemnity may be limited to matters only in one area, country or a

marked map or even types of establishments. So you are imposing a
territorial limit to the liability under the indemnity. You may wish to accept a
claim under the indemnity for a matter in Europe but not in other countries
worldwide.

• The clause relating to indemnity may set out a process of approval or

consultation for settling an alleged claim or a legal action.

• The indemnity may require the party seeking to potentially make a claim to
provide full details and to allow the matter to be dealt with by the person
who may be liable under the indemnity. The aim here is to reduce the
potential cost and expenses and to take control of the matter.
• The extent of the sums due under an indemnity and the liability for interest,
costs, damages, losses, legal costs, accountancy fees and any other sums
does not necessarily have to be reasonable.

• Therefore the word reasonable can be added to an indemnity clause as

another way of reducing the potential liability and sums due to be paid.

• An indemnity clause can also be amended in negotiations to limit the clause

to only those matters which arise directly and not indirectly from the
agreement.

• Many indemnity provisions have no date on which they end. The indemnity
may not be linked to the termination of the agreement or the end of the
licence. It may be unresolved which would leave it open for either party to
try to argue either way based on the drafting of the agreement.

• There are also contracts which make it clear that certain clauses continue
after the termination of the agreement or expiry of the licence period. Here
again the agreement may be drafted to make the indemnity clause exist after
the agreement has ended, but yet again there is an unlimited period which
has no end date. While this may be a good position for the company which
has the benefit of the indemnity. It is not good for the person or company
which has the unlimited liability.

• The length of time that an indemnity can be relied upon by the other party is
significant as there is an ongoing risk of a claim. It is worthwhile limiting an
indemnity as far as possible to a fixed date or the termination of the
agreement or the end of the licence.

• Even where there has been an assignment there is no reason why any
indemnity should continue more than a few years if that – yet many have no
such limit either by time or total liability.

• If the indemnity must survive the agreement then limit it to a period of one
additional year or some other fixed period.

• It could also be agreed that the indemnity shall cease from an individual if the
company is transferred and sold to a third party.

• There may be a time limit by which a claim may be made under the
 indemnity by the other party. The time limits may vary for specific matters.

• In this clause A-Z I.082 in General Business and Commercial. The clause –
which is quite wide – has been limited in the following ways:

– consequential and/or indirect loss has been excluded

– the lawyers’ fees and costs must be reasonable

– the licensee must notify the company of any litigation, claim or threat in
writing to which they wish the indemnity to apply

– the company shall at its own expense be able to defend or deal with any
matter

– The company shall not be bound to provide any indemnity to the licensee
for any settlement which has not been approved or authorised by the
company

A-Z I.082
The [Company] will indemnify and hold harmless the [Licensee], its
officers, directors and employees against any and all claims, damages,
liabilities, losses and expenses (except for any consequential and/or
indirect loss) including any reasonable lawyers’ fees and costs arising out
of any addition, deletion or other act of the [Company] in connection with
the [Property]. The [Licensee] shall promptly notify the [Company] in
writing of any litigation, claim, or threat of legal action to which this
indemnity applies. The [Company] shall at its own expense assume the
defence of or deal with any such matter. The [Company] shall not be
obliged to indemnify the [Licensee] in respect of any settlement of any
claim, threat or litigation which has not been approved by and/or
authorised by the [Company].

• Where there is an assignment as in A-Z I.037 in DVD Video and Discs. The
assignor may seek to limit the duration of the indemnity which will last until
a fixed date.

• The clause will state that after that end date the assignor will not be liable to
pay any sums.
• The assignee should acknowledge and accept that there is no indemnity after
the agreed end date.

A-Z I.037
The [Assignor] agrees to indemnify the [Assignee] against all claims,
liabilities, demands, actions, costs, damages or reasonably foreseeable loss
arising directly out of any breach by the [Assignor] of any term, warranties,
representations or inducements made under this Agreement which may
arise before: [date]. After that time the [Assignor] shall not be liable to pay
the [Assignee] any sums whatsoever however they may arise. The
[Assignee] agrees that the indemnity shall not continue after: [date].

• There can be a fixed financial limit which applies to an indemnity clause as in

A-Z I.032 in Employment.

A-Z I.032
The total liability of the [Executive/Company] under this Agreement shall
be limited to: [figure/currency].

• It is also possible either to exclude certain areas of work or clearances or

other matters or to exclude responsibility for liability under an indemnity for
matters which arise in certain countries.

• For example in A-Z I.071 in Film and Television the indemnity and claim
only relates to countries outside the excluded ones named.

A-Z I.071
The claim for any sum relates to an action and/or other matter outside
[specific countries].

• In A-Z I.131 in Publishing it is agreed between the parties that the indemnity
only applies to exploitation of the work in a specified country. The
publishers cannot claim under the indemnity for any other country and must
exploit the work at its own risk.

A-Z I.131
The indemnity only applies to exploitation of the [Work] in [country], all
other reproduction, publication, distribution and exploitation is at the
 [Publishers’] risk and cost.

• An indemnity clause may also contain a time limit by which any claim must
be received as in A-Z I.134 in Publishing.

• The publisher waives all rights to make any claim under an indemnity which
is not made by the fixed date and time. This clause is not common but makes
perfect sense as a means of creating an end date for liability for the other
party.

A-Z I.134
All claims under the indemnity Clause [] must be received by the
[Company] by [date] [time]. Thereafter the indemnity shall no longer
apply. The [Publishers] waives all rights and agrees not to make any further
claims against the [Company] after that date.

• Liability may also be limited under an indemnity by stating those matters

which the parties agree are excluded as in A-Z I.044 in DVD Video and
Discs.

• There are any number of lists which can be created to exclude subjects for
which a party does not wish to be liable under an indemnity.

A-Z I.044
The parties agree that the following matters are not covered by any
indemnity from one party to the other:

1.1 Administrative and reproduction costs.

1.2 Costs of financial and accounting advice.

1.3 Telephone, accommodation and travel costs.

1.4 Fees for consultants, agents, and other experts except legal advisors.

1.5 Matters which arise as a result of the actions and/or failure to pay of
any sub-licensee, agent and/or any other third party.
• A company or institute may not only limit the liability of the indemnity but
also exclude certain subjects from the indemnity as in A-Z I.184 in
University, Library and Educational.

• Here the exclusion relates to:

– any losses, damages costs, expenses

– destruction of data

– interruption of facilities or services

– lack of availability of key personnel

– inaccuracies, errors and defects

– failure to account or pay sums due

A-Z I.184
The total indemnity by the [Institute] to the [Company] shall be limited to:
[figure/currency] [words] which is the value of the [Product/Service/other].
No responsibility can be accepted by the [Institute] for any other losses,
damages, costs, expenses, destruction of data, delay in delivery,
interruption of facilities and/or services, non-availability of key personnel,
inaccuracies, errors, defects, failure to account and/or pay any sums due
whether directly and/or indirectly arising from reliance on this Agreement
by the [Company].

• Where there is a mutual indemnity as in A-Z I.068 in Film and Television.

The focus is on early notification of any alleged claim and the fact that the
party against whom the allegation is made is consulted about the matter.

• Both parties have a maximum identical limit to their liability under the
indemnity.

A-Z I.068
The Licensor and the Licensee mutually undertake to indemnify the other
against all liabilities, claims, demands, actions, costs, damages and loss
arising out of any breach by the other party of any of the terms of the
 Agreement. Both parties agree that in such an event they shall provide full
details to the other party at the earliest opportunity. If either party wishes to
assert its rights to be indemnified then it must promptly:

1.1 Notify the other party of any threat or claim which may arise and make
no admission of settlement.

1.2 Provide the other party with the opportunity to be full consulted in
respect of the proposed cause of action with the case

1.3 The maximum liability of either party shall be limited to [figure

currency] in total for each party under this Agreement to the other
party

1.4 The indemnity shall only apply if the party seeking to rely on the
indemnity has notified the full nature of the claim and cooperated fully
with the other party.

• The focus of a clause may be on controlling the costs under an indemnity as

in A-Z I.038 in DVD Video and Discs.

• Both parties have agreed not to incur any costs which may be claimed under
the indemnity without first obtaining the approval of the party from whom
the indemnity will be sought.

• This clause is not very practical even though consent shall not be
unreasonably withheld or delayed but it serves the purpose of forcing one
party to inform and seek approval of the other party and not waste costs.

A-Z I.038
Neither party shall incur any costs of any nature in such [indemnity]
circumstances without first obtaining the prior approval of the other party
which shall not be unreasonably delayed or withheld.

• In A-Z I.089 in General Business and Commercial the assignor and assignee
to an assignment have agreed to the same indemnity.

• The clause does not directly refer to any alleged breach. However it states
that each must provide the other party with details of any claim at the earliest
 opportunity and shall not settle any other matter without consulting with the
other party.

A-Z I.089
The Assignor and the Assignee mutually undertake to indemnify the other
against all liabilities, claims, demands, actions, costs, damages or loss
arising out of any breach by either of them of the terms of this Agreement.
In the event of any claim, dispute, action, writ or summons the Assignor
and the Assignee agree to provide full details to the other party at the
earliest opportunity and shall not settle any such matter without first
consulting the other party.

No indemnity

• In A-Z I.030 in Employment the executive is not providing any indemnity to

the company.

A-Z I.030
The [Executive] does not provide any indemnity whatsoever to the
[Company] in respect of any loss, claim or damage that may arise from this
Agreement.

• A company may agree to take out insurance cover to provide protection to an

executive for his services as in A-Z I.033 in Employment.

A-Z I.033
The [Company] agrees and undertakes that it shall arrange suitable
insurance cover at the [Company’s] cost for the benefit of the [Company]
[and the Executive] to cover any matters that may arise from the
employment and/or the ultra vires actions of the [Executive] and any claim
by the [Company] and/or a third party and/or shareholder.

• Both parties may agree not to provide any indemnity as in A-Z I.041 in DVD
Video and Discs. The agreement is to take out insurance, the premiums for
which can be taken out of the budget for the project.

A-Z I.041
 The Producer and the Distributor agree that they shall not provide
indemnity provisions to each other but shall arrange insurance cover for
such purpose in the sum of ‘figure/currency for the benefit of both parties.

• There may be no indemnity clause in respect of access to a location as in A-Z

I.028.

A-Z I.028
The [site/location] set out in Schedule [-] and which forms part of this
Agreement is not safe and is not habitable and is used by your [Company]
at your own risk. There are no indemnity provisions and/or undertakings as
to suitability for any use. Prior to access you must agree to take out
insurance cover at your own cost for all persons that may enter and/or use
the [site/location] to provide protection for the [Owner] and your
[Company].

• There may be no indemnity by an author and the obligation in the agreement

relates solely to the delivery of the work required under the agreement as in
A-Z I.127 in Publishing.

• The company accepts all responsibillity for any costs and expenses and all
liability which arises from the exploitation of the work by the company.

A-Z I.127
The [Company] agrees that it shall not have the right to seek any sums
from the [Name] in respect of this Agreement provided that he/she fulfils
the obligation to deliver the [Work] by [date]. All responsibility for any
legal liability or proceedings which may arise from the use of the [Work]
and any other material collected, obtained or provided under this
Agreement shall be at the sole risk, cost and expense of the [Company].

• In A-Z I.174 in Sponsorship there are certain matters which the sponsor
agrees will not be covered by the indemnity by the company and which are
excluded.

A-Z I.174
The [Sponsor] agrees that it shall not seek to be indemnified by the
[Company] for any financial loss, expense, damage to reputation, changes
to an advertising campaign, merchandising and/or other direct and/or
indirect consequences which arise due to the following matters:

1.1 Cancellation, delay, alteration of the content of the scheduled

[Film/Work/Event], artistes and/or the location.

1.2 Changes in any title, players, outfits to be worn, banners, flags, official
brochures, television and media coverage.
 JURISDICTION

• The A-Z contains 37 clauses on the issue of Jurisdiction from A-Z J.001 to
A-Z J.037 under the sub-heading General Business and Commercial.

• Other main clause headings in the A-Z that may be relevant include
Arbitration, Authorisation, Capacity, Disputes, Invalidity, Legal
Proceedings, Mediation, Severance and Territory.

The meaning and purpose of jurisdiction

• The jurisdiction in a contract can either be left to chance and not mentioned at
all or be defined and agreed between the parties.

• The jurisdiction is the country or countries which the parties have agreed will
be used for the purpose of any legal proceedings. The jurisdiction clause
would not necessarily be held to apply to just a complaint if there were no
legal proceedings. The clause may also be adapted to apply to mediation and
arbitration.

• You may decide that you wish to limit the choice of countries in which a
person or company may have the ability under the agreement to take legal
action. If a person or company has agreed to only use the jurisdiction of one
country they will be in breach of an agreed clause if they try to use a
different jurisdiction.

• The opposite approach is to try and give a person or company as many

options as possible and so not to limit the jurisdiction in any manner for
either party.

• It is inevitable that both parties to an agreement will be keen for the

jurisdiction to be their main place of business and location of their head
office. This is often resolved by the stronger party who is paying most of the
money asserting the right to choose the jurisdiction.
• The jurisdiction clause may be drafted to be relevant to any dispute, claim,
litigation, question of interpretation, damages or loss which arises directly or
indirectly as a result of an agreement.

• There are times when the parties to an agreement may involve companies and
enterprises set up in different countries. The products are produced and
manufactured in entirely different countries and distributed worldwide.

• One party may seek to choose the jurisdiction which will offer the most
protection, security and damages through its legal system.

• There is no reason why there should not be a choice of jurisdictions in an

agreement.

• The word jurisdiction applies to the country in which legal action may be
taken as opposed to legislation and/or law which will apply to the agreement.

• The clause may also limit the jurisdiction further, not only to a country which
has been specified but also to a court or type of court.

• Jurisdiction is not the same as governing law which only applies to the
legislation and laws of a country.

• There is a distinction therefore between the governing law and the

jurisdiction but they can be drafted to be the same or different.

• The jurisdiction may therefore be the United Kingdom or a named part of it

such as England. The governing law would therefore naturally be related to
the nominated country or countries. However within those countries there
may be more than one form of governing law.

• The United States of America has different governing laws for each state.

• If the parties have a disagreement over which jurisdiction should apply to the
contract. It is fairly common to use two jurisdictions in a manner that
satisfies both parties.

• Some contracts clauses make reference to the exclusive or non-exclusive

nature of the jurisdiction. Such wording will have little or no relevance
unless it seeks to impose some form of restriction or obligation upon one or
 both of the parties.

• An agreement may state that the parties submit to the non-exclusive

jurisdiction of the courts of England and Wales. Despite this form of drafting
the directives, regulations and courts of the European Union are also
relevant. A party may still decide to take action through the EU courts or
elsewhere despite the jurisdiction clause.

• References to exclusivity can hold greater weight and import than references
to non-exclusivity.

• Very often a jurisdiction clause is added at the ended of an agreement without

a great deal of thought. The impact on the cost and consequences of legal
proceedings from one country to the next can however be significant.

• The importance of a jurisdiction clause may not be appreciated until a party

reviews a contract with the intention of issuing legal proceedings.

• At that stage they may realise that the agreement is subject to a jurisdiction of
which they have no knowledge and for which it would be very expensive to
engage legal representation.

Drafting clauses relating to jurisdiction

• There is nothing wrong in aiming for minimalism in a clause. If brevity is the

challenge then a single line such as set out in A-Z J.011 will mean that both
the jurisdiction and the laws will be those of one country.

A-Z J.011
This Agreement shall be subject to the Laws of [England].

• The clause may be restricted by adding that the parties agree that any legal
proceedings shall be subject to the exclusive jurisdiction of the High Court of
Justice in England as in A-Z J.017.

A-Z J.017
This Agreement shall be construed in accordance with the Laws of
[England] and shall be subject to the exclusive jurisdiction of the [High
Court of Justice in England].
• In A-Z J. 019 the issue of the jurisdiction of one country is treated separately
from that of the issue of the governing law.

A-Z J.019
This Agreement shall be interpreted and construed in accordance with
[Name] Law and the parties agree to submit to the jurisdiction of the
[Name] Courts.

• An agreement may set out in a clause that is governed and construed in

accordance with the laws of a country. Further that the parties agree to be
subject to the exclusive jurisdiction of the courts of that named country as in
A-Z J.015.

• No party would then have the right to take legal action outside the agreed
country and the exclusive jurisdiction as it would be a breach of that clause.

• Note this clause applies to any dispute or legal proceedings.

A-Z J.015
This Agreement is to be governed by and construed in accordance with
[English] Law and the parties hereto submit to the exclusive jurisdiction of
the [English] Courts in respect of any dispute and/or legal proceedings in
respect of this Agreement and any matter arising thereunder.

• A jurisdiction clause may be drafted widely so that it covers more than

litigation and it is clear that it covers all disputes, litigation, questions of
interpretation, damages and losses as in A-Z J.006.

• The clause may be drafted to cover all such matters which may occur directly
from the agreement as well as indirectly which may be as a result of third
parties. This type of clause is therefore also covering matters which would
arise in the clauses of Liability and Legal Proceedings in the A-Z.

• Note here there is no reference to exclusive or non-exclusive – it is not

necessary. However there is an affirmative statement that no other
jurisdiction will be applicable.

A-Z J.006
 Both parties to this Agreement acknowledge and confirm that any dispute,
litigation, interpretation, damages or loss which arises directly or indirectly
as a result of this Agreement shall be subject to the laws of [Country] and
no other jurisdiction shall be applicable.

• A jurisdiction clause may be drafted with a main country and court

nominated but which is not compulsory and binding as in A-Z J.007. The
jurisdiction is therefore mainly for guidance and it is made clear that the
parties may seek to use any other jurisdiction.

A-Z J.007
This Agreement shall be interpreted and construed in accordance with
[specify] law and the parties hereby agree to submit to the jurisdiction of
the [country/court]. Provided that nothing shall prevent either party from
seeking redress in any other jurisdiction if it shall so think fit.

• The parties to an agreement may not have been able to decide upon a
nominated country for jurisdiction and governing law and nominated court.
There is nothing wrong with both parties not making a fixed choice at the
signature of the agreement.

• The aim of a clause may therefore be to confirm that the matter has not been
decided and that all the parties are free to make whatever choice they wish
regarding jurisdiction and governing law.

• There may therefore be such an acknowledgement as in A-Z J.002 that there

is no restriction on the jurisdiction which can be used by the creditor.

A-Z J.002
Nothing contained in this Clause shall limit the right of the [Creditor] to
take proceedings against the Guarantor in any other Court of competent
jurisdiction, nor shall the taking of any such proceedings in one or more
jurisdictions preclude the taking of proceedings in any other jurisdiction,
whether concurrently or not (unless precluded by applicable law).

• In A-Z J.013 it is agreed that the performance and obligations of the author
shall be construed and governed by the laws of the State of New York.
However the obligations and performance of the publisher shall be governed
 by the laws of England and the jurisdiction of the English courts.

• Note there is no reference to disputes or legal proceedings in this clause.

A-Z J.013
Regardless of its place of execution, the provisions of this Agreement
relating to the performance or obligations of the [Author] shall in all
respects be construed according to, and be governed by, the [Law of the
State of New York]. However, the provisions of this Agreement relating to
the performance or obligations of the [Publisher] shall in all respects be
construed according to, and be governed by, the [Law of England], and be
within the [non-]exclusive jurisdiction of the [English Courts].

• If the parties intend for the contracts to be under the jurisdiction of the United
States then the agreement will make reference to the United States of
America and limit it to a nominated area such as the State of New York or
merely make reference to one of the many states.

• A clause may refer to the fact that the jurisdiction clause is to be used for its
construction, interpretation and legal effect as in A-Z J.018.

• This clause limits the jurisdiction to the named state. There is no reference to
the United States but it could be included.

• However the clause only applies to contracts entered into and performed
within the named state.

• So if the contract fell outside that criteria then you would be left in the
situation where any company or person could decide to choose any other
jurisdiction and governing law they wish. As the clause would not cover any
situation where the contract was performed outside the named state.

A-Z J.018
This Agreement has been entered into in the State of [Name] and its
validity, construction, interpretation and legal effect shall be governed by
the State of [Name] applicable to contracts entered into and performed
entirely within the State of [Name].

• A website company will want to choose a jurisdiction of its choice which

 applies to any terms and conditions which a person or company will agree to
as a condition of access or the supply of material, products or services.

• It would not be unreasonable to expect any company which distributes its

products, services or material worldwide through a website to endeavour to
control where legal action may be taken or where it may be most at risk from
a large claim.

• In A-Z J.037 the issue of jurisdiction is considered a fundamental term if a

person or company wants access to the blog, app or website. The nominated
jurisdiction is the country where the business is based for its headquarters.

A-Z J.037
The use and/or supply and/or distribution of the [App/Blog/Website] is
worldwide but any disputes, claims, actions and /or other matters which
arise are subject to the legislation, policies and jurisdiction of [country]
where [Name/Distributor] is based at [address]. You are not authorised by
[Name/Distributor] to access, download, use and/or supply and/or
distribute the content in any form unless you have agreed to this
fundamental term.

• A jurisdiction clause may purely be for the benefit of one party as opposed to
the other. The clauses do not have to be the same for each party.

• A-Z J.035 is not a common clause but reflects the reality of the number of
countries that may be involved in the performance of an agreement.

• Note this clause is limited to a choice of forums and jurisdictions for the
company not the licensee.

A-Z J.035
The [Company] reserves the right to choose the forum and/or place for any
legal proceedings against the [Licensee] from any of the following at any
time:

1.1 [country] where the parent company [specify] is based at [address].

1.2 [country] where the [Products] are manufactured at [address].

1.3 [country] where the [Supplier] is based at [address].

1.4 [country] where the website known as [specify] which markets the
[Products] is based at [address].

1.5 [country] where the [Company] is based at [address].

1.6 [country] where the main office of the legal advisors of the [Company]
are based at [address].
 LEGAL PROCEEDINGS

• There are over 100 clauses in the A-Z relating to Legal Proceedings A-Z
L.027to A-Z L.130.

• This subject can be cross referenced to the main clause headings in the A-Z
of Arbitration, Brand, Budget, Costs, Damages, Data, Database,
Defamation, Domain Name, Editorial Control, Expenses, Indemnity,
Insurance, Jurisdiction, Liability, Logo, Loss, Material, Mediation,
Quality Control, Risk, Sub-Licence, Trade Marks and Waiver.

The significance and purpose of legal proceedings

• There are many potential types of legal actions and proceedings which could
arise in relation to an agreement between two or more companies. A clause
may therefore address the question of legal proceedings between all the
contracting parties to an agreement.

• In this instance it would also be relevant to consider the main clause headings
in the A-Z of Arbitration, Mediation, Jurisdiction and Liability, Costs
and Expenses.

• The dispute may relate not just to a breach of the agreement but also disputes,
claims and allegations which may be made by third parties.

• These third parties who either threaten a legal action or commence legal
proceedings may be members of the public, agents, sub-licensees,
distributors or someone who has at some stage has created original material
such as artwork, music or a script for a project.

• It is very difficult to foresee all the potential types of legal threats and claims
that may occur.

• There may be a legal action by a contractor for injury or death arising from
 the supply of a service at a company’s premises.

• A toy may be faulty and may have to be recalled as its content is not suitable
for use by children. There may be an investigation and a fine or a product
liability claim by a third party retailer or consumer.

• A logo or trade mark which is used in association with a new brand name
may give rise to a claim of trade mark infringement or passing off.

• The parties to an agreement may agree that each can use its own discretion as
to whether:

– to take legal action against another third party who has infringed their
product

– or how to defend a claim

– or when to settle a matter

• Company A who is the licensor under an agreement may seek to control and
be in charge of any settlement or defence regarding any threats of legal
actions or claims made by a third party against the copyright and intellectual
property rights granted to a licensee.

• If the licence which the licensee has acquired is an exclusive one, then the
licensee cannot be prevented by the licensor from taking any legal action for
the period of the licence. Except where the consent of the licensor to be
joined as a party is required for the action to proceed.

• This applies in cases where the licensor is the copyright owner of the work in
the United Kingdom.

• The parties can also agree that unless an allegation or claim is reported to the
licensor then the indemnity shall not apply.

• For more on this subject please look at the main clause heading of Indemnity
in the A-Z.

• That there may be a limit as to the total amount of financial liability accepted
by the licensor. The licensor cannot however exclude liability in the United
 Kingdom for personal injury and death.

• For more on this topic please look at the main clause heading in the A-Z of
Liability.

• The parties may agree which party A or B is to take control and deal with any
allegations and threats and who is to pay the costs and expenses of legal
advisors and experts who may be required.

• It may be that both parties are in charge of their own legal proceedings and
control any allegations which are made against them.

• As well as any allegation or claim against or by any third party that they
engage such as an agent, supplier, distributor or manufacturer.

• The parties may however agree to keep each other informed.

• The parties may agree to provide copies of any documents upon request.

• The parties may agree to consult with each other in advance of any proposed
settlement.

• The licensee may have to seek to join the licensor as a party to any legal
action against a third party which it may wish to take.

• The licensor may agree to have its name joined in the legal action provided
that a separate indemnity document is concluded. Where the licensee agrees
to pay all sums which the licensor may incur in respect of the legal action
and for which it may become liable including damages, aggravated damages
and costs and expenses.

• The agreement may state that an insurance policy should be taken out to
cover the potential threat of any legal action regarding the project. The
parties may agree that all parties shall be named as benefiting from the
policy and that the premiums will come out of the budget. For more clauses
on insurance please look at the main clause heading in the A-Z of
Insurance.

• Even if a company wins a legal action that it has taken or defends an action
successfully. It is very unlikely that the company will recover all the costs
 and expenses and charges that it has incurred.

• You need to consider other relevant subjects, such as the registration and
protection of the legal title and ownership of the copyright and any other
intellectual property rights, any computer software, patent, database and
data, domain name, trade marks and logos and any physical material which
may exist in different formats and media which relate to the project.

• For more on this subject please look at the main clause headings in the A-Z
of Brand, Data, Database, Domain Name, Logo, Material and Trade
Marks.

• Where an agreement allows for the appointment of third parties such as

agents, sub-licensees or distributors. You may also wish to address in the
main agreement the procedures for them to report back any knowledge of
potential infringements and complaints.

• You may include a clause in the main agreement which ensures that where a
third party is appointed. That in any third party agreement there is a
requirement to seek prior approval or to consult with the main licensor
before any legal proceedings are started or defended.

Drafting clauses relating to legal proceedings

• A clause may be used to make it clear that one party is not obliged to consult
with another if it wishes to take legal action or defend or settle any matter.
The contracting party can take such steps as it thinks fit to act in its own
interests as in A-Z L.128 in University Library and Educational.

• In this clause the institute makes it clear that it has sole control of whom it
takes legal action against and how to deal with any allegation or claim.

• There is no obligation to consult with a person and the final decision as to

whether to settle any matter or not is for the institute.

• The institute may not want any third party to think that they have any rights
over the conduct of the institute.

A-Z L.128
The [Institute] shall have the right to defend, settle and/or resolve any
 threat and/or start of legal proceedings, any allegations and/or breach of
any code of conduct and/or policy guidelines as it thinks fit and in the best
interests of the [Institute]. The [Institute] may settle a matter without any
admission of liability in order to save costs and/or publicity. The [Institute]
shall not be obliged to consult with any person prior to any final decision
as to the best course of action.

• A slightly different approach is taken in A-Z L.124 in University Library and

Educational.

• In this clause the company has agreed that the institute shall have the sole
discretion as to whether the institute starts any legal proceedings.

• There is no obligation on the institute to keep the company informed or to

consult with the company over any settlement.

• The company shall not have any right to any damages, costs and expenses
paid to the institute from any legal proceedings.

A-Z L.124
The [Institute] shall have the sole discretion as to whether to take any steps,
actions and/or commence any legal proceedings for any civil and/or
criminal matter. The [Institute] shall not be obliged to keep the [Company]
informed as to the progress in any case. The [Institute] shall not be obliged
to consult with the [Company] as to the terms of any settlement and/or
claim. The [Institute] shall be entitled to keep all damages, costs, interest
and any other sums received as a result of any such legal proceedings and
the [Company] shall have no right to any part.

• The principle is the same but the clause is drafted in a different way in A-Z
L.077 in Merchandising.

• The clause applies to both parties.

• Each party may make its own decisions regarding a wide range of legal issues
and any threat, legal action or allegation. Provided that it does not seek to be
reimbursed for any legal costs under the agreement.

• Note that this clause does not mention damages and losses that may be paid.
 Those words may be added after legal costs.

A-Z L.077
Each party agrees that in the event of any complaint, threat, legal action or
allegation of infringement of copyright, trade mark, service, mark, logo,
slogan, domain name, words or images. That each party shall be entitled to
deal with the matter without consulting the other and decide what to do
based on their own commercial interests provided that they do not intend to
seek to be reimbursed for any legal costs under any indemnity clause in this
Agreement.

• In A-Z L.053 in General Business and Commercial both parties have agreed
that they can deal with their own legal issues as they wish.

• They have both agreed to bear their own legal costs and expenses.

• They have both agreed that they shall not seek to claim or be entitled to any
indemnity or compensation from the other party. Both parties may settle,
institute or defend any legal action entirely at their own discretion.

A-Z L.053
The parties agree that they shall not be obliged to notify the other party of
any threatened or the institution of any legal or other proceedings against
them or a third party to the other party to this Agreement. They shall each
be entitled to settle, defend, or institute any legal or other proceedings as
they think fit entirely at their own discretion. Further each party agrees that
in the event of any such legal or other proceedings of any nature they shall
be entirely responsible for their own legal costs and shall not seek to be
indemnified or compensated by the other party to this Agreement [whether
they are entitled to do so or not].

• In an assignment agreement the assignor A and the assignee B may provide a

mutual undertaking regarding legal proceedings.

• This is not necessarily always the case. The reference to legal proceedings
could be limited to the undertakings provided by the assignor to the assignee.

• In A-Z L.126 in University Library and Educational the institute and the
 company can make their own decisions as to how to deal with any legal
actions either to protect or defend the project or product under the
agreement.

• Each party shall have the right to take any legal action they think fit.

• Each party can defend an allegation or claim in any way they wish and may
reach a settlement.

• This clause also addresses the issue of the registration of copyright

ownership, domain names, patent and any other interest that may arise which
one party needs to protect.

• This clause allows the parties to go ahead and register that right provided that
they are the legal owner.

A-Z L.126
The [Institute] and/or the [Company] shall both have the discretion to take
such legal, commercial and practical steps as may be required in order to
claim ownership of, protect and/or defend their rights and interest in the
[Project/Work/Product]. Both parties shall have the choice whether to issue
any legal proceedings, make any claim, demand, defend any action and/or
whether to settle any matter and/or register any domain name, patent,
copyright and any other rights and interest. Where both parties decide to
take any legal proceedings they shall agree in advance the basis upon
which any costs are to be split and any damages and other losses awarded
are to be shared.

• Both parties may agree to provide full details at the earliest opportunity of
any action, claim, dispute or proceedings which occur arising out of any part
of the agreement as in A-Z L.027 in DVD Video and Discs.

• Assignor A and assignee B have agreed not to make any offer or disclosure
or to settle any matter unless required by a court order. Until both parties
have agreed the best course of action and also considered taking legal advice.

• Each party will bear its own costs and expenses unless the fault is attributable
to one party. In which case the party at fault shall pay all the costs and
expenses of both parties.
 A-Z L.027
In the event of any action, claim, dispute, writ or proceedings arising out of
this Agreement the [Assignor] and the [Assignee] agree to provide full
details to the other party at the earliest opportunity. No offer, settlement or
disclosure shall be made to the other party [unless required by order of a
court of law] until both parties have agreed the best course of action and/or
taken legal advice. Each party shall bear its own costs and expenses unless
the problem is directly attributable to one party, in which case the
defaulting party shall bear all costs and expenses.

• In A-Z L.106 in Purchase and Supply of Products in 1.1 the parties are in
charge of their own legal proceedings and must bear their own legal costs
and expenses.

• In 1.2 the parties are not permitted to deduct any legal costs and expenses
from any sums due to be paid under the agreement.

• Where there is to be any proposed settlement and a contribution by any party

to the costs, expenses or damages, then the terms must be agreed in each
case. Similarly, where there is any award of damages or settlement for the
benefit of the parties, the terms must be agreed.

A-Z L.106

1.1 It is agreed that each party to this Agreement shall bear its own
expenses and costs in the event that it decides to take advice, threaten,
commence and/or defend any legal proceedings and/or object to any
registration and/or defend and/or register any domain name, trade
mark, service mark and/or other intellectual property rights and/or
register as a controller of any data and/or any other matter.

1.2 That no party shall have the right to seek to deduct payments due to the
other under this Agreement to set off any administration, legal costs
and expenses.

1.3 That where the co-operation and assistance of any other party is
required that terms shall be agreed as to the basis of the contribution
and who is to pay the costs and who is to receive and/or pay any
settlement and/or who is to retain sums received which may be
 awarded.

• A licensor who has granted certain copyright and intellectual property rights
to a licensee may accept liability for the legal costs as in A-Z L.041 in Film
and Television.

• The licensee and licensor must each promptly notify the other of any
potential claim from a third party regarding the series.

• The licensor has agreed to assume responsibility to deal with any allegation
or claim on behalf of both parties and to pay all legal costs and expenses.

• The licensee is only obliged to cooperate with the licensor.

• If any legal costs and damages were awarded in favour of the licensor or the
licensee. The licensor could not keep any sums due to the licensee.

A-Z L.041
In the event that legal proceedings are threatened or some claim, action or
breach is made by any third party in respect of the [Series] against the
[Licensor] or the [Licensee] then either party shall promptly notify the
other accordingly. The [Licensor] shall assume all responsibility for all
such matters upon behalf of both parties and bear all costs and expenses.
The [Licensee] shall provide such material, documents and other evidence
as may be requested and generally co-operate fully with the reasonable
requests of the [Licensor].

• Where a designer has been commissioned by a company to design and create

a proposal for a project as in A-Z L.108 in Services.

• Here company A and designer B have both agreed to both inform and consult
with each other if there are any legal proceedings issued against them in
respect of the project or some other matter regarding the agreement.

• Note this clause does not mention allegations and threats.

• Company A and designer B shall each pay their own legal costs and
expenses.
• They have agreed to consult with each other prior to any settlement. They are
therefore not bound to acceptance the other parties views.

• In 1.2 where the legal action involves the designer B as a result of work
commissioned by the company A. The company A agrees to deal with the
matter for both parties and will pay the legal costs of the designer B. If the
designer agrees to be represented by the same legal advisors as the company
A.

A-Z L.108

1.1 In the event that legal proceedings are commenced by any third party
against either the [Designer] and/or the [Company] in respect of the
[Proposal/Website] or some other matter relating to this Agreement.
Then both parties shall be kept fully informed and provide each other
with assistance to resolve or defend the matter. Each party shall bear
its own legal costs and expenses and consult with each other prior to
any settlement.

1.2 Where any action relates to work requested by the [Company] for the
[Website] then the [Company] agrees to act on behalf of both parties
and shall pay the [Designer’s] legal costs and expenses provided that
he/she agrees to be represented by the same legal advisors as the
[Company]. The [Designer] agrees to execute such legal documents as
may be reasonably required.

• In A-Z L.109 in Services presenter A is providing his or her services to

company B.

• Company B has agreed to be solely responsible for the legal consequences

and liabilities of the event or television series.

• Company B has agreed that where there is any allegation, complaint or legal
action that the presenter and his or her agent shall be entitled to independent
legal representation and advice.

• Company B has agreed to indemnify presenter A and his or her agent and to
pay all the costs and expenses, losses and sums that may be incurred.
• Note there is no time limit on the period for which liability is accepted or
when the indemnity will end.

A-Z L.109
The [Company] accepts and agrees that it shall be solely responsible for the
legal consequences and liabilities that may arise in respect of the content
and exploitation of the [Event/Services/Series/other]. That where any legal
proceedings, actions, claims, complaints and/or allegations are made the
[Company] undertakes to fully indemnify the [Presenter] and his/her agent
for the cost of separate and independent legal representation and advice,
and/or any other costs, losses, expenses and sums that may be incurred or
arise as a consequence.

• The parties may also agree that there may be no indemnity for legal costs
under an agreement except where there is an insurance policy as in A-Z
L.060 in General Business and Commercial.

• The clause is very general and could apply to legal proceedings between the
parties and any legal action against a third party.

• Note that this clause does not apply to any damages awarded or losses
incurred under the agreement due to the default of one party or as result of a
breach of the agreement.

A-Z L.060
Each party agrees that in the event of any legal proceedings they shall each
bear their own legal costs and shall not be indemnified except under any
insurance policy.

• Where the parties have concluded a production and distribution agreement

for a product as in A-Z L.076 in Merchandising.

• Licensor A and licensee B have both agreed that where they receive any
allegation or complaint they shall inform the other party within an agreed
period.

• Both parties have agreed to assist each other settle or defend any matter.

• The parties may seek to recover any legal costs under the indemnity in the
 agreement.

A-Z L.076
If there is any dispute of any nature by any third party relating to the
[Licensor’s] rights to the [Licensor’s] Logo, the use of it by the [Licensee]
or the [Licensee’s] Product at any time during the Licence Period or during
the sell off period. The party against whom the allegation is made or who
receives the complaint shall provide full details to the other within [seven
days] and their response to the allegations or complaint within [one
month]. Both parties shall assist each other as far as possible to settle or
defend the matter. Each party shall bear its own legal costs but may seek to
recoup them later on an indemnity basis under this Agreement.

• Licensor A may authorise licensee B in the agreement to use its name in any
legal action as in A-Z L.055 in General Business and Commercial.

• The licensee is however required to fully indemnify the licensor in each case
where the licensor is joined as a party to any legal action. The indemnity
would be required to cover costs, expenses and charges.

• There is likely to be a separate indemnity document as well.

• This clause makes no reference to the indemnity which the licensee may seek
from the licensor for breach of the agreement. This would be dealt with in
another clause.

A-Z L.055
The [Company] hereby authorises the [Licensee] to institute, prosecute and
defend such proceedings and to do such acts as the [Licensee] may
consider necessary to protect the rights granted under this Agreement or
any part of them and to seek and claim damages, penalties or any other
remedy for any infringement of such rights. The [Company] authorises the
[Licensee] in so far as may be necessary to use the name of the [Company]
for such purposes and the [Company] shall provide such assistance as the
[Licensee] may reasonably require in proving or defending such rights and
shall join with the [Licensee] as co-plaintiff if requested by the [Licensee]
to do so. In such event the [Licensee] shall fully indemnify the [Company]
against any costs, expenses and charges including counsel, solicitors’, and
agents’ fees incurred by the [Company] relating to such proceedings.
• Where there is an agreement between a sportsperson or presenter or other
person and a sponsor. The focus of the drafting of a clause which relates to
any complaint, allegation or legal proceedings is likely to be more personal
and specific to the individual.

• The whole aim is for the sponsor to be alerted to any potential adverse
publicity which may arise as a result of that person and damage the sponsors’
business and products or services.

• In an agreement between an athlete and a sponsor in A-Z L.120 in

Sponsorship the athlete is providing certain undertakings to the sponsor that
he or she shall notify the sponsor of and supply copies of documents of:

– any civil or criminal proceedings which are threatened or started during

the term of the agreement

– any disciplinary proceedings by the specified organisations listed

– failure of the athlete to attend random drug tests

• The athlete has the chance in 1.5 to cooperate with the drafting of a press
release.

• Note in this agreement there is no reciprocal clause relating to any allegation

against the sponsor or legal proceedings relating to the sponsor which may
damage or cause harm to the career of the athlete. If for instance the sponsor
is involved in a fraud, or product recall or distributes negative, offensive or
defamatory material.

A-Z L.120
The [Athlete] agrees and undertakes to:

1.1 Notify the [Sponsor] by telephone and then in writing of any civil
and/or criminal proceedings which are threatened, commenced and/or
pending against the [Athlete] during the Term of this Agreement.

1.2 Notify the [Sponsor] by telephone and then in writing of any

disciplinary proceedings by any of the following organisations against
the [Athlete] which arise during the Term of this Agreement [specify
 bodies].

1.3 Notify the [Sponsor] by telephone and then in writing of any failure by
the [Athlete] to attend random tests required by any sporting
organisation and/or failure of any test which arise during the Term of
this Agreement.

1.4 Supply copies of any documents which relate to the above matters in
confidence to the [Sponsors] upon request during the Term of this
Agreement:

1.5 Cooperate in the drafting of and distribution of any press release and to
be available at such press conferences as may be necessary during the
Term of this Agreement.

• Where the clause relates to an agreement between a company and a sponsor

for an event as in A-Z L.118 in Sponsorship. There is a mutual clause where
both parties are obliged to let the other know quickly if there are any threats,
claims or complaints.

• Where either party intends to rely on the indemnity provisions to seek to

claim any damages, losses or costs and expenses under the agreement. Then
they must allow the party who will provide the indemnity to assist in or
control the defence and settlement.

A-Z L.118
If there is any threat, complaint, claim, and/or legal action by any third
party against the [Sponsor] and/or the [Company] in respect of the [Event]
and/or the services and/or products supplied by the [Sponsor] under this
Agreement. Each party agrees and undertakes to notify the other within
[number] days by email and in writing of the nature and detail of any such
matter of which they have knowledge together with copies of any
documents. In the event that the [Company] and/or the [Sponsor] seeks to
be indemnified from the other for legal costs, expenses, damages and/or
other costs. Then the party seeking to rely on any indemnity is under an
obligation to allow the other party to have the opportunity to [assist
in/control] the defence of and/or settlement of any such case.
• Where a person or company acts as an agent under an agreement as in A-Z
L.099 in Purchase and Supply of Products. The aim of the clause is to have
the assistance of the agent in monitoring a market for any potential
infringements of the product.

• This is a very general clause where the agent has agreed also to assist in any
legal proceedings in the territory provided that it is at the company’s cost.

A-Z L.099
The [Agent] agrees to advise the [Company] on any potential infringement
of rights in the Territory relating to the [Samples] and the [Products]
including copyright, design rights, trade marks or any other rights which
have been brought to the attention of the [Agent]. Further the [Agent]
agrees to provide assistance in any legal proceedings at the [Company’s]
cost whether relating to non-payment, copyright, design rights, trade
marks, or any other rights of the [Company] in the [Samples], the
[Products] and/or the [Company] Logo.

• In A-Z L.033 in Film and Television the distributor is also monitoring the
market for any potential infringements of the rights in the film.

• The distributor has agreed to notify the licensor if it becomes aware of any
infringement of the film.

• Here the distributor has agreed to cooperate if the licensor decides to take
legal action regarding the infringement.

• The licensor has also agreed that although the distributor may take legal
action in its own right. The distributor shall require the prior consent of the
distributor which will not be unreasonably withheld or delayed.

A-Z L.033
If at any time in the future the [Distributor] becomes aware of any facts or
information indicating that any third party is or may be infringing the
[Licensor’s] copyright in the [Films], the [Distributor] shall promptly
inform the [Licensor] of such facts or information. If the [Licensor] in its
sole discretion determines that it shall institute legal or other action then
the [Distributor] shall co-operate fully and the [Distributor] shall have the
right to institute an action in its own name. The [Distributor] shall not
 institute any such legal action without the prior written consent of the
[Licensor], such consent not to be unreasonably withheld or delayed.

• Where author A has an agreement with publisher B as in A-Z L.093 in

Publishing.

• Publisher B has agreed that if it wishes to seek an indemnity from author A it

must:

– notify the author of any allegation or claim or legal proceedings in

respect of any matter relating to the work and the illustrations as soon as
reasonably possible

– and provide copies of documents

– consult with the author

– allow the author to refute the allegations to the publisher

– keep the author informed of any proposed settlement

A-Z L.093
The [Publisher] shall notify the [Author/Illustrator] of the detail of the
threat of any legal proceedings against the [Publisher] and any action,
claim, demand for defamation, breach of copyright, infringement of trade
mark and/or service mark, threat of injunction, loss, damage and/or injury
and/or any other matter relating to the [Work/Artwork/Photographs] as
soon as reasonably possible. The [Publisher] agrees and undertakes to
provide copies of any documents relating to the case to the
[Author/Illustrator] and/or their legal advisor and to consult with the
[Author/Illustrator] where the [Publisher] intends to seek to be indemnified
by the [Author/Illustrator] under this Agreement. Then the
[Author/Illustrator] should be informed of the matter as soon as possible,
be regularly consulted and allowed to refute the allegations, and kept
informed of progress and advised of any proposed settlement.

• Where there is any allegation made, or investigation in process or threatened

legal proceedings. There is always a concern about controlling the publicity
and comments.
• This issue is raised in A-Z L.063 in General Business and Commercial.

• No person associated with the company is permitted to make any public

statement or to release any information or to publish any material in any
medium.

• This restrictions applies not only to legal proceedings but any allegations,
investigation or enquiry.

• This clause makes it clear that it would be considered a breach of the

agreement if they did so.

A-Z L.063
No employee, consultant, agent, supplier and/or distributor and/or any
other person engaged by and/or supplying services to the [Company] shall
have the right to make any public statement and/or release any data and/or
information and/or supply and/or distribute and/or publish any material in
any medium regarding any investigation, enquiry, report, civil and/or
criminal proceedings and/or any other allegations which are made against
and/or by the [Company] against a third party at any time. Any breach of
this clause shall be deemed a breach of this Agreement and entitle the
[Company] to end the Agreement.

• The parties may agree that they should take out insurance cover to protect
both parties in respect of certain topics as A-Z L.040 in Film and Television.

• Both parties – the licensor and licensee – should be named on the policy.

• The premiums would come out of the budget for the project.

• The parties would have to agree the level of the cover and the duration of the
policy. It should be for the period of exploitation as well as production.

A-Z L.040
The [Licensee] must arrange suitable insurance cover for the benefit of the
[Licensor] and the [Licensee] as part of the cost of the Budget with a
reputable company to provide comprehensive cover for the threat of any
legal proceedings, complaint, dispute, allegation, breach of contract,
defamation, infringement of copyright, unauthorised use of material against
either party or any authorised third party in respect of the [Film] and/or
parts and/or any exploitation in any form from [date] to [date].
 LIABILITY

• The A-Z contains over 100 clauses on Liability from A-Z L.131 to A-Z
L.241.

• This section can be cross referenced to the main clause headings in the A-Z
of Acceptance, Arbitration, Damages, Delivery, Defamation, Disclaimer,
Facility Access, Force Majeure, Indemnity, Insurance, Jurisdiction,
Legal Proceedings, Location Access, Loss, Mediation, Product Liability,
Quality Control and Risk.

The meaning and significance of liability

• The liability of one party under an agreement is often also linked to the
payment of any sum which may become due under the indemnity clause in
the agreement. Please look at the main clause heading Indemnity in the A-Z.

• Any person or company may have a liability to another person or company

either under legislation or common law in the United Kingdom.

• This type of liability mainly relates to personal injury and death which has
arisen through a failure of duty of care in tort or negligence or the failure to
ensure that sufficient tests, health and safety assessments or precautions were
taken to protect the public.

• There may also be examples which relate to product liability such as

children’s toys and electrical items, medicines, materials or products which
have not been approved for sale or do not comply with the legislation and
guidelines in place at any time.

• The financial cost of the liability would be the responsibility of the person or
company who has accepted liability or had it proven against them.

• That the person or company would be obliged to be liable for and pay any
 sum which was a reasonably foreseeable loss or damage.

• You cannot exclude liability for causing personal injury and death under a
contract. Even if you were to do so if you or your company were found as a
matter of fact to have been negligent. The exclusion of the liability for
personal injury or death would not be allowed by the courts. There are some
clauses which are drafted in an agreement which are unenforceable.

• The fact that personal injury or death cannot be excluded does not however
prevent a person or company taking out insurance cover for such a situation.

• In many instances public liability insurance is taken out by large companies

rather than bearing the risk at the companies’ cost.

• There may also be a legal obligation to do so in relation to certain products or

services or premises. For more on these topics please look at the main clause
headings Insurance and Product Liability in the A-Z.

• Where a person or a company agrees to be liable or to accept liability under

an agreement. There has therefore been an agreement for that person or
company to be responsible for the consequences that may arise and any costs
and expenses that may be incurred in respect of that liability.

• Liability may be accepted under an agreement by one party and not the other
parties. The person or company who has accepted liability is responsible for
the costs and expenses for all the natural consequences which follow and
arise from the breach of either a specific clause or the whole agreement.

• Where a liability clause is drafted for an agreement between a company and a

member of the public as a consumer. Then where a clause is shown to be
unfair and unreasonable it is possible that it will be unenforceable and will
be excluded by a court. It is also possible that it may invalidate the whole
agreement.

• The directives, regulations, legislation and guidelines which exist in order to

protect the public as consumers cannot be ignored.

• There is no restriction on including a clause in an agreement which meets the

minimum standards set for consumers. It is also possible that a company may
adopt a corporate policy and strategy which is more generous in its terms.
• The aim in this situation is to take account of the legislation and guidelines
but still to draft the clause which favours the company without being unfair
and unreasonable to the consumer.

• Liability may arise in a variety of circumstances such as where:

– a company and a distributor are agreeing terms for a licence

– a sponsor is funding a series of events for an institute

– a website company is supplying a service or products to the public

– a photographer is commissioned for a feature article

• Where there is an agreement between two parties it is wrong to assume that

only one party will have any liability and the other none.

• The liability of each party is likely to be different based on what they are
agreeing to give under an agreement.

• The terms may include:

– The supply of original material

– The grant of a licence or an assignment of copyright or other intellectual

property rights in the material

– The supply and distribution of products

– The promotion and marketing of an event

– The payment of sums to sponsor an event

– The payment of an advance and royalties

– The appointment of sub-licensees and distributors

• You therefore need to consider many other subjects which give rise to a
liability in agreement. Some of these subjects are covered in the main clause
headings in the A-Z such as Copyright Clearance, Credits, Marketing,
Material, Moral Rights, Payment, Royalties, Title, Warranties and
 Waivers.

• Note that in the A-Z the warranties often fall under the main subject heading
of the topic rather than under general warranties.

• Company A may have agreed terms and obligations in an agreement to

company B. You may then look at the potential liability from company A to
company B based on the agreement as a whole but also in relation to each
clause.

• Where an agreement allows for the appointment of third parties by company

B. You need to also then consider whether there is also a liability to those
third parties from company A.

• When looked at from the other viewpoint the question arises at to what
liability company B should have to company A.

• Also what liability those third parties appointed by company B should have
to company A.

• The first step is to establish the scope of the liability which you accept under
the whole agreement.

• Therefore there may be liability which you accept and liability which is
specifically excluded.

• The liability and indemnity under an agreement may be limited to certain

clauses and not others in the agreement.

• Once you have established the scope of the liability and the topics covered.
Then you need to look at the persons or companies to which that liability
applies.

• If you are seeking to restrict liability then you need to:

– limit the liability to matters and costs and expenses which arise directly
as opposed to indirectly

– set out to whom the liability applies and limit it to specific named
companies
 – exclude liability to apply to any successor in title or assignor of the other
parties

– exclude liability to any third parties appointed under the agreement

– limit the duration of the liability to the term of the agreement or the
licence period or some other fixed start and end date

– limit the duration of the period by which a claim can be made under the
indemnity

– limit the countries or territory in which the liability is accepted.

– set a financial limit in relation to any claim

– set a maximum financial liability under the agreement

• The jurisdiction clause in an agreement affects liability and will have an

impact and so must be carefully considered. For more on this subject please
look at the main clause heading Jurisdiction in the A-Z.

• If you wish to draft a liability clause which creates a very wide liability of a
company or person then you can draft terms that the agreement applies to:

– that company and the parent company

– as well as any third party or agent, distributor or supplier

and that:

– there is no maximum financial limit

– no limit on the duration of the liability or the method or period in which a

claim can be made during the term of the agreement

– the liability will continue after the agreement has expired or been
terminated

– there is no limit on countries which apply to the liability or the agreement

– the jurisdiction is a country or countries where your claim can be made

 by you easily and within your cost restraints

– liability applies to the whole agreement not just a few clauses

– liability applies to any successor in title or assignor of the agreement

Drafting clauses in respect of liability

• It is possible to address the common law issue of negligence and incorporate

it as an additional contractual obligation as in A-Z L.131 in Building.

• There is no reference to liability even though that is the function of the

clause.

A-Z L.131
We agree to make good any damage to the premises [name and address]
arising directly out of our use thereof subject to any damage being the
direct result of and caused by the negligence on the part of the [Company].

• The liability may relate to specific material as in A-Z L.198 in

Merchandising.

• Liability is accepted by the distributor for the master material from the date
of delivery until it is returned to the licensor.

• The liability is for any loss, damage, cost and expenses.

• The parties have agreed a replacement value for the material.

A-Z L.198
The [Distributor] shall be liable for any loss, damage, costs and expense of
any [Master Material] loaned by the [Licensor] [Distributor] from the date
of delivery until it is returned to the [Licensor]. The total insurance
replacement value shall be in accordance with Schedule [–] which set out
the material and the sum to be paid. All sums due shall be paid within
[number] days of a notified claim unless written reasons have been
provided for rejection of the claim.

• In a licence agreement between licensor A and licensee B in A-Z L.158 in

 General Business and Commercial.

• The liability relates to the clearance and payment for the cost of copyright,
intellectual property rights and physical material which may be delivered or
created under the agreement.

• The licensee and agreed both to arrange clearance and pay any sums due.

• The licensee has also accepted that any sums paid cannot be recouped from
payments due to the licensor.

A-Z L.158
The [Licensee] shall be liable for all payments due and/or that may arise
related to obtaining clearance of any copyright and/or intellectual property
rights relating to the reproduction, broadcast, transmission, performance
and exploitation of all lyrics, words, music, sound recordings, films and
any exploitation in any format at any time and any agency and
administration costs. The [Licensee] shall not be entitled to recoup and/or
set off any of these sums from payments due to the [Licensor].

• There may be instances where one party is willing to accept liability for
particular facts and circumstances as in A-Z L.157 in General Business and
Commercial. The liability is intended to exceed any minimum that may fall
within the normal situation arising from personal injury and death.

• The distributor B has accepted liability to pay for:

– medical costs

– legal costs

– expenses

– financial losses from potential future work

– loss of insurance cover

– payments for death, personal injury, disability

• Note the liability is however limited to the filming of the sporting activity by
 named person A for distributor B.

• Any sums due for which liability is accepted must arise directly from the
contribution of named person A or the filming of sporting activity.

• In 1.2 distributor B has agreed to arrange a fixed total of insurance cover for
a fixed period.

• Note the term does not state that person A must be named as the beneficiary
of any payment under the insurance policy. The presumption is that the
payment will go to the distributor who will then pay the person or the estate.

A-Z L.157
1.1 The [Distributor] shall bear all liability and be responsible for any
medical and legal costs and expenses, financial losses relating to future
work, loss of insurance cover, and any payments due to the estate and
beneficiaries of [Name] for death, disability, personal injury or
otherwise of any nature that [Name] may incur as a direct result of
his/her contribution and filming for [Film] in the capacity of
[sport/activity].

1.2 The [Distributor] and [Name] agree that although an insurance policy
is being arranged with [specify] for [cover] for [currency/number]
from [date] to [date] at the [Distributors’] cost. That any exclusions
within that policy shall not apply to the liability of the [Distributor]
under 1.1.

• Both the sponsor A and company B have agreed to be jointly responsible in

A-Z L.233 in Sponsorship.

• The joint responsibility in 1.1 applies to:

– any liability, costs, expenses, damages and losses

– that may result from the [Products]

– which may be used and/or adapted by any member of the public

– whether they are free and/or purchased at the [Event]

• The clause does not address use of the products outside the event.

• There is no detail as to how the parties are to split any costs and expenses.
There is a presumption it would be equally.

• The sponsor has agreed to arrange for public and product liability insurance
for not less than a fixed sum in the country where the event is taking place. It
is assumed that the sponsor is paying for the cost but it could be split.

• Here again the parties need to state that they both wish to be named as a
beneficiary of the insurance policy.

• The sponsor has agreed to ensure that the products comply with product
liability and health and safety requirements in the country for the event.

• Where there is a general clause like this in an agreement. You would need to
check whether there is another liability or indemnity clause which may
contradict this clause.

A-Z L.233
1.1 The [Sponsor] agrees that it shall be jointly responsible with the
[Company] in respect of any liability, costs, expenses, damages and
losses that may result from the [Products] which may be used and/or
adapted by any member of the public whether they are free and/or
purchased at the [Event].

1.2 That the [Sponsor] shall arrange insurance to cover public and product
liability of not less than [number/currency] in [Country].

1.3 That the [Sponsor] shall ensure that the [Products] contain adequate
instructions for use and comply with all health and safety and product
liability requirements in law and/or in any guidelines in [Country].

• In this clauses between sponsor A and company B in A-Z L.227 in

Sponsorship. The sponsor has agreed to arrange and pay for the cost of an
insurance policy.

• The intention is that the insurance policy will cover any claims the sponsor or
athlete may have either directly or indirectly as a result of the agreement.
• Company B has accepted responsibility for any liability or legal proceedings
which arise from the use of the material supplied and created under the
agreement and the use of the services of the athlete.

• It could be added that the sponsor is not liable and will not bear any costs or
other sums.

A-Z L.227
The [Sponsor] agrees and undertakes that it shall arrange a comprehensive
insurance policy to cover any damages, losses, legal costs, expenses and/or
other sums which may be claimed, due, lost and/or arise directly and/or
indirectly as a consequence of this Agreement by the [Sponsor] and/or the
[Athlete] and/or any third party including but not limited to damages, loss
of reputation, cancellation of any advertising campaign, failure to be
awarded any contract. All responsibility for any legal liability or
proceedings which may arise from the use of any material collected,
obtained or provided under this Agreement and in the product of the
services shall be at the sole cost, risk and expense of the [Company].

• In A-Z L.238 in University Library and Educational company A has a very

wide liability to institute B.

• The company has accepted liability to the institute for:

– any acts, statements

– omissions, failures

– damages, legal costs, losses

– personal injury, death

– damage to career prospects and/or reputation

– and/or loss of profits

– caused by and/or attributable to the [Company]

– and/or any employee, representative, agent, and/or third party authorised

by the [Company]
• The liability is for the term of agreement and continues after the agreement
has ended.

• The liability applies to the project and also any associated material.

• There is no financial limit on the liability.

A-Z L.238
The [Company] shall be liable to the [Institute] for any acts, statements,
omissions, failures, damages, legal costs and losses, personal injury, death,
damage to career prospects and/or reputation and/or loss of profits caused
by and/or attributable to the [Company] and/or any employee,
representative, agent, and/or third party authorised by the [Company]
during the Term of this Agreement and at any time thereafter in respect of
the [Project] and any associated material in relation to the [Institute]. There
shall be no limit as to the level of liability and/or the jurisdiction and this
clause shall survive the termination of this Agreement.

• In A-Z L.230 in Sponsorship there is a limitation on the total liability of

company A under the agreement in 1.1.

• The liability to sponsor B by company A also ends on a fixed date.

• The same pattern is repeated in 1.2. Sponsor B has a limited total liability to
company A.

• The liability of sponsor B to company A ends on a fixed date.

A-Z L.230
1.1 The total liability of the [Company] under this Agreement shall be
limited to [figure/currency]. The liability of the [Company] under this
Agreement to the [Sponsor] shall end on [date] and after that date no
further sums shall be paid by the [Company] except in respect of
notified outstanding claims.

1.2 The total liability of the [Sponsor] under this Agreement shall be
limited to [figure/currency]. The liability of the [Sponsor] under this
Agreement to the [Company] shall end on [date] and after that date no
further sums shall be paid by the [Sponsor] except in respect of
 notified outstanding claims.

• A-Z L.139 in DVD Video and Discs has a similar aim but is set out in a
different style.

• The parties – licensor A and distributor B – have agreed that the liability of
each party shall end on a fixed date.

• There is also a fixed financial total liability for each party in 1.1 and 1.2.

A-Z L.139
The total aggregate liability of each of the parties under this Agreement
shall end on [date] and shall be limited as follows:

1.1 The [Licensor] to the [Distributor] shall be limited to [figure/currency].

1.2 The [Distributor] to the [Licensor] shall be limited to [figure/currency].

• Where an agreement appoints a licensee as in A-Z L.140 in DVD Video and

Discs.

• Licensee B may agree and undertake to be liable to the licensor A that it will
be responsible for:

– all the acts, errors, omissions and/or failures of

– any sub-licensees, sub-agents, distributors

– and/or any other third parties engaged by the [Licensee] pursuant to this
Agreement

• In this clause licensee B agrees to pay the licensor all sums which the third
parties did not pay.

• Therefore there is a legal contractual obligation rather than a reliance on a

legal action based on a technical legal argument.

A-Z L.140
The [Licensee] agrees and undertakes to the [Licensor] that the [Licensee]
 shall be responsible and held liable for all the acts, errors, omissions and/or
failures of any sub-licensees, sub-agents, distributors and/or any other third
parties engaged by the [Licensee] pursuant to this Agreement. That the
[Licensee] shall be obliged to pay any sums due to the [Licensor] which
should have been paid by such third parties.

• An agreement may also make it clear that there is no liability for sums due
from third parties as in A-Z L.199 in Merchandising.

• The total liability of distributor B is not limited in this clause.

• However the distributor is not liable for:

– acts, errors, omissions and/or failures

– of any sub-licensees, sub-agents, sub-distributors and/or any other third

parties

– engaged by the [Distributor] pursuant to this Agreement

• Note that distributor B is also not liable to pay any sums to the licensor which
it has not received from such third parties.

A-Z L.199
The total liability of the [Distributor] to the [Licensor] shall not be limited.
The [Distributor] shall not be held liable for the acts, errors, omissions
and/or failures of any sub-licensees, sub-agents, sub-distributors and/or any
other third parties engaged by the [Distributor] pursuant to this Agreement.
Nor shall the [Distributor] shall be obliged to pay any sums due to the
[Licensor] which should have been paid by such third parties which are not
received by the [Distributor].

• In A-Z L.180 in General Business and Commercial a company or supplier is

seeking to limit its liability to distributor or retailer.

A-Z L.180
The total liability of the [Company] to the
[Customer/Retailer/Distributor/other] shall be limited to [figure/currency].
• Whereas in A-Z L.181 in General Business and Commercial there is a limit
of liability on each individual claim and also a total limit on liability from
aggregate sums.

A-Z L.181
The liability of the [Company] shall be limited to [figure/currency] in
respect of each and every claim. The total aggregate liability for the
duration of this Agreement or thereafter shall be limited to
[figure/currency].

• In A-Z L.213 in Services company A has engaged the services of individual

B for a project.

• Company A accepts liability to individual B for both company A and any

third party it uses which causes damage and losses.

• This clause would cover damage to a reputation by press releases and

material created and distributed by company A or the third parties.

A-Z L.213
The [Company] shall be fully liable to the [Celebrity] for all acts,
statements, omissions, failures, damages and losses, damage to career
prospects, damage to reputation caused by and/or attributable to the
[Company] and/or any third party engaged, contracted or authorised by the
[Company] during the Term of this Agreement relating to the services of
the [Celebrity] under this Agreement and/or any material created in
pursuance of the Agreement.

• A supplier may not want to be liable where a service is interrupted or ended

as in A-Z L.223 in Services.

• Supplier A does not accept any liability to company B where a service has to
be varied, end or be interrupted.

• The company agrees in this clause that the supplier is not liable for any such
costs, expenses, losses and damages.

• The company accepts the risk and any such liability at its own cost.
 A-Z L.223
Where for any reason the [Supplier] has to vary, cease and/or interrupt the
services provided to the [Company] due to a change in circumstances of
the availability of [material/other] for the [Supplier] which would affect its
ability to fulfil the service as required. Then the [Company] agrees that the
[Supplier] shall not be liable for any losses, damages and expenses and
costs that may arise and the [Company] accepts the risk and liability at its
own cost.

No liability – except for personal injury and death

• Where a person has appeared in, and contributed to, a film as in A-Z L.041 in
DVD Video and Discs.

• The person who has made the contribution may be concerned that there
should be no liability which arises from their contribution.

• In 1.1 the distributor agrees that the person has no liability and will not be
asked to make any contribution to any sums which fall due as a result of the
contribution to the film or sound recordings and its use in the DVD.

A-Z L.041
1.1 The [Distributor] agrees and undertakes that [Name] shall not be liable
and/or asked to contribute to any sums which may arise and/or be
incurred by the [Distributor] and/or any other associated third party
either during the term of this Agreement and/or thereafter whether
losses, damages, legal costs and expenses, loss of revenue, loss of
reputation and goodwill and /or any other matter as a result of the
appearance and contribution of [Name] to the [Film/Sound Recording]
for the [DVD/Disc/CD/other].

1.2 The [Distributor] agrees and undertakes that 1.1 shall apply even if the
subsequent behaviour, acts and/or omissions of [Name] result in
publicity which affects the marketing and sales of the
[DVD/Disc/CD/other] and/or causes the [Distributor] to cancel, delay
and withdraw the proposed [DVD/Disc/CD/other].

1.3 The [Distributor] agrees and undertakes that provided that [Name]
completes the scheduled work for the [Film/Sound Recording] that
 regardless of the circumstances which may arise in the future that the
[Distributor] shall have no grounds to seek repayment of any fees
and/or expenses from [Name].

• Where a company controls or owns a website or app then they may wish to
endeavour to exclude liability to those who access and download content as
in A-Z L.192 in Internet and Websites.

• The company does not accept:

– any responsibility and/or liability

– for any legal and/or other consequences

– which may arise directly and/or indirectly

– as a result of the use of this [Website]

– and/or any data, text, images, film, sound recordings, downloads and/or
other material

• Liability in this context should be looked at in conjunction with the main

clause heading Disclaimer in the A-Z.

A-Z L.192
The [Company] does not accept any responsibility and/or liability for any
legal and/or other consequences which may arise directly and/or indirectly
as a result of the use of this [Website] and/or any data, text, images, film,
sound recordings, downloads and/or other material.

• The liability may relate to a specific event as in A-Z L.166 in General

Business and Commercial.

• Company A is not accepting any liability for any direct or indirect loss or
damage.

• This includes by way of example any loss of profits or consequential

damages suffered or incurred by the exhibitor, whatever the reason.
• There is no entitlement to compensation if the exhibition stand is cancelled
and there will only be a refund of the sums already paid for the reservation.

A-Z L.166
The [Company] shall not be responsible or liable for any loss or damages
of any nature whether direct or indirect including any loss of profits or any
consequential damages suffered or incurred by the [Exhibitor] for whatever
reason. In the event that the [Exhibitor] is prevented from attending or
exhibiting at the [Exhibition] because the [Company] cancels the
reservation made by the [Exhibitor] without good reason at any time, then
the [Exhibitor] shall be entitled to a full refund of all sums paid to the
[Company] for the reservation. The [Exhibitor] agrees that it shall not be
entitled to claim any additional sums by way of compensation or otherwise.

• A more general short clause A-Z L.170 in General Business and Commercial
addresses the issue of excluding liability for:

– indirect or consequential damages

– including without limitation, those arising from business, interruption or

loss of profits

• Note this clause applies to both parties to the agreement.

A-Z L.170
Neither party shall be liable to the other for indirect or consequential
damages including without limitation, those arising from business,
interruption or loss of profits.

• In A-Z L.226 in Sponsorship the clause applies again to both parties.

• The parties are both excluding liability for:

– indirect or consequential loss or damages

– that may arise from this Agreement

– whether loss of profits, publicity or failure to enhance reputation

 A-Z L.226
Neither party shall be liable to the other for any indirect or consequential
loss or damages that may arise from this Agreement whether loss of profits,
publicity or failure to enhance reputation.

• In A-Z L.234 in University Library and Educational the institute A is

excluding liability to a contributor B who is providing his or her services to
the institute in 1.1.

• The only exception is that in 1.1 the institute accepts that it cannot exclude
death or personal injury caused by the institute or directly attributable to the
default of the institute.

• In 1.2 the contributor accepts that there is no indemnity from the institute
under the agreement provided that the institute has arranged for
comprehensive insurance cover for the benefit of the contributor.

A-Z L.234
1.1 The [Institute] shall not be liable to the [Contributor/Company] for any
acts, statements, omissions, failures, damages, legal costs and losses,
damage to career prospects and/or reputation and/or loss of profits
caused by and/or attributable to the [Institute] and/or any employee,
representative, agent, and/or third party authorised by the [Institute]
during the Term of this Agreement. This shall apply to the services of
the [Contributor/Company] under this Agreement and/or any material
created, developed, reproduced and/or distributed including any
products, packaging, marketing, film, radio, website material and other
associated publicity. This shall not apply in the case of death and/or
injury caused by the negligence and/or directly attributable to the
default of the [Institute].

1.2 The [Contributor/Company] agrees and undertakes that it shall not

seek to be indemnified by the [Institute] provided that the [Institute]
arranges at the [Institutes’] cost an comprehensive insurance policy for
the benefit of the [Contributor/Company] to cover any acts, statements,
omissions, failures, damages, legal costs and losses, damage to career
prospects and/or reputation and loss of income caused by and/or
attributable to the [Institute] and/or any employee, representative,
agent, and/or third party authorised by the [Institute] during the Term
of this Agreement.
 LICENCE AREA

• There are 14 clauses relating to Licence Area from A-Z L.242 to A-Z L.255
under the single sub-heading of General Business and Commercial.

• This section can be read in conjunction with the main clause headings in the
A-Z of Assignment, Exclusivity, Hotel, Location Access, Multiple
Occupation, Premises, Rights, Territory and Venue.

The meaning and purpose of a licence area

• This term is can be used to define a much smaller area to which the licence
applies than a country or a defined territory.

• The aim is to show that a licence can be for a venue, a plan showing a field, a
university campus or even a village or a plot marked on a map.

• Note however that a definition of licence area can be used which would
covers one or more countries as opposed to use the term territory.

• There is often a mistaken assumption that a licence must be for a whole

country but that is not the case.

• The question is to how to define the area which is covered by the licence to
avoid ambiguity and disputes at a later date.

• The issues of geographical limitation are addressed in greater detail in the

main clause heading Territory where there are a variety of definitions
relating to Europe and the European Union, the United Kingdom, the
Commonwealth as well as countries defined by their language.

• As in all licences, an agreement for a licence area can be exclusive or non-

exclusive and there must be consideration and so the main clause headings
Exclusivity and Payment are relevant.
Drafting clauses which specify licence area

• It is a useful tool in drafting to actually have a map attached to the agreement

which defines in outline the area which is covered by the licence as in A-Z
L.244.

• Here there is no mention of the territory or countries – although the address

of the licence area should be specified. The map which is attached forms part
of the agreement between the parties.

• The map may also be used to discuss issues such as entrances, exits,
drainage, electricity, fencing, security and car parks. You may require
additional clauses in the agreement to cover these issues.

A-Z L.244
‘The Licence Area’ shall mean the area specified on the attached map
marked in [–] which is attached to and forms part of this Agreement.

• Where there is a footprint for a satellite or some other form of

telecommunication then the area covered may be more accurately described
by the use of the term licence area even though it covers different countries
as in A-Z L.246.

• Here again an image on map of the footprint is attached to and forms part of
the terms agreed between the parties. This type of clause is not common as
most contracts provide a licence for all the country rather than just the
footprint. This is due to the fact the service may be provided by others means
such as cable, WiFi and the internet.

A-Z L.246
‘The Licence Area’ shall mean the footprint of the transponder referred to
as [specify] down to the Effective Isotropic Radiated Power (EIRP)
strength of [–] Decibel Watts (dBW) a print of which is attached and forms
part of this Agreement.

• A licence granted by one party to another may be very specific as to the exact
venue and location that shall be defined as in A-Z L.252.
• The clause states the building and the address and country.

A-Z L.252
‘The Licence Area’ shall be the location and venue of the [student
union/college/university] at [address] in [Country].

• The licence area may be a series of structures such as a campsite or caravans

at an address as in A-Z L.255.

• Although it is not the number of caravans that is important but the location
and area of the licence area.

A-Z L.255
‘Licence Area’ shall be the [campsite/hotel/caravan park] known as
[specify] at [address] which covers [dimensions] in [Country]. This shall
include any access road, river and/or other geographical features.

• A licence between a landowner and an organiser of a festival may refer a

licence area as opposed to a location or territory. As the area to be used does
not cover all the land owned by the landowner as in A-Z L.253.

• In this instance there is a physical boundary on the map of the land to be used
by the organisers for the festival.

A-Z L.253
‘The Licence Area’ shall be the plot of land known as [specify] a copy of
which is attached in Schedule [–] and forms part of this Agreement and
which is used for the purpose of a festival from [date to [date].
 LICENCE FEE

• There are 65 clauses relating to Licence Fee from A-Z L.256 to A-Z L.321.

• This section can be cross referenced to the main clause headings in the A-Z
of Acceptance, Assignment Fee, Budget, Costs, Expenses, Delivery,
Interest, Payment, Rates of Exchange, Rejection, Royalties and Set-Off.

The meaning and purpose of a licence fee

• If the payments relate to an assignment then they would be called an

assignment fee not a licence fee. For more on this subject please look at the
main clause heading Assignment Fee in the A-Z.

• A licence fee may either be a one off payment for a licence of rights for
work, services or material.

• A licence can also be paid as an advance against future royalties. For more on
this subject please look at the main clause heading Royalties in the A-Z.

• The principle fact is that the licence fee – if paid against royalties – must be
stated to be either returnable or non-returnable.

• It should also be made clear whether the licence fee or advance is to be

recouped against future royalties or not.

• You may wish to avoid the problem of being asked to return an advance
which is not recouped against all the royalties as the expected sales have not
been achieved.

• The licence fee may be paid in stages linked to the completion of work or the
delivery and acceptance of material or some other event.

• Where payment of any part of the licence fee is linked to some other event
 taking place. If that event does not take place then no payment falls due.

• In order to avoid this problem you would therefore include an end date at
which time the money will be due and must be paid regardless of whether the
event has taken place or not.

• In a publishing agreement the licence fee or advance is a payment for the

rights granted in the agreement by author A to publisher B.

• The author has the right to receive royalties from the exploitation of the rights
granted. However if the agreement states that the publisher has a right to
recoup the licence fee or advance from the royalties. No royalties will be
paid until the advance has been set off against the sums due to the author.

• A licence fee may be paid which has no advance element whatsoever and is
entirely a fee paid for rights or material or services. The licence fee may still
be paid in instalments and linked to completion of work or a fixed date or the
distribution of a product or service.

• The licence fee may have no payments linked to the commercial success or
failure of a project.

• It is important to make it clear which person or company is obliged to make

the payment and to which person or company or agent the payment must be
made.

• If the payment is to be made to a person or company who is not a contracting

party to the agreement. The agreement should refer to this fact and the
contracting party should acknowledge that fact and accept that payment to
that other party as requested constitutes payment.

Drafting clauses for a licence fee

• In any clause which involves a payment you should not just write the figures
but also state the amount in words. The currency of the payment should also
be stated in the clause.

• Whatever the currency of the payment you need to be clear in which currency
you will receive the payment and into which account it will be paid. Bank
charges and rates of exchange are also relevant. For more clauses on these
 subjects please look at the main clause headings Payment and Rates of
Exchange in the A-Z.

• Payment of a licence fee may therefore be linked to:

– full signature by both parties of the agreement

– an agreed date

– delivery and acceptance of master material of a work

– approval of a prototype or sample

– first release date of a specific product in a specific country

– the achievement of a fixed target of numbers of sales figures for a

specific format in a specific country or worldwide

– the achievement of certain fixed gross or net receipts for a specific

format in a specific country or worldwide

• The licence fee may be a single fee which is split into three payments as in A-
Z L.274 in General Business and Commercial.

• The amount and currency of the licence fee would be set out in the three
payments.

• The first payment is due on signature by both parties of the agreement in 1.1

• The second payment is due when the licensee has accepted the material set
out in the agreement.

• The third payment is by a fixed date but subject to the completion of work
required under the agreement.

• Note this clause is not drafted as an advance against royalties.

• The clause makes no reference to the method of payment although it states

the licensor should be paid by the licensee.

A-Z L.274
 In consideration of the rights granted the [Licensee] shall pay the
[Licensor] the Licence Fee as follows:

1.1 [–] upon signature of this Agreement by both parties.

1.2 [–] upon acceptance by the [Licensee] of the [Material] in clause [–].

1.3 [–] on or before [date] subject to fulfilment of Clauses [–].

• A licence fee may be non-returnable and a company may not have the right to
offset or recoup the payment as in A-Z L.315 in University Library and
Educational.

• The company is paying a licence fee to the institute.

• The fee cannot be recouped by the company or offset against any other
payments due to the institute by the company.

A-Z L.315
‘The Licence Fee’ shall mean the non-returnable sum of [figure/currency]
[words] payable by the [Company] to the [Institute] under this Agreement.
This sum cannot be offset and/or recouped against any other payment due
to the [Institute].

• In contrast in A-Z L.318 in University Library and Educational the licence

fee can be reclaimed by the institute.

• The author has agreed that the licence fee paid by the institute to the author
can be reclaimed from the author if he or she fails to deliver the material.

• In addition if the institute rejects the material submitted by the author on

reasonable grounds and gives the author an opportunity to resolve the issues.
If the author fails to deal with the problems or the material is still not
accepted. Then the institute may seek to reclaim the advance from the author.

• This scenario creates problems for both parties as the author will argue that
the material is suitable and the institute will argue that it is unacceptable. The
author will have the view that they have completed the work for no money if
the licence fee has to be repaid.
• The clause may be amended to allow only a portion of the licence fee to be
repaid and for any repayment to be spread over a number of years.

A-Z L.318
The [Author] agrees that the Licence Fee shall be reclaimed by the
[Institute] in the event that the [Author] fails to deliver the material
specified in Clause [–] and/or the material is rejected on reasonable
grounds and the [Author] has had the opportunity to remedy the matter and
failed to do so.

• In A-Z L.320 in University Library and Educational the author has agreed
that the institute can recoup the licence fee from all future royalties due to
the author from the exploitation of the work.

• If there are not sufficient royalties to recoup the licence fee the institute has
agreed that it cannot recoup any such sums from the author or the agent.

• Note in this clause the institute cannot recoup or offset any sums due for the
licence fee from any other agreements, or works or books the institute may
have with the author.

A-Z L.320
The [Institute] shall be entitled to offset and recoup the Licence Fee paid to
the [Author] for the [Work] against future royalties due to the [Author]
received from the exploitation of the [Work] in any media at any time. In
the event that, for any reason, there are insufficient royalties to recoup the
Licence Fee. The [Institute] shall not be entitled to reclaim such sums
directly from the [Author] and/or his agent. Nor shall the [Institute] be
entitled to offset and/or claim back any unrecouped Licence Fee from the
[Work] against any other work, book, option, licence, contract or otherwise
that the [Institute] may have with the [Author] at any time.

• The payment of the licence fee may be linked to a series of dates and events
as in A-Z L.265 in Film and Television.

• The licensee is paying the licensor a fee which is set out in full in numbers,
currency and words.
• The payments are in eight stages:

– full signature of the agreement and linked to approval of an outline for

the project

– approval of a provisional edit of the film

– acceptance of the film material by the licensee

– a fixed date subject to completion of the earlier stages

– first transmission of the film or a fixed date whichever is the earlier

– first release to the public of a DVD

– first release of any merchandising to the public but with a fixed date by
which payment will be made in any event

– first release of an agreed format in a specific country

A-Z L.265
In consideration of the rights granted in this Agreement the [Licensee] shall
pay to the [Licensor] a fee of [figure/currency] which shall be payable as
follows:

1.1 [–] on full execution of this Agreement and subject to approval of the
full outline.

1.2 [–] subject to approval by the [Licensee] of [the rough cut of the
[Film].

1.3 [–] on acceptance by the [Licensee] of the [Film Material].

1.4 [–] on or by [date] subject to completion of 1.1 to 1.3.

1.5 [–] on or by [date] and/or first transmission of the [Film] whichever is

the [earlier/later].

1.6 [–] upon first release to the public of the [DVD/video] but in any event
no later than [date].
 1.7 [–] upon first release to the public of any the [Merchandising] but in
any event no later than [date].

1.8 [–] upon first release to the public of the [subject] in [country].

• In a distribution agreement relating to the exploitation of products as in A-Z

L.291 in Merchandising. The focus of the payments of the licence fee is
linked to:

– acceptance of the master material in 1.1

– approval of a sample prototype in 1.2

– first release date of a product in a country in 1.3

– first release date of a product in another language in 1.4

• Note however that the licence fee is a fixed amount and not variable in
relation to the success of the product.

• The licence fee can however be recouped by the distributor from any future
payments due to the company under the agreement.

• There is no right to recoup any licence fee from other agreements between
the distributor and the company.

A-Z L.291
The [Distributor] agrees to pay the [Company] a licence fee as follows:

1.1 [Number/currency] upon delivery to and acceptance by the

[Distributor] of copies of master material in clause [–].

1.2 [Number/currency] after approval by the [Company] of the sample

prototype of the [Product].

1.3 [Number/currency] after the first date of release of the [Products] to

the public in [country].

1.4 [Number/currency] after the first release of the [Products] in

[language].
 The [Distributor] shall be entitled to recoup these sums due in 1.1 to 1.4
from any future payments due to the [Company] under this Agreement.

• The licence fee in A-Z L.316 in University, Library and Educational is a

fixed fee that the company shall pay in instalments.

• There is no mention of an advance against royalties and the licence cannot be

recouped or set-off by the company.

• The payments are in six stages:

– payment on signature of the agreement by both parties

– payment on acceptance of the specified material by the company

– publication of a hardback format of the work but in any event no late

than agreed date

– publication of a paperback format of the work but in any event no later

than agreed date

– general release to the public of a DVD of the work

– the achievement of the sales of a fixed number of units of the DVD in an

agreed country or worldwide

• The last payment relates to unit sales and not revenue or gross or net receipts
by the company.

A-Z L.316
In consideration of the rights granted by the [Institute] to the [Company],
the [Company] shall pay the [Institute] the Licence Fee as follows:

1.1 [–] upon signature of this Agreement by both parties.

1.2 [–] on or before [date] subject to the delivery and acceptance of the
material in Clause [–] to the [Company].

1.3 [–] upon publication of the hardback of the [Work] but in any event not
later than [date].
1.4 [–] upon publication of the paperback of the [Work] but in any event
not later than [date].

1.5 [–] upon general release to the public of the [CD/DVD/Disc].

1.6 [–] upon the [CD/DVD/Disc] achieving sales figures of [number] units
in [country/worldwide].
 LICENCE PERIOD

• There are only 16 clauses relating to Licence Period in the A-Z from A-Z
L.322 to A-Z L.347 which all fall within the sub-heading of General
Business and Commercial.

• This subject should be cross referenced to the main clause headings in the A-
Z of Assignment, Assignment Period, Break Clauses, Cancellation,
Force Majeure, Suspension, Term of the Agreement, Sell-Off Period and
Termination.

The meaning and purpose of a licence period

• The licence period is used in relation to a licence as opposed to an

assignment. Please look at the main clause heading Assignment and
Assignment Period for examples of clauses on these topics.

• The term licence period is often defined at the front of an agreement. This
then makes it much easier to use the definition in the grant of rights clause
from one party to another later on in the agreement.

• The licence period is the duration of time that a person or company A has
agreed to grant the rights specified in an agreement to another person or
company B.

• The aim is to have clarity as to when the licence period begins and ends.

• The licence period is used whether the agreement is non-exclusive or

exclusive. For more on this subject please look at the main clause heading
Exclusivity in the A-Z.

• It is possible to use other words to cover the same topic and sometimes you
may wish to use the words. For examples please look at the main clause
heading term of the agreement in the A-Z.
• Where the licence period is not defined but the agreement is represented as a
licence. The other party may try to effectively acquire all the copyright and
intellectual property rights by making the licence period for the full period of
copyright and any extensions and renewals.

• Additional words may also be added that the licence period is in perpetuity or
forever.

• There is an argument that such clauses which seek to acquire rights in

perpetuity are against public policy. It is not however the subject of any
legislation in itself in the United Kingdom.

• However where two commercial parties seek to reach such an agreement The
question should really be whether they should be concluding an assignment
and not a licence.

• If a licence is to last for the full period of copyright then such a period in
general terms will be governed by the relevant provisions of copyright
legislation in force from time to time. For the most part that term is for 70
years from the end of the calendar year in which the copyright owner dies in
the United Kingdom. But there are many complex variations to that general
term and each example must be looked at on its facts and no assumptions
made.

• As the legislation can be changed and so copyright term may be extended.

The reference is usually for the full period of copyright including any
extensions or renewals.

• If you wish to maximise the revenue and exploitation of the rights from a
work, product or service. Then the aim is to licence the right for a short fixed
period. Each fixed period relates to a licence fee and maybe royalties.

• Therefore it is possible to issue consecutive licence periods and negotiate

each one in turn maximising the revenue.

• If you are the person or company acquiring the rights under a licence then the
aim is to achieve the longest licence period. This may effectively be for the
full period of copyright and any extensions or renewals.

• In which case if the licence was exclusive the licensor would be prevented
 during that period from granting another licence for the same rights to
another third party.

• As with any agreement it would also depend on the rights actually granted,
the territory covered by the licence and the terms actually agreed regarding
payment.

• If the licence was non-exclusive even if the licence period granted was for the
full period of copyright and any extensions and renewals. The licensor would
not be prevented from granting exactly the same rights to another third party.

• A licence period could be for one week, one year, ten years or twenty years.
It is purely a negotiation point.

• It must be appreciated however that if a long period is granted when it is not

needed that it is effectively a waste of an asset which could be exploited.

• Therefore you will find some licence periods which will end either on a fixed
date or the completion of an event such as a broadcast on television or a
fixed period from publication or distribution.

• This mechanism allows the licence period to be shorter and the agreement to
come to an end sooner.

• If the agreements end earlier then the rights are available to be sold on to
another third party and so you can have a strategy of licensing which
increases potential revenue.

• The definition of the licence period may also permit the licence period to end
if the agreement is terminated for any reason.

• There may be a clause in the agreement which provides one or more parties
with the option to extend or renew the agreement.

• Parties to an agreement often forget to address the issue of the fact that there
may be payments of sums which arise from exploitation during the licence
period that have not been paid. This may be because the sums have not been
received or have not been paid by the licensee which fall due to the licensor
after the licence period has expired or been terminated. For more on this
subject please look at the main clause headings Accounting Provisions and
 Payment.

• The licence period relates to the rights granted, not the payments which may
fall due. Unless the agreement is drafted so that all payments may cease
when the agreement has expired or been terminated.

Drafting clauses for a licence period

• Instead of defining the licence period as a definition at the front of the

agreement. The agreement may state a start and end date as in A-Z L.330.

• This clause also avoids the possibility of one party seeking to renew or
extend the agreement.

• The licence period could start on the date of the agreement or any other date
agreed between the parties.

A-Z L.330
The present licence agreement commences on [date] and terminates
automatically on [date].

• In contrast in A-Z L.332 the term licence period is defined at the front of the
agreement with a start and end date. The term licence period can then be
used in the grant of rights clause.

A-Z L.332
‘Licence Period’ Start Date [–] End Date [–].

• In A-Z L.331 the licence period starts on the date of the agreement and will
not expire until ten years after the date of first publication in hardback or
paperback of the work.

• If the work is not published in hardback or paperback the ten-year period

according to this clause does not come into effect and so the licence period
has no end date. The licence period continues indefinitely.

• Note that publication is not limited by reference to any specific country or

territory.
 A-Z L.331
The Licence Period shall commence on the date of this Agreement and
continue for a period of [ten] years from the date of first publication of the
[hardback/paperback] of the [Work].

• The licence period may be linked to acceptance of material and a fixed date
as in A-Z L.333. The duration of the licence period is fixed and begins at the
agreed date.

A-Z L.333
‘The Licence Period’ in respect of the [Product] shall commence on the
earlier of the acceptance of the [Material] by the Company and [date] and
continue until the expiry of a period of [specify duration] from [date].

• In A-Z L.334 the licence period is defined to start on the date of the
agreement and will continue for a fixed period which could be one month, a
year or five years.

• However the continuance of the licence period is subject to the termination of

the agreement. If notice is served to terminate the agreement then the licence
period will end.

• The licence period may also be extended beyond the agreed period provided
it is extended in accordance with the agreement. There may be an additional
sum or fee to pay for the extension.

A-Z L.334
‘Licence Period’ shall commence on the date of this Agreement and shall
continue for a period of [specify length] unless terminated earlier or
extended in accordance with the terms of this Agreement.

• The duration of the licence period may be linked to the release or exploitation
of a product as in A-Z L.336.

• The licence period starts on the date of the agreement. However the five-year
period commences from the first release to the public of the licensed articles
in a specified country.
• It may be sufficient for one article to be released to the public for the duration
to start. So in some cases the number of copies that is a minimum for release
may be stated.

• Note this licence period is linked to one country and not the world.

• The agreement may be signed five years before the first release to the public
and so the licence period could effectively be ten years. That may not have
been the original expectation of the licensor. In order to avoid this problem
that is why there is often another date added which is the latest the duration
of five years can commence.

A-Z.336
The Licence Period shall commence on the [date] of this Agreement and
continue for a period of [five years] from the [date] of first release to the
general public of the [Licensed Article] in [country].

• In clause A-Z L.327 the licence period starts not from the date of the
agreement but the first theatrical release of the film in the defined territory.

• If the film does not have a theatrical release before the fixed date in the
clause. Then the the ten-year licence will commence in any event from that
fixed date.

• The effect of adding a date by which the licence period commences in any
event means that the licensor has the latest start and end date.

A-Z L.327
The Licence Period shall mean the period commencing from the first
theatrical release of the [Film] in the [Territory] which shall not be later
than [date] and shall continue for a period of [ten years] from that date.

• A company may grant the right to extend a licence period as in A-Z L.322.
The option can be exercised to extend the period by the payment of a fixed
sum within the existing licence period. The extension is also for an agreed
period.

• This clause does not allow the option to be used after the expiry of the licence
period.
 A-Z L.322
The [Company] hereby grants to the [Acquirer] an option to extend the
Licence Period for a further period of [specify length] (or such other period
as is specified in schedule) exercisable at any time prior to the expiry of the
Licence Period and upon payment to the Company of a fee set out below
[–].

• In A-Z L.325 the clause is drafted to not be fixed but to be more of a rolling
agreement until such time as one of the parties decides to end the
arrangement.

• The licence period starts on the date of the agreement.

• The agreement is for a minimum of one year.

• Thereafter the agreement continues until terminated by one party or the other.

• Note here the licensee agrees that it shall be liable to pay the licensor any
proceeds for the commercial exploitation of the licensed articles. Payment
must be made to the licensor both within the licence period and after it has
ended.

A-Z L.325
The Licence Period shall commence on the date the Agreement is signed
by both parties and shall continue for a period of not less than [one year].
Thereafter it shall continue until such time as terminated by either party in
accordance with Clauses [–] below. The [Licensee] shall always be liable
to the [Licensor] for any and all proceeds from the commercial exploitation
of the [Licence Articles] whether within the Licence Period or not.

No extension or renewal of the licence period

• It may be important to state that there can be no extension or renewal as in A-

Z L.337.

A-Z L.337
The [Company] agrees that there is no right of renewal, extension and/or
variation of the Licence Period.
• Similarly it may be necessary to make it clear there is no option to extend the
licence period as in A-Z L.338.

A-Z L.338
There is no option to extend the Licence Period.
 LOGO

• There are 51 clauses in the A-Z relating specifically to Logo from A-Z L.376
to A-Z L.426.

• This section should be read in close conjunction with the main clause
headings in the A-Z of Brand, Copyright Clearance, Copyright Notice,
Credits, Disclaimer, Domain Name, Downloading, Goodwill, Marketing,
Material, Publicity, Rights, Sub-Licence, Third Party Transfer, Title and
Trade Marks.

A logo as opposed to a trade mark?

• The terms logo and trade mark are often mistakenly used as if they have the
same meaning – which is not correct.

• A logo – which may consist of an image, words or shape – may not have any
protection except in copyright and passing off in the United Kingdom unless
the logo has been successfully registered as trade mark or registered design.

• A trade mark may have a pending application to be registered in one or more

countries in the world and the classes for which registration has been sought
or have actually been made and registered may vary. For more clauses please
look at the main clause heading on Trade Marks in the A-Z.

• However if the trade mark is registered then you should use a trade mark user
licence agreement where you are granting a third party use of a trade mark.
Contract 20 is a Trade Mark User Licence Agreement in The Media and
Business Contracts Handbook 5th edition by the authors.

• There are several recurring issues which apply in contracts to logos and trade
marks. Even if you have a trade mark user licence agreement. That does not
prevent you raising the issue of trade marks in the main agreement. You may
also attach the trade mark use licence agreement to the main agreement so
 that if forms part of the main agreement.

What is a logo?

• A logo is a term to denote a symbol or design or shape or image which may

also have an associated letter or words which has been created to be original
and distinctive.

• The aim is for the logo to be sufficiently distinctive to be recognised and

identified with a product, company or organisation.

• An original and distinctive logo is most commonly used for marketing and
promotional purposes to create an impression of a company which suits its
business or purpose or to create a strong association between a range of
products or services under a brand name.

• The use of a logo which is a visual representation can convey a strong

message to the public which, when it has been successfully developed and
used, can easily be recalled when shopping.

• Some companies have created logos which are recognisable without any
company name accompanying the logo.

• If a new logo is not created for a project then the companies involved will use
their own combined logos and trade marks to raise the profile for the project
as much as their own corporate names.

• A logo is therefore of great value to a company because a single design using

a combination of words, lettering, images, colours and graphics can generate
a complex message unique to, and readily associated with, a particular entity.

• Where a company of any type, whether it be a manufacturer, service supplier,

product distributor or publisher, has created a logo which is used on their
website and apps, in their marketing, on packaging and content of products.

• The company will have created goodwill for the logo in the different markets
and countries where the logo has been used or displayed.

• If a particular logo is successful in the sense that it creates an immediate and

positive impression in a consumer’s mind due to its distinctive nature. The
 fundamental objective of a company or organisation is to protect the integrity
of the logo and its brand. So that third parties do not adapt or distort it or use
it for any unauthorised purpose.

Who actually owns each version of the logo?

• The first question should always be – who actually owns the logo to which
you are referring to in the agreement?

• Unfortunately this question may raise quite a few issues – it is not uncommon
for many company departments to commission new material without regard
to the aspect of ownership of the copyright and intellectual property rights
and the material. Please look at the main clause headings Assignment and
Buy-Out in the A-Z for more on this aspect.

• Most of the contract clauses relate to the use of a logo by a third party where
there is a contract between the owner of the logo – which should be the
company – and the licensee.

• There has however been more than one company that has failed to be the
copyright owner of a design for a logo for a website, shoe label or other
product as they have failed to get the designer or creator of the new website
logo or shoe label to assign all the rights in a buy-out.

• A company should expect to pay an additional fee, however small, for the
assignment of all the rights as well as the work that has been completed. This
is not a requirement but will show a consideration for the assignment.

• Often a false assumption is made that, as you have commissioned the work,
therefore when the company pays the invoice, the copyright and other
intellectual property rights are transferred. That is not correct. You must
arrange for an assignment document however short to be issued and signed
by both parties.

• Wherever a new version of a logo is created by a third party then you should
ensure that there is a full assignment of all the copyright and any other
intellectual property rights.

• There have been instances where companies with an existing logo have had a
new version created for their website but the rights were not then assigned.
 So although they owned the original version they did not actually own the
new version which was an adaption, as there was no assignment from the
designer, creator or software developer.

Drafting clauses relating to a logo

• All logos should preferably be defined in detail and a copy may be attached
and form part of the agreement as in A-Z L.413.

• Here also the use of the words ‘the company’s logos’ creates an impression
that the logos belong to the company.

A-Z L.413
‘The Company’s Logos’ shall mean the designs and the associated texts,
images and colours. A two-dimensional copy of the Company’s Logos is
attached to and form part of this Agreement.

• An alternative approach is set out in A-Z L.395

A-Z L.395
The [Company] Logo shall be the following trademark, design or logo
together with any associated words briefly described as follows [specify].
A two-dimensional copy of the [Company] Logo is attached to, and forms
part of, this Agreement.

• There are a number of common issues which arise in contracts where logos
are to be authorised for use.

• It is a recurring theme that where a licensee may in turn sub-licence rights to

third parties. In such circumstances thought should be given as to how
wording may be introduced which ensures that such third parties conform to
the terms of the main - head agreement.

• Any company or organisation that owns a logo will be concerned when they
enter into a licence agreement with a third party that the logo is not changed
or adapted and that it is kept to the same shape, colour and size when it is
reproduced by the licensee on its website, products and in its marketing.
• The aim of any clause is to make sure that the other licensee understands that
it cannot make changes as in A-Z L.378 in DVD Video and Discs. Any
proposed changes must be approved by the licensor. Note approval is not
however required to be in writing.

A-Z L.378
The [Distributor] agrees and undertakes to reproduce and display the
[Licensors’] master material of the logo, trade mark, images, text and
shapes in the exact size and colour that they are supplied. The [Distributor]
shall not change, alter and/or vary any part without the prior approval of
the [Licensor].

• Where a company operates a website then they would wish to impose a

contractual obligation on the person who accesses and downloads material or
who receives products – not to make changes to any logos, trade marks or
images, text or shapes which may be on that material. In A-Z L.405 in
Internet and Websites the customer must agree not to delete, erase, change,
alter and/or vary any services or products.

A-Z L.405
The [Customer] shall not delete, erase, change, alter and/or vary the
[Company’s] logo, trade mark, images, text and shapes which are on any
services and/or products supplied by and/or downloaded from the
[Website] by the [Customer].

• The obligations on a licensee in A-Z L.391 in General Business and

Commercial are much wider.

• In A-Z L.391 the licensee must not modify the logo from the format set out
in the schedule which is attached to the agreement. The licensee can only use
the logo on the agreed products. The licensee must report to the licensor any
unauthorised use of the logo in the licensed territory of which the licensee
becomes aware to the licensor.

A-Z L.391
The [Licensee] warrants that:

1.1 All uses of the [Logo] upon the [Products] will be in accordance with
 the terms of this Agreement and no modification may be made to any
part of the [Logo] which shall always be used in the format set out in
the Schedule hereto.

1.2 It shall not make any challenge against the rights of the [Licensor] in
the [Logo] or its validity in any way provided that the [Licensor] shall
not be in breach of any of its warranties in relation to the [Logo].

1.3 If the [Licensee] becomes aware of any unauthorised use of the [Logo]
within the Territory it will promptly notify the [Licensor] with
appropriate details.

1.4 No other logo, image or wording will be used on any of the [Products]
together with the [Logo] except with the prior written approval of the
[Licensor].

• A contract clause may also specify where a logo will appear on any product,
labels and marketing material as in A-Z L.377 in DVD Video and Discs. The
clause may specify the order of priority of any logos and credits as well as
the size.

• You may also wish to add a clause which sets out what will happen if the
logo does not appear for any reason.

A-Z L.377
The [Distributor] agrees and undertakes to put the following trademark,
logo, text, image and credits to the [Licensor] on the content of the disc, the
label, the outside of the Disc, the cover and in all press releases, posters,
publicity, promotional, advertising and packaging material in respect of the
[Disc] of the [Film/Work] as set out in Appendix [–] which forms part of
this Agreement [specify size, shape, position on each type of material].

• A clause in a television or film agreement may specify where and how on the
screen the logo will appear and how often and the duration.

• There may also be a clause in an agreement which requires the licensee to

ensure that the logo complies with any relevant codes and policies which
may exist. This may apply where there is a sponsor for a radio or television
or other programme on the internet.
• It is particularly important that the licensee confirms or acknowledges that
the rights in the logo remain with the licensor and the grant of rights under
the licence will not be construed to have effect as some form of acquisition
in the logo or the goodwill associated with the logo.

• The reference to goodwill is of some significance because if the logo is not

registered the goodwill element is of some value to the owner of the logo.

• The licensee may therefore acknowledge as in A-Z L.399 in General

Business and Commercial that – all copyright, trade marks, service marks,
design rights and any other rights in the licensors’ logo belong to the
licensor.

• In addition that the licensee shall not acquire any rights or interests in:

– the licensor’s logo

– or in any trade mark, design, title, artwork

– in any medium

– including any developments or variations

– whether provided by the licensee or a third party.

• This clause therefore sets out the stated intention of the parties in the
agreement even if at a later stage an assignment document is needed. The
licensee is not in a strong position to argue that the intention was that there
should be joint ownership or that the licensee should own certain rights.

A-Z L.399
The [Licensee] acknowledge that all copyright, trademarks, service marks,
design rights and any other rights in the [Licensee’s] Logo together with
any goodwill shall belong to and remain the sole property of the Licensor.
The [Licensee] shall not acquire any rights or interests in the [Licensor’s]
Logo or in any trademark, design, title, artwork, in any medium including
any developments or variations whether provided by the [Licensee] or a
third party.
• Where a company appoints a distributor a clause should always be included
where the distributor confirms that it is not acquiring any rights and that it is
the sole property of the licensor as in A-Z L.380. This clause covers
ownership not just logos, but also copyright, design rights, future design
rights, a domain name, trade mark, service mark, community mark, business
name, trading name, inventions and patents. As well as any other
developments and variations of the master material.

A-Z L.380
The [Distributor] agrees that no part of this Agreement is intended to
transfer any copyright, design rights, future design rights, domain name,
trade mark, service mark, community mark, business name, trading name,
invention, patent including any developments or variations in the master
material of the [Licensors’] logo, trade mark, images, text and shapes to the
[Distributor]. The [Distributor] agrees that all such rights in relation to such
material are the sole and exclusive property of the [Licensor].

• Where a licensee is authorised to engage third parties as sub-licensees and

agents. You would want the licensee to have an obligation to ensure that any
third parties must adhere to the rule not to alter the logo as in A-Z L.397.

• The sub-licensee must ensure that all third parties agree that:

– the logo belongs to the licensor

– they shall not represent that they own the logo or

– attempt to register any rights or interest in the logo or

– attempt to register any rights or interest in any trade mark, service marks,
title, text, slogan, catchphrase, image artwork or other developments or
adaptations in any language.

A-Z L.397
The [Licensee] agrees to ensure that all third parties to be contracted by the
[Licensee] under this Agreement will agree that all copyright and any other
rights concerning the [Licensor’s] Logo shall remain the sole and exclusive
property of the [Licensor]. That the [Licensee] and all such third parties
shall not acquire, nor represent that they own and/or control and/or attempt
 to register any rights, interest and/or goodwill in any the [Licensor’s] Logo
nor any trademark, logo, service marks, title, text, slogan, catchphrase,
image, artwork or otherwise or any developments, variations or adaptations
in any language at any time which is based on, derived from and/or
associated with it.

• The parties may also agree that where new artwork is commissioned for a
project such as a children’s book that they will be joint owners as in A-Z
L.416. Further, that where any material is to be adapted by the publisher that
the prior written approval of the author shall be required in order for the
project to proceed.

• The publisher would still have to ensure that the copyright and other
intellectual property rights in the new material in all its forms were assigned
as well as ownership of the physical material.

A-Z L.416
In the event that the [Publisher] commissions a designer and/or requests an
employee and/or consultant to create any artwork, photographs, images,
typography, index, titles, character names and/or cover and/or slogan. The
[Publisher] agrees that all such material shall be owned jointly by the
[Author] and the [Publisher] and that no material shall be used, adapted and
exploited without the prior written approval of the [Author] in each case
and that the [Author] shall be entitled to [number] per cent of any sums
received by the [Publisher] in such case.

• Where there is a new product, website or book a company or individual may

also wish to prevent other third party logos being added and so require their
consent to be sought and provided as A-Z L.417.

A-Z L.417
The [Publisher] agrees that it may not add any new logos, trademarks
and/or other credits to the [Work] and/or any adaptation without the prior
written approval of the [Author] of the exact proposed sample.

• Many employment contracts fail to address the issue of the creation of new
rights and material by its employees, directors and officers which is a
mistake. There is a legal presumption in the United Kingdom that work is
 owned by the company which employs a person. However it is much wiser
to address this matter as a contract clause in an employment contract so that
the person has had due notice of that fact.

• An employer should always use clear wording to confirm the legal position
that copyright and related rights in material created by the employee in the
course of their employment belongs to the employer, not the employee as
confirmed by A-Z L.382 in Employment.

• This is a very wide clause for a very wide variety of contributions that
someone may make as an employee. The employee will not own any
copyright or any other intellectual property rights and any other rights. The
employee not be entitled to receive any payment from their exploitation or
registration.

A-Z L.382
Where any [Employee] whether temporary, permanent and/or otherwise
contributes to and/or designs and/or creates any new logo, slogan, lyric,
image, photograph, film, sound recording, title, recipe, blog, website, app,
invention, patent, trade mark and/or any other computer software,
hardware, new technology, process and/or method of telecommunication
which is entirely original and/or based and/or derived from other work by
the [Company]. The [Employee] shall not own and/or control any
copyright, intellectual property and/or any other rights of any nature in any
such material and shall not be entitled to receive any sums from any form
of exploitation, registration and/or sale at any time.

• If a company commissions new artwork, designs, photographs or material for

a website or app which is in effect a commission for work to be completed
by a third party. It is crucial to confirm the copyright ownership of the new
material. In the United Kingdom the person who is the author of creator of
the material is the legal owner not the person who has commissioned the
material. Unless there is an assignment clause to that effect from the author
and creator to the company.

• In such circumstances the contract, not being an employment contract but a

contract for services or a commissioning agreement, should confirm who
owns the rights in the logo as stated in A-Z L.381 in DVD, Video and Discs.
• The designer has created a moving image logo for a website which has been
commissioned by the company based on its original two dimensional logo.
The new material has the logo in a range of different colours which is not the
same as the original logo.

• The assignment clause from the designer to the company in 1.1 refers to the
new logo not the old one.

• Note the designer has used computer software to create the new logo and so
the assignment is for all the copyright, intellectual property rights, computer
software and design rights and any other rights and/or interest in the new
logo.

• The designer is also handing over physical possession of all the original and
development material except for those items the company agrees he or she
may keep.

• The designer has also agreed in 1.4 that he or she is not entitled to any further
payments for the exploitation of the new logo which is important.

A-Z L.381

1.1 The [Designer] has created and developed a computer generated three
dimensional moving image of the [Logo] which has been
commissioned by the [Company] which is in different colours and
formats as described in Schedule [–] entitled the [New Logo].

1.2 The [Designer] agrees to assign all copyright, intellectual property

rights, computer software and design rights and any other rights and/or
interest in the [New Logo] to the [Company] throughout the world and
universe for the full period of copyright and all other period of
intellectual property rights and any additional terms forever and
without limit and in respect of all new rights and/or developments
created at any time in the future in return for the payment of the
[Commission/Fee] and [Budget] attached in Schedule [-].

1.3 The [Designer] agrees to provide all original and copies of all
preparatory and development material to the [Company] which he/she
may have in his/her possession at the [Company’s] cost. The
[Designer] agrees that he/she shall not retain any material except
 [specify].

1.4 The [Designer] agrees that he/she shall not receive any additional
payment for the work and/or any registration of the [New Logo] and/or
any exploitation and/or adaptation in any form at any time.

• Where there is a sponsorship agreement as in A-Z L.425 in Sponsorship. The

emphasis is on ensuring the maximum use of the logo for the sponsors. Thus
the requirement that the organisers use the sponsor’s logo and material as
agreed and also the logo appears on any marketing and promotional material.

A-Z L.425
The [Organisers] confirm that whenever possible they will ensure that the
[Sponsor’s] Logo will be present in accordance with this Agreement and
that the [Promoter] has undertaken to the [Organisers] to use its best
endeavours to ensure that the [Sponsor’s] Logo is incorporated in all
promotional, advertising and publicity material.

• In a merchandising agreement with an agency or a distributor where they will

enter into many sub-licences for different markets and countries. The main
agreement would require the licensee to ensure that the clauses in the main
agreement with the licensor were repeated in the sub-licence agreements.

• In A-Z L.410 in Merchandising the licensee agrees in 1.1 that all the sub-
licensees shall provide the agreed credit, copyright notice, trade mark and
logo to the licensor for the products and packaging.

• In 1.2 the sub-licensees will have to send exact samples to the licensor to
approve together with any packaging before reproduction takes place.

• Note this clause does not deal with marketing and promotional material
which would in a separate clause. For additional clauses please look at the
main clause headings Marketing and Publicity in the A-Z.

A-Z L.410

1.1 The [Licensee] agrees and shall ensure that any sub-licensee agrees to
provide the following credit, copyright notice, trade mark and logo to
the [Licensor] in respect of the [Licensed Articles] and the packaging
 in the positions and size specified in the attached Appendix [–] which
is attached to and forms part of this Agreement.

1.2 The [Licensee] agrees that the [Licensor] shall be entitled to approve
an exact sample of the [Licensed Articles] and packaging prior to
reproduction for the public. The [Licensor] shall provide written
approval or rejection of the sample within [number] days of delivery.
Failure by the [Licensor] to reply within that period shall be deemed
approval of the sample.

• The question of the cost of the creation of any logo and new material or the
reproduction of the logo in another format should be dealt with in an
agreement.

• In A-Z L.421 in Sponsorship the sponsor is paying for the cost of supplying
the sponsor’s logo in an acceptable form to the company for reproduction in
the brochure.

A-Z L.421
The [Sponsor] agrees to bear all costs of creating the [Sponsor’s] Logo and
of supplying the [Sponsor’s] Logo in a form acceptable to the [Company]
for incorporation in its [brochure/programme].

• The fundamental issue with logos is that they should be given as much
attention within a contract as trade marks because they serve the same
purpose and need to be protected.
 MARKETING

• There are over two hundred clauses on Marketing in the A-Z from A-Z
M.001 to A-Z M.206.

• This subject should also be read in conjunction with the main clause headings
in the A-Z of Assignment, Assignment Period, Brand, Budget,
Compliance, Confidentiality, Consultation, Copyright Clearance,
Copyright Notice, Costs, Credits, Designs, Disclaimer, Distribution
Expenses, Domain Name, Editorial Control, Exclusivity, Expenses,
Goodwill, Gross Receipts, Insurance, Liability, Licence Period, Logo,
Material, Moral Rights, Publicity, Quality Control, Rights, Territory,
Term of the Agreement, Title and Trade Marks.

The purpose and significance of marketing

• Marketing encompasses many types of use of material, formats, methods and

medium. It is often forgotten in agreements and not included at all.

• The words marketing, promotion and advertising mean broadly the same in a
very general way. It is to make more people aware of a product or service
and to encourage them to use it or buy it.

• The whole concept of marketing is so wide that you would not wish to list
every possible method in an agreement which is agreed. However that should
not be used as a reason to avoid the topic in the agreement.

• It is not unreasonable for both parties to an agreement to discuss and outline

their marketing strategy and methods in advance of the signed agreement.

• It is important to establish who has the final decision in respect of all aspects
of a project.

• It is often thought that marketing can be dealt with after an agreement has
 been concluded and does not have any relevance to or impact on the
agreement.

• This is a very common mistake and one which may incur additional costs and
liabilities which were not expected or budgeted for in the project.

• It is essential that marketing and promotion as well as packaging,

competitions, use of premium rate phone lines and use of extracts of licensed
material for that purpose are discussed in advance.

• Raise the issues in advance and find the parameters of what one party thinks
is going to happen as opposed to your presumption that any sort of marketing
must be good and must be allowed under the agreement.

• This is often not the case and a supplier or author or distributor may be quite
specific as to what form of marketing is permitted and what is not allowed
and is prohibited.

• Marketing can take many different forms and examples include:

– Direct marketing through emails and mailshots using a brochure,

catalogue or flyer

– Trade exhibitions, festivals, events, performances and street promoters

– Marketing to persons who have signed up to a free newsletter or website

contact email

– Sponsorship, product placement

– Radio, television and online advertising

– Merchandising such as free give-aways, competitions and premium rate

phone lines, tour fan material and licensed products for characters and
names, soundtrack music for CDs and downloads

– Merchandising in the form of a licence with a third party for exploitation

by means of branded clothing, confectionary, toys, stationary and other
items
 – Cross-promotion partnerships with specific companies or organisations

– Branded posters, mugs, key rings, sweat shirts, arm bands, balloons,
bags, cards, flags and banners, signs and billboards

– Listing and adverts on websites, directories and search engines on the

internet

– Online films, videos, forums, blogs, free and paid for apps, website
promotions, links and paid for banner advertisements

– Paid-for articles, interviews, reviews, blogs, quotes and appearances

– Book covers, record sleeves, packaging and in store displays

• Other forms of marketing and promotion can be found in the main clause
headings Marketing, Publicity and Rights in the A-Z.

• Just because you want to use one of the above forms of marketing does not
mean that you necessarily have the right to do so. There is no automatic right
acquired to be able to market extensively.

• Most companies and distributor have a planned campaign of advertising and

promotion for both the company and their products or services.

• They may have a formula which they follow which is either personal to the
product or service or which is generic and follows the same pattern
regardless.

• A company or distributor may be restricted by trade organisation guidelines

or the policy of a government body regarding the suitability and use of
material. For more on the topic please look at the main clause heading
Compliance in the A-Z.

• If you are licensing a third party to exploit a product or service on your behalf
then the detail of their intended marketing campaign is crucial – as is the
budget they intend to spend.

• It is quite common for a company not to be willing to commit to a specific

budget for a marketing campaign, rather they will try to show the level of
 personnel involved and the experience they have had with other products or
services.

• Even if there is not a commitment to a specific budget to be spent on the

marketing for the project. That does not prevent you from specifying
methods of advertising which will be used as a minimum.

• You may also set performance targets or preferred magazines or television

companies or newspapers in which the product or service will be promoted.

• If a marketing budget is to be agreed and incorporated in the agreement then

it should be made clear how the budget should be spent and who is liable if
for any reason the budget is exceeded. For more on this subject please look
at the main clause heading Budget in the A-Z.

• The packaging, marketing and promotional costs for a project may be

significant. The agreement should state which person or company is
responsible for all such costs and expenses.

• It needs to be stated unequivocally whether or not such costs and expenses

can or cannot be recouped and set off against any gross receipts, net receipts
or royalties due.

• If the marketing costs and expenses are permitted to be recouped then you
should consider whether there should be a limit on the amount in total which
can be recovered. This may either be in each accounting period or in total for
the duration of the agreement. For more on this topic please look at the main
clause headings in the A-Z of Costs, Expenses and Distribution Expenses.

• There is also the question of the liability and responsibility for the marketing
costs and expenses. If the licensee or distributor is engaging third parties to
market and promote the product, service or project under the agreement, then
in whose name are these new additional charges made and to whom will an
invoice be addressed? If you do not wish to accept any liability then a clause
to that effect must be included in the agreement which you can then rely
upon at later date. Otherwise if the licensor and licensee work together on a
project and fail to address this issue in the agreement. There may be
ambiguity as to how the costs and expenses incurred may be paid. For more
on the topic of Liability please look at the main clause heading in the A-Z.
• It is quite often the case that the company or person who is paying for the
marketing costs and expenses has final editorial control both as to the content
of the marketing and the methods. Despite this fact it is perfectly possible to
have a right of approval or consultation over the draft material whatever the
medium in which it will appear before the material is finally distributed and
used. For more on these subjects please look at the main clause headings in
the A-Z of Editorial Control, Consultation and Quality Control.

• There are clear benefits to both parties in supplying marketing material for
approval or consultation as it allows the author or creator to correct errors
and omissions but also add new ideas and content which may enhance the
final version.

• Where it is agreed that material may not be used unless it has been approved
by the licensor or author. Then additional words may be added that approval
shall not be unreasonably withheld or delayed.

• It is also possible to set a time limit for approval after which approval is
deemed to have taken place if there has been no reply.

• There are different types of costs which may be incurred for marketing the
cost of:

– reproducing and delivering original material

– creating a new logo, name and other artwork

– developing and supplying a sample or prototype

– reproducing the approved product or service

– designing, creating and producing new formats of marketing in different

medium

– copyright clearance and other intellectual property payments

– fees for any contribution by a third party

– fees due for the creation, supply, reproduction or adaptation of any music
or sound recording
 – sums due to any collecting society

– sums due for any waiver

– sums due as a result of a contractual obligation and

– payments due to assignment of copyright and other intellectual property

rights or computer software rights created

• The same issues arise with marketing material as arise in the main clause
heading Material. Here again the question of the ownership and title and
clearance must be looked at separately from physical possession or control of
the marketing.

• You must address in any agreement the following issues:

– Which party is supplying any marketing material?

– At whose cost is the marketing material reproduced, supplied and

delivered?

– Who owns the material to be used and has full title to the copyright and
intellectual property rights and can provide authority for its use?

– Which person or company is paying for any sums due for copyright
clearance and other intellectual property rights?

– Where new marketing material is created who will own that material?

– If an assignment is required to transfer the ownership and title to the

licensor as required under the agreement. Then who makes the
arrangements and pays the fees, costs and expenses due for the
assignment?

• If more than one designer or artist is involved in the creation of many

different forms of new marketing material. Each person will need to
conclude an assignment for even a nominal sum in order to assign and
transfer the copyright and intellectual property rights to the company for
their work and all the rights to it in all media. You would want to include an
obligation to make the assignment in the main agreement.
• Failure to ensure an assignment of all new material which is created in any
form creates problems for any company.

• As you do not own those rights even though you have commissioned the
work to be created. You will be unable to register any logo as a trade mark.
If there is no assignment then you have not acquired copyright and
intellectual property rights and are not the owner and you do not have legal
title.

• An exchange of emails expressing a view that such a term is acceptable is

insufficient. An assignment must be in writing and signed by the person or
company making the assignment. For more on the main clause headings
Assignment and Buy-Out please look at the A-Z.

• It is essential that the question of the ownership and copyright clearance of

the material is considered in some detail. New and separate licences may be
needed for the exploitation in the form of marketing for a project. For more
on these subjects please look at the main clause headings Title and
Copyright Clearance in the A-Z.

• In the same way that material has to be cleared for use so does marketing
material. This is often forgotten and decisions are made to use material for
which permission has either not been obtained or which is outside the use for
which it was originally authorised.

• Where the licensor is supplying material and content for the marketing. The
licensor may agree that the material and content is cleared and no further
sums are due for authorised marketing. Alternatively the licensor may charge
an additional payment for exploitation of the material and content for
marketing.

• Many companies limit the extent to which original text, photographs, images,
film, music and other material can be used and adapted for marketing
material related to a project.

• A distributor may only be allowed to use the same limited duration of

minutes of film for an advertisement or trailer.

• A distributor may only be permitted to reproduce certain limited quotes from

a text in any marketing material.
• The whole aim is to protect the original film, book or product so that it is not
exploited extensively with an impact on sales and revenue.

• There may be a number of persons or companies which have created new

material and contributed to the development of a project. Dependent on their
agreement and their contribution they may or may not have negotiated a right
to a credit or copyright notice for their work and role in the project.

• This may also extend to any marketing material and so you should always
check contractual obligations in terms of the marketing and credits and
copyright notices. For more on these subjects please look at the main clause
headings Credits and Copyright Notice in the A-Z.

• If one company or licensee has paid for the cost of the creation of a blog or
app or website. Unless there is a clause in the agreement as to ownership and
title of such new material it is difficult to argue that the ownership and title
belongs to the licensor or that it is shared between the parties.

• The presumption will be that the company who paid for the new material and
content for marketing has concluded an agreement for its use. Even the
company which has commissioned the work may not own the title and rights
if there has been no assignment from the creator or author who has been
commissioned.

• Where moral rights have been asserted or where they have not but material is
being changed and adapted. The issue of whether the author or director needs
to receive a credit or should provide approval to the proposed changes in any
marketing of the original text or film should be investigated.

• Moral rights should be considered in relation to any marketing material

which may be created. You will need to look at the original agreement and
establish whether there was any assertion of moral rights or if they were
waived and whether the obligation to provide a credit extended to marketing
material. For more on these subjects please look at the subjects Moral
Rights and Waiver in the A-Z.

• In many agreements, contributors, authors and performers provided their

consent to the use of their name, image, photograph and sometimes signature
in relation to any marketing.
• This consent may only be in relation to certain formats and does not mean
that there is the right to licence these images and the name for merchandising
agreements to third parties.

• Marketing in relation to a product or service is not the same as merchandising

and the exploitation of copyright and other intellectual property rights by
means of a licence to a distributor.

• Free samples may be required to be provided to a licensor or person under the

agreement of each and every format of the finalised marketing material.

• Equally, in contrast, some companies do not provide copies of any marketing

material except the brochures and catalogues generally available to the
public.

• A person or company may also seek to restrict the addition of any new
content to any marketing material by a third party.

• A company may for instance specify that there should be:

– No other products or services promoted and marketed in any marketing

material and content

– No product placement in other third party advertisements, events or

programmes

– No sponsorship or funding of any marketing material or content by a

third party or any event, programme or festival associated with it

– No sub-licence granted to any third party or any rights transferred at any

time

• A licensor or author may in fact encourage extensive marketing and

promotion and find it perfectly acceptable that every means of creating
additional attention should be exploited. There may for instance be numerous
cross promotions with other retailers or products or services. In addition
there may be product placement agreements arranged for major feature films,
national television series or for significant events and exhibitions.

• Sponsorship agreements could be concluded with major sporting

 organisations for both events and with individuals. As well as for festivals
and conferences which would develop the brand image and create press,
radio and television coverage.

• A major part of any campaign is the brand, the logos, images and trademarks
associated with the original service or product or film or book. The title and
characters and the associated logo and slogan may be reinvented in different
formats and stylised in many different ways. For more on these subjects
please look at the main clause headings Brand, Goodwill, Logo, Trade
Marks and Domain Name.

• Where in an agreement you are agreeing for the use of certain extracts of a
work whether text, images, photographs or otherwise. It is best to treat this
consent and agreement as if you are issuing a licence for the marketing of
such limited content.

• Limit the purpose and use of the licensed extracts to the licensed use under
the main agreement. If you wish you can set out the licence period or term of
the agreement. The particular methods by which the extracts can be used in
the marketing content. As well as the territory in which the marketing of the
extracts may take place.

• If marketing is allowed on the internet then automatically it is a global

market.

• There may also be an issue as to whether any translations or other language

versions are authorised of the extracts for marketing purposes.

• For more on these subjects please look at the main clause headings
Assignment Period, Exclusivity, Licence Period, Term of the Agreement,
Territory and Rights.

• An additional contractual restriction may be that the other party shall not seek
to register any rights to any copyright, intellectual property rights or trader
marks or any other rights at any time.

• A person or company may require a clause in which a licensee confirms that

they will not use any original extracts or create any new marketing material
which is likely to lead to a civil or criminal action or which is offensive,
obscene, derogatory or defamatory.
• In the United Kingdom under the legislation marketing is defined in a rather
limited way as meaning in relation to products or articles that it is being sold,
let for hire or offered or exposed for sale or hire in the course of business.

• In the present existing global markets this is an inadequate description which

fails to address any core issues of marketing.

• Where you are appointing a distributor or licensee you do not want to be in a

position where a book or product is not published or distributed or sold and
there is no clause upon which you can rely to show that there has been a
breach.

• The more specific you are in an agreement then the more clauses you have to
rely on at a later date to show that the other party did not comply with the
terms of the agreement.

• You may, as a part of the agreement, also require a licensee or distributor to

arrange meetings and regular update reports on the marketing and sales. As
well as providing samples of all the material for your own records.

Drafting clauses relating to marketing

• There may be a clause where an agent agrees to use its best endeavours to
promote and market and obtain orders as in A-Z M.164 in Services.

• Note this is much more onerous than reasonable endeavours.

• Note there is no performance sales target which would be more effective. If

the target was not achieved then this failure could be linked to the
termination of the agreement.

A-Z M.164
The [Agent] agrees that it shall use its best endeavours to promote, market
and obtain orders for the [Product] based on the [Samples] throughout the
Territory for the Term of this Agreement.

• In A-Z M.038 in Film and Television the licensee B confirms rather than
undertakes that it will use its best endeavours.
• Here the focus is on the exploitation of the rights granted and the money.
That is to achieve the maximum defined gross receipts.

A-Z M.038
The [Licensee] confirms that it shall use its best endeavours to exploit the
rights granted under this Agreement and to achieve as far as possible the
maximum Gross Receipts.

• In A-Z M.070 in General Business and Commercial the record company has
agreed that there is a minimum marketing budget in respect of each product
in this case an album.

• A minimum budget could be set for each type of format.

• Note there is no detail on how the marketing budget will be actually spent.

A-Z M.070
The [Record Company] agrees that the minimum marketing budget with
respect to each [Album] shall not be less than [figure/currency].

• There may be specific targets set as in A-Z M.097 in Merchandising. Here

the licensee undertakes to use its best endeavours to achieve a fixed sum of
defined gross receipts.

• There is also an undertaking that the marketing budget for the first calendar
year shall not be less than a fixed sum.

A-Z M.097
The [Licensee] undertakes that it shall use its best endeavours to exploit the
rights granted under this Agreement and as far as possible to achieve a
level of Gross Receipts of not less than [figure/currency] with a marketing
budget for the first calendar year of not less than [figure/currency].

• It is far less onerous to agree to reasonable endeavours as in A-Z M.117 in

Publishing.

• In this clause it is set out what is expected of the publisher and what they
must do rather than a general reference to marketing and promotion.
• This clause is not usual but by raising these issues in negotiations it forces the
publisher to disclose the marketing plan and strategy to you even if it not
adopted in an agreement.

• The publisher shall use its reasonable endeavours to:

– Distribute a flyer to a minimum number in 1.1

– Ensure the work is accurately described in its marketing in 1.2

– Distribute review copies to a minimum number in 1.3

– Advertise in specific newspapers or magazines in 1.4

– Promote the work on all trade stands and produce major promotional
material in the first year in 1.5

– Have a minimum first print run of copies for sale in 1.6

– Ensure the content and cover of the work is of a high professional

standard in 1.7

– Ensure any quotes and statements regarding work from third parties are
approved by the author in 1.8

– There is a minimum marketing budget in 1.9

– There are a minimum number of review copies for author to distribute in

1.10

– That marketing shall be in agreed specified media and formats in 1.11

– Specified release or publication dates in different formats or countries in

1.12

A-Z M.117
The [Publisher] shall use its reasonable endeavours to market the [Work]
effectively as follows:

1.1 Distribute a leaflet to a database of at least [number]

companies/persons who work in the field of [–].
 1.2 Describe the [Work] accurately both in its brochure, marketing
material and catalogue and when supplying information to third
parties.

1.3 Dispatch review or promotional copies to at least [–]

companies/persons.

1.4 Arrange for advertisements in the following

[magazines/newspapers/other].

1.5 For the first year of publication the [Work] will be featured on the
[Publisher’s] stands at all exhibitions and in any major promotions of
books of a similar type.

1.6 Sufficient copies are printed for distribution and sale to the public by
the publication date and in any event not less than [number].

1.7 The cover of the [Work], text and artwork shall be of a high
professional standard.

1.8 All quotes and uses of statements from third parties by the [Publisher]
of the [Work] shall be subject to the approval of the [Author].

1.9 The total marketing budget is not less than [–].

1.10 Review copies will be sent to [number] persons recommended by the

[Author].

1.11 The marketing of the [Work] shall cover the following media [–].

1.12 The [Publisher] shall, unless prevented by force majeure or delay by

the [Author], try to aim for these release dates in each format:
[hardback/paperback/film/DVD/merchandising dates].

• Where a person is engaging the services of a manager or agent as in A-Z

M.153 in Services.

• The manager has agreed to provide his or her services and to use their
reasonable endeavours to obtain work for the person and to promote them in
 all forms of the media.

• A-Z M.153 1.1 to 1.4 provide examples of the type of marketing that is
expected by the manager.

• This clause would match the clause in the agreement where the sportsperson
agrees to provide their services.

• Where the services to be provided by the sportsperson are limited either in

the duration of the agreement or by the countries covered. There would be
reasonable grounds to try to limit the extent of the marketing by the manager.
An exception would necessarily have to be made where it is agreed that
material is displayed on the internet or an app or blog as they would
necessarily involve worldwide coverage.

A-Z M.153
The [Manager] shall use his/her reasonable business endeavours to obtain
work for the services of the [Sportsperson] and to promote and publicise
the [Sportsperson] in all forms of the media in [country] including:

1.1 Programmes, films, DVDs, CDs, CD-Roms, discs, corporate videos,

sound recordings, voice-overs, guest appearances, interviews, game
shows and presentations.

1.2 Advertisements and commercials for all forms of terrestrial, cable,

satellite, digital television and radio, telephone networks and
telecommunication systems, websites and the internet, podcasts, blogs,
advertisements, banner advertisements, newspapers, magazines and
books.

1.3 Merchandising, theatre, biography, articles and features in newspapers,

magazines and books.

1.4 Corporate events, public appearances, sponsorship, endorsement of

products, services and their brands.

• Where a television company has produced a film based on an author’s

treatment as in A-Z M.054 in Film and Television.
• It may be a required clause of the agreement that author A agrees and accepts
that company B has the sole discretion to make decisions on any marketing
and that this should include editorial and artistic control.

A-Z M.054
The [Author] accepts that the editorial and artistic control of the marketing
shall be entirely at the [Company’s] discretion.

• In an assignment in A-Z M.073 in General Business and Commercial.

Assignor A acknowledges that assignee B shall have the sole discretion in
respect of the manner and method of marketing. Assignee B will therefore
make all the decisions and is not required to consult with assignor A.

• The clause is deliberately wide to include the rights assigned and the product
or service.

• The clause applies to all forms of marketing, promotion advertisement and

distribution.

A-Z M.073
The [Assignor] acknowledges that the [Assignee] shall have the sole
discretion as to the manner and method to be used in marketing, promoting,
advertising and distributing the [Product/Work/Services] in respect of the
rights assigned under this Agreement.

• Where a distributor is selling DVDs as in A-Z M.010 in DVD Video and

Discs.

• Then the focus is on the fact that it is the distributors’ decision to decide the:

– production schedule

– release dates

– subscription rental and sale prices

– discounts and promotional offers

– marketing
 A-Z M.010
The [Distributor] shall at all times have the right at their sole discretion to
decide upon the production, schedule, the release dates, the supply,
subscription, sale, rental, and distribution prices, discounts, and price
reduction strategy and promotional offers and the marketing of the
[DVDs/Discs].

• In an agreement for a project as in A-Z M.204 in University Library and

Educational.

• Contributor A has agreed that institute B has sole control of the project and
sole discretion to make all the decisions for all the following matters
regarding the project, work or event to be created:

– management

– production

– budget

– development

– design

– publication

– launch date

– advertisement

– promotion

A-Z M.204
The [Contributor agrees that the [Institute] shall at the [Institutes] sole cost
have the entire control and discretion as to the management, production,
budget, development and design, publication, launch date, advertisement
and promotion of the [Work/Service/Event].

• In an agreement one company may agree to incur all the marketing costs as in
 A-Z M.053 in Film and Television.

• In this clause in 1.1 production company B has undertaken that it shall be

solely responsible for all costs incurred not just in marketing but in the
development, production, distribution, marketing and exploitation of the film
and any parts in any form.

• The addition of the words any parts means that this also applies to extracts.

• The addition of the words any form means it applies to any medium.

• The production company has agreed in 1.1 that the author A is not and will
not be liable for any such payments.

• Note that in addition in 1.1 the production company cannot deduct such sums
from the gross receipts and try to recoup the sums.

• In 1.2 production company B agrees to provides copies and samples at the

production company’s sole cost to author A.

• Samples include publicity, promotional, advertising and packaging material

which is much wider than just marketing.

• In 1.3 there is an obligation on production company B to update author A on

production, exploitation and release dates.

A-Z M.053

1.1 The [Production Company] undertakes that it shall be solely

responsible for all costs incurred and sums due in respect of the
development, production, distribution, marketing and exploitation of
the [Film] and parts in any form. That the [Author] is not and will not
be liable for any such payments and that the [Production Company]
shall not be entitled to deduct them from the Gross Receipts.

1.2 The [Production Company] agrees to provide copies and samples at its
own cost of any publicity, promotional, advertising and packaging
material in respect of the marketing and commercial exploitation of the
[Film] when requested to do so by the [Author].
 1.3 The [Production Company] agrees to keep the [Author] informed of
the progress of the production and exploitation in any media. The
[Author] shall be advised of all proposed release dates in any media at
any time in the Territory.

• In A-Z M.160 in Services the company has agreed to provide samples of

proposed publicity, promotional, advertising and packaging material if they
are requested by the agent.

A-Z M.160
The [Company] agrees at its own cost and expense to provide copies and
samples of any proposed publicity, promotional, advertising and packaging
material in respect of the [Product/Work/Services] upon request by the
[Agent/Artist].

• In A-Z M.206 in University Library and Educational the consortium has

agreed that it shall be liable for the cost of:

– marketing and promotion

– administration

– copyright, contract and intellectual property rights clearances and

payments

• Note the liability is to pay those costs incurred by the institute for the
conference.

• The clause implies or is ambiguous as to whether the consortium is accepting

liability for other costs such as insurance, venue costs and hospitality.

A-Z M.206
The [Consortium] agrees that it shall be liable for the cost and expenses of
any marketing and promotion and administration and copyright and
contractual and intellectual property rights clearances and payments which
may arise in respect of the [Conference] which are incurred by the
[Institute].
• In a publishing agreement with an author as in A-Z M.112 in Publishing.

• Publisher A may agree that it will have entire control of the:

– format, paper, binding, typography, layout and design, including the

jacket

– production, publication, distribution and advertising

– price and terms of sale

• There is no mention of the cost in this clause and whether such sums can be
deducted under sums due to the author or whether they are incurred at
publisher A’s sole cost.

• Publisher B has also agreed to send a copy of the proposed jacket,

biographical material and any marketing quotes to author A before
publication in order to consult with author A.

A-Z M.112

1.1 The [[Publisher] agrees that it shall be solely responsible for all costs
incurred in developing, printing, binding, publishing, distributing,
advertising, promoting, marketing and exploiting the [Work] including
all associated material and that no sums shall be deducted from the
payments due to the [Author] under this Agreement.

1.2 The [Publishers] shall send a copy of the proposed jacket, biographical
material and any marketing quotes to the [Author] in advance of
publication of the [Work] for the purpose of consulting with the
[Author].

• A company may agree to be responsible and liable for all the costs incurred
in order to create, market and sell a product as in A-Z M.098 in
Merchandising.

• Company B undertakes that it shall be solely responsible and pay the costs
for development, production, manufacture, distribution, marketing,
promotion, advertising and exploitation of the products.
• Company B also agrees that any such costs shall not be offset against the
money due to licensor A in royalties.

A-Z M.098
The [Company] undertakes that it shall be solely responsible and bear the
cost of all sums incurred in respect of the development, production,
manufacture, distribution, marketing, promotion, advertising and
exploitation of the [Licensed Articles] and that such sums shall not be
offset against the [Licensor’s] Royalties at any time.

• Where a person is providing a service to a company as in A-Z M.150 in

Services.

• You may require a general consultation clause which relates to areas of

material which are created prior to production, manufacture and distribution.

• In this clause company B agrees to consult with actor A and his or agent.
There is no obligation to adopt the expressed views however.

• Company B has agreed to provide copies of all proposed scripts, credits,

labels, packaging, advertising, promotional, publicity and marketing
material.

• Note there is no mention of the types of formats so it may or may not cover
all media dependent on the drafting of the clause.

A-Z M.150
The [Company] agrees to consult with the [Actor] and the Agent in respect
of all proposed scripts, credits, labels, packaging, advertising, promotional,
publicity and marketing material prior to the production, manufacture and
distribution of the material by the [Company.

• In A-Z M.008 in DVD Video and Discs company B has agreed to provide
copies of specific marketing material prior to production, publication or
distribution to licensor A.

• The material may be in any shape, form or in any media of the DVD and
includes:
 – sales literature, advertising material, brochures, catalogues and posters

– labels and packaging

– shop display material

– promotional extracts and website material

• Company B has agreed to take account of all the changes and amendments
made by licensor A.

• Company B has also agreed to resubmit any new version for approval after
the changes have been made. If the marketing material is not approved it
cannot be released.

A-Z M.008
The [Company] shall submit to the [Licensor] for approval in advance prior
to production, publication, distribution, or release all sales literature,
advertising material, brochures, catalogues, posters, labels, packaging, shop
display material, promotional extracts and website material of the
[DVD/Disc] in any shape, form or media. The [Company] shall take into
account all changes and amendments made by the [Licensor] and shall then
resubmit any such material for approval by the [Licensor]. No material
shall be released unless it has been approved by the [Licensor].

• Marketing may also include the need to acquire the right to use the name,
image, photograph and biography of a person as in A-Z M. 014 in DVD
Video and Discs.

A-Z M.014
The [Distributor] shall be entitled to use the name, photograph, image and
brief biography of the [Writer] in any commercial exploitation of any film
and/or DVD [and/or Disc] in respect of which the [Writer] has provided
his/her services under this Agreement.

• A clause may also prevent an assignee from using any name, likeness or
biography which it is authorised to use for the endorsement of other products
or services as in A-Z M.170 in Services.
• No use by assignee B at any time of the assignor’s name, likeness or
biography must, either expressly or by implication, be an endorsement of any
product or other material which is not the subject of the agreement.

A-Z M.170
The [Assignee] shall be entitled to use the [Assignor’s] name, likeness and
biography in connection with the exploitation of the rights assigned
hereunder. Provided that no use shall at any time express or imply an
endorsement by the [Assignor] of any product, or other material other than
the subject matter of this Agreement.

• There may be a specific clause required in an agreement which provides

express permission for extracts of a film or book to be used in other formats
for marketing purposes as in A-Z M.059 in Film and Television.

• Licensee B has permission and a licence to use a maximum duration of the

film which must be the same extracts across all media.

A-Z M.059
The [Licensee] shall be entitled to use, license and permit the use of
excerpts of the [Film] and/or parts for advertising, publicity, marketing,
sponsorship/and/or endorsement purposes only of the [Film] and/or the
[Company] and/or the [Sequel] and/or the [Products] for newspapers,
magazines, television, radio, video, DVD, CD-Roms, CDs, Discs, games,
banner advertisements on websites and/or downloads from the internet to a
mobile and/or landline telephone, television, computer and/or some other
gadget. Provided that the total aggregate duration shall not exceed
[number] [minutes] of the [Film] and it shall be the same extracts used
across all the media.

• Where a contributor is part of project as in A-Z M.084 in General Business

and Commercial and there has been an assignment of the product of their
services and work.

• You may need to make it very clear that there are no additional payments due
for any other forms of marketing and exploitation. You could also include in
the clause examples of the areas covered.
• In this clause the company can exploit and market any part of the
contributor’s work in any media without any further sums being paid.

A-Z M.084
The [Company] shall be entitled promote, market and/or exploit the
product of the [Contributors] work and/or any part on the [Website] in any
media including but not limited to advertisements, television, radio,
mobiles, the internet, blogs, downloads, merchandising, books, magazines
and newspapers without any further payment.

• If a sponsor is providing funding and is the main sponsor of the event as in

A-Z M.176 in Sponsorship. The agreement may refer to the event and
marketing but not make any reference to the sponsor creating its own
material and whether it can use any third party logos or film or make
recordings at the event.

• In this clause organiser B agrees that they do not have any right of approval
over the advertising and publicity material issued by sponsor A regarding the
event.

• Note that is not the same as the use of the organiser’s name and logo which
would be dealt with in a separate clause.

A-Z M.176
The [Organisers’] agree that the [Sponsor] shall be entitled to create its
own advertising and publicity material in respect of the [Sponsor’s]
association with the [Festival/Event] and that the [Organisers] shall not
have the right of approval of such material issued by the [Sponsor].

• If a sample has been approved then the expectation is that the final version
will be an exact copy as set out in A-Z M.092 in Merchandising.

• Licensee B has agreed that the final licensed product and any wrappings,
containers, contents, labels, packaging, displays, articles, marketing,
publicity or advertising materials shall be the same as the samples which are
approved by the licensee under another clause in the agreement.

A-Z M.092
 The [Licensee] shall ensure that the [Licensed Articles] together with all
wrappings, containers, contents, labels, packaging, displays, articles,
marketing, publicity or advertising materials and the like conform in all
respects with the samples approved pursuant to Clause [–].

• A regular sales, advertising and marketing report may be made by licensee B

as in A-Z M.100 in Merchandising.

• The licensee may also be obliged to supply samples of material at the

licensee’s cost which has been distributed so that licensor A is kept up to
date.

A-Z M.100
The [Licensee] shall provide a regular marketing, advertising and sales
report to the [Licensor] and supply examples of all material which has been
distributed at the [Licensees] cost.

• A company may agree to consult with a person as regard the appointment of

third parties as in A-Z M.126 in Publishing.

• Although this is not very common it is a useful mechanism to be consulted

for your views even if they cannot be binding as you are informed of the
proposal in advance.

• Here publisher B agrees to consult with the author regarding:

– The appointment of third parties to exploit the work

– Proposed release dates

• The publisher also agrees to supply sample copies of all formats free of
charge to the author.

A-Z M.126

1.1 The [Publisher] shall consult with the [Author] in respect of the
appointment of any third party to exploit the [Work].

1.2 The [Publisher] shall provide the [Author] with details of the proposed
 release dates in respect of the exploitation of the [Work].

1.3 The [Publisher] agrees to provide the [Author] with not less than
[number] copies of the [Work] in each and every form in which it is
made available to the public free of charge to the [Author].

• Marketing also includes press releases as in A-Z M.141 in Purchase and

Supply of Products.

• Seller A has agreed not to issue any statement to the media regarding the
product or supplier B without first consulting the press office of the supplier
B.

• Seller A has also agreed not to:

– knowingly and with malice deliberately

– bring supplier B or its product

– into disrepute or act in a derogatory or offensive manner

– or cause loss, damage to their business or reputation

• The aim of this clause is to warn the seller not to issue press releases which
are derogatory at a later date and to damage sales.

• Note none of this clause relates to other actions by the seller. It is limited to
statements to the media.

A-Z M.141
The [Seller] agrees that it shall not issue any statement to the media
regarding the [Product] and/or the [Supplier] without the prior consultation
with the press office of the [Supplier]. The [Seller] agrees that it shall not
knowingly and with malice deliberately bring the [Supplier] or its
[Product] into disrepute or act in a derogatory or offensive manner or cause
loss, damage to their business or reputation.
 MATERIAL

• There are over two hundred clauses relating to Material in the A-Z from A-Z
M.207 to A-Z M.412.

• This subject can be cross referenced with the following main clause headings
in the A-Z of Acceptance, Access, Advertising, Assignment, Audio Files,
Banner Advertisements, Blog, Books, Brand, Budget, Collecting
Societies, Commission, Computer Generated, Consultation, Copyright
Clearance, Copyright Notice, Costs, Credits, Data, Data Protection,
Delivery, Designs, Disclaimer, Distribution Expenses, Domain Name,
Downloading, Dramatic Work, Editorial Control, Electronic, Error,
Exclusivity, Expenses, Facility Access, Films, Index, Insurance,
Laboratory Access, Language, Licence Period, Logo, Loss, Marketing,
Musical Work, New Editions, Omission, Order, Patent, Performers,
Podcast, Product Liability, Publicity, Quality Control, Recordings,
Rejection, Scripts, Sound Recordings, Term of the Agreement,
Territory, Title, Trade Marks, Waiver, Website and Work.

The purpose and significance of clauses relating to material

• Material in this section is used in the context of physical material which is

supplied or a service which is provided or products which are distributed or a
website or app which is created and developed.

• Material can be defined to include any number of types of formats and be

very narrow or wide. Examples include:

– Books, newspapers, magazines, comics, stationery, cards, posters,

stickers, calendars

– Images, graphics, photographs, drawings, illustrations, plans, sketches,

electronically generated material, design rights, background tables, maps,
 computer generated art

– Logos, trade marks, icons, characters, domain names, trading names,

slogans, catchphrases

– Banners, links, blogs, website and internet material, and any material to
be downloaded

– Films, sound recordings and music, DVDs, CD-Roms, games,

advertisements, infomercials

– Products, articles, toys, merchandising, sponsorship, endorsement and

product placement material

– All forms of electronic and digital methods, computer software, landline

and mobile telephone and any telecommunication system material

– Any other format in media of any nature whether in existence now or

created in the future

– Any adaptations and translations in different languages

• The physical possession or the control of use of material of any sort is not the
same as being the copyright owner of the copyright or the owner of any of
the other intellectual property rights or other rights.

• In any agreement the issue of the actual material should be looked at as a

separate matter from that of the copyright and rights.

• There is no presumption that, as you have physical possession of the material,

that you can necessarily exploit it and use it as you wish.

• All material of whatever type is subject to the legislation which governs who
has the actual right to exploit the material.

• No presumption can be made that a third party does not own the copyright or
other intellectual property rights just because there is no copyright notice or
credit or trade mark or other evidence of ownership on the material itself or
any packaging or associated material.
• Do not make an assumption that because a company supplies you with
material and content that it is necessarily cleared for the use that you wish to
make of it or that if the clearance has been obtained that it has been paid for.

• There are many organisations, including collecting societies, supplying

material which they do not own and which they then purport to licence to
third parties.

• You should always question the source of the material and put the supplier of
the material to proof as to the issue of ownership.

• Failure to do so at an early stage can result in material being incorporated or

used in a project which later turns out not to be either cleared or originally
owned by the supplier.

• If you know for a fact that the material supplied has been created by a
particular person or company who is not the distributor who is supplying it to
you. There is nothing wrong with seeking confirmation and assurances from
the original copyright owner that there is no issue.

• It is not unusual for artist or photographer B to have licensed original artwork

or photographs to a company A for a specific purpose. Company A then tries
to licence that material to third parties C for other purposes when they did
not acquire those rights from original artist or photographer B.

• If those photographs or artwork is then included under licence from company

A by you C. You could potentially be involved in a legal action and claim.
This could be avoided by more work in the beginning to verify the source of
the rights and relying on more than a contractual assurance by the company.

• There are different types of material based on a time line in relation to the
agreement these include:

– Material which exists prior to the agreement

– Material which is created or developed as a result of the agreement which

did not exist at the time of the agreement. This will include the prototype
and finished version, a new logo or name

– Material which exists at the expiry or termination or end of the

 agreement

– Material which is created in relation to packaging

– Material which is created for marketing, advertising and promotional

purposes

– Material which exists for each new adapted version and each new
language

• In order to create a final version of a website there will be new material

developed which will be sound recordings, films, photographs, text, images,
logos, slogans and trade marks that are created and exist in many different
formats.

• All these formats exist individually and there may be separate copyright and
intellectual property rights created and held in each. They are then all
brought together in a different format for the final finished website.

• The definition of the term material can be used to define a long list of
physical material which needs to be provided under an agreement.

• The definition may also seek to address the issue of functionality or quality
but it is much better that there are additional clauses in the agreement which
deal with these matters.

• The definition of the term can have many different names and may specify a
wide variety of types of material in different formats and medium.

• Listing all the content and material to be supplied a definition at the front of
the agreement makes it easier to draft the relevant clauses as you do not have
to constantly repeat the list in the main part of the agreement.

• The material or content may be defined as being purchased by you and

delivered as products.

• Or it may be the material which is to be created and developed as a result of a

service which a person or company is providing.

• The aim is to set out in detail exactly what is to be delivered or created so that
 there is no dispute at a later date.

• Alternatives to the actual work to be completed or the material to be

delivered may be defined by using a wide selection of definitions which may
include the following:

– the defined treatment

– the defined scripts

– the defined synopsis

– the defined blog

– the defined app

– the defined product

– the defined project

– the defined licensed articles

– the defined character

– the defined designs

– the defined graphic work

– the defined stills

– the defined photographs

– the defined licensors’ logo

– the defined programme and the defined programme material

– the defined series and defined series material

– the defined film in conjunction with the defined film package

– the defined sound recordings

 – the defined format and the defined format package

– the defined work in conjunction with the defined work material

– the defined delivery items

– the defined website in conjunction with the defined website material

• It is possible when defining the material to be delivered or supplied to be as

general or specific as you wish. This principle applies whatever the exact
nature of the agreement.

• If the size, appearance, quality and number of the items you want to be
delivered matter and are fundamental to your contract. It is advisable to set
out in the agreement in great detail exactly what is expected. Do not put a
general description in the agreement and seek to rely on a more specific
description in a quotation document which is not included.

• If you do not want any colour variation then put that requirement in the
agreement and link it to delivery, rejection and termination of the agreement.
For more on these subjects please look at the main clause headings in the A-
Z of Delivery, Rejection and Termination.

• If you expect a certain quality and content for the products which are to be
produced and distributed by a company. You will want to inspect samples
and so include clauses in the agreement which relate to consultation or
approval of the samples and prototypes.

• As well as quality control clauses which set a standard for content and
appearance of not just the product but also any associated material. It may
also be necessary or practical to ensure that there be certain assessments and
tests carried out for health and safety reasons. For more on these topics
please look at the main clause headings in the A-Z of Consultation, Quality
Control and Product Liability.

• It helps in any agreement to create a definition of the app, film or manuscript

or product which is to be created and developed. As well as the material
which is to be supplied by either party to the agreement.

• It then makes it easier to ensure that other matters in respect of that material
 are dealt with so it is clear what each person or company must do or pay for.

• There are a number of other topics which have an impact on the material
either supplied, created or distributed. These include:

– ownership and title of material

– assignment, buy-out or licence and rights.

– copyright clearance and other intellectual property rights clearance

– other consents and permissions and contractual obligations

– payments, costs for clearances and collecting societies

– moral rights, waivers, credits and copyright notices

– editorial control and consultation

– delivery, risk, damage, loss and error

– rejection and termination

– marketing and publicity

– third parties and adaptation.

– liability, product liability, legal proceedings and insurance.

Drafting clauses relating to material

• In A-Z M.274 in General Business and Commercial the original designs have
been commissioned which are described in full in a schedule which forms
part of the agreement.

A-Z M.274
‘The Designs’ shall be the original concept and two-dimensional designs
for a range of items described as follows [–]. Full details of the Designs are
attached to and form part of this Agreement in Schedule [–].
• The definition of the designs in an agreement may refer to the two-
dimensional drawings as well as three-dimensional finished products as in A-
Z M.339 in Merchandising.

• The definition is trying to cover all work done by the designer under the
agreement and not just that listed as part of a range of merchandising.

A-Z M.339
‘The Designs’ shall be the original concept and two-dimensional designs
for a range of [–] and other products to be created and provided by the
[Designer]. The Design shall include all such designs which are set out in
the attached Schedule [–] and form part of this Agreement together with
such other designs as are created by the [Designer] in accordance with the
terms of this Agreement

• The definition of graphic work in A-Z M.277 in General Business and

Commercial more closely follows the legislation on the United Kingdom
which results in a very wide definition.

• The definition could be limited to refer to just a defined illustration or series

of drawings.

A-Z M.277
‘Graphic Work’ shall include any painting, drawing, diagram, map, chart
or plan and any engraving, etching, lithograph, woodcut or similar work.

• Where there is a book or website to be created which would be referred to as

the defined work in the agreement.

• Then artwork may be defined separately even though it is intended to be

included as part of the final version of the book or website as in A-Z M.279
in General Business and Commercial.

• This definition is quite wide and again closely follows the legislation in the
United Kingdom. There is however no obligation to do so and the artwork
could be defined as the maps or diagrams only.

A-Z M.279
‘The Artwork’ shall mean any photographs, drawings, sketches, pictures,
 diagrams, maps or any other illustrations or visual images which are
intended to be included as part of the [Work].

• In A-Z M.356 in Publishing the general definition is extended to cover any

other material which is listed which forms part of the defined work.

A-Z M.356
‘The Artwork’ shall mean any photograph, drawing, sketch, picture,
diagram, map, chart, plans, graphic work or any other illustration or any
engraving, lithograph, woodcut or similar work and any other material
listed [–] which forms part of or is attached to the [Work].

• Where a book has already been published then the title and reference code
may be used in the definition as in A-Z M.352 in Publishing.

• Note the reference to the original work of the author and that there is a
separate reference to the artwork or photographs.

A-Z M.352
‘The Author’s Work’ shall mean the original work of the [Author]
including the Artwork entitled [–] published by [–] ISBN reference [–].

• Where a book or script has not been written then it is important to ensure
some flexibility if possible in the title and length if it is not certain as in A-Z
M.353 in Publishing.

• Here the heading of the definition uses the word the work.

• The definition makes reference to the fact that it is a book which includes
artwork.

• That the book is based on the synopsis. A synopsis may be included or

excluded as part of the agreement. If it is included it should be attached and
form part of the agreement.

• The title is only provisional.

• There is only an approximate length.

 A-Z M.353
‘The Work’ shall be the following book including the artwork based on the
synopsis provisionally entitled [–] which shall consist of approximately
[number] typed A4 pages.

• A clause may make it clear as to who is to pay the cost of the supply of
material as in A-Z M.351 in Publishing.

• Although there is an implication, this clause is not clear whether the cost
includes all copyright clearance payments as well.

A-Z M.351
The [Author] shall deliver [two] copies of the complete typescript of the
[Work] consisting of approximately [Number] words ready for setting by
the printer together with any artwork, photographs or illustrations [at the
[Authors] cost and expense].

• The definition of the photographs in A-Z M.281 in General Business and

Commercial refers to both the physical material and the intellectual property
rights.

• The definition includes a wide choice of formats – negatives, stills,

transparencies, prints – however they may be stored or reproduced.

A-Z M.281
‘Photographs’ shall mean the physical and intellectual property rights in
the negatives, stills, transparencies, images and prints howsoever stored,
reproduced or supplied [which is not a film.]

• In A-Z M.284 in General Business and Commercial the focus is on the

distinction between a photograph and a film and more closely follows the
legislation in the United Kingdom.

A-Z M.284
‘The Photographs’ shall mean all recordings of light or other radiation on
any medium on which an image is reproduced or from which an image may
by any means be reproduced and which is not part of a film commissioned
by the [person] or the [Company] or taken by them directly and shall
 include any negatives or prints howsoever stored or reproduced.

• Whereas there is a more practical approach to the definition of stills in A-Z

M.286 in General Business and Commercial.

• The detail of the title, reference and description of the stills is specified.

• It is also agreed that the stills are supplied at the licensee’s cost and risk.

A-Z M.286
‘The Stills’ shall mean the following photographs: Reference Code [–]
Title and Description [–] Source Material [–] to be reproduced and supplied
by the [Licensor] to the [Licensee] at the [Licensee’s] cost and risk.

• Where there is a process of development of a prototype or sample as in A-Z

M.341 in Merchandising. Then you may choose to define this so that you
can ensure that it is delivered and approved quite separately from any final
licensed article.

• The prototype is defined as the three dimensional representation of the

defined designs.

• The approved prototype forms the basis of the future licensed articles.

A-Z M.341
‘The Prototype’ shall be the three-dimensional reproductions of the
Designs which are the final products upon which the manufacture of the
[Licensed Articles] are to be based.

• Within the same agreement therefore the licensed articles which are the final
version which is sold and distributed are based on the defined prototype.

• The licensed articles are defined in A-Z M.321 in Merchandising as the three
dimensional reproductions based on the prototype to be manufactured or
made and distributed or sold by the company B.

A-Z M.321
‘The Licensed Articles’ shall be the three-dimensional reproductions based
 on the prototype to be manufactured and distributed by the [Company].

• A character from a film or a book may be licensed to licensee B as in A-Z

M.327 in Merchandising.

• The whole definition here therefore relates to the use of the character in the
licensed articles.

• The definition allows for a detailed description of the character to be attached

and form part of the agreement.

• It may be that the character and all its detail must be followed quite precisely
and that the licensee does not have any right to deviate from the existing
colour, name, design and costume.

A-Z M.327
‘The Licensed Article’ shall be the licensed product to be produced and
distributed by the [Licensee] which shall be based on or derived from the
[Character] and which is described as follows [–]. Full details of the
[Licensed Article] are attached to and form part of this Agreement in
Schedule [Colour, size, name, design, material, accessories].

• Another method is to put a definition of the character first and not to put it
within the definition of the licensed articles.

• There is a definition of the character in A-Z M.325 in Merchandising.

• The character is defined as an original and novel concept.

• Details are given of the name of the character and any associated trade mark
or logo.

• A full description, drawings and photographs can then be attached and form
part of the agreement.

A-Z M.325
‘The Character’ shall be the original concept and novel idea for a character
which is briefly described as follows [Name/Trade Mark/Logo]. Full
details of the character are attached to and form part of this Agreement.
• Where there is a summary of a project then you may use the expression the
treatment as in A-Z M.256 in Film and Television.

• The treatment is the outline and structure of the proposed programme.

• A copy of the treatment is attached to and forms part of the agreement.

• If the treatment or synopsis is not followed then it would be a breach of the

agreement.

A-Z M.256
‘The Treatment’ shall be the summary of the contents and structure of the
[Programme]. A copy of the treatment is attached to and forms part of this
Agreement.

• It is important to realise that a sound track or sound recording is not defined

in legislation in the United Kingdom as part of the film. The sound recording
may therefore be referred to as a separate item as in A-Z M.221 in DVD
Video and Discs.

• You may however choose to define the film as including the soundtrack but it
is always useful to make reference to it as well as any language in which you
expect it to be supplied.

• In this clause the DVD is defined to be the film and sound recording based on
the treatment.

• The duration of the DVD is stated and a brief description is also provided.

A-Z M.221
‘The [DVD/Video/Disc] ‘shall be the following film and any associated
sound recording based on the Treatment entitled [–] which shall be [–]
minutes in duration and briefly described as follows [–].

• In A-Z M.251 the programme is defined as the film and the sound recording.

• The details stated include the title, duration, and the fact that it is in the
English language.
 A-Z M.251
‘The Programme’ shall be the film and any associated sound recording
entitled [Title] which shall be [–] minutes] in duration in [colour/black and
white] in the [English] language.

• In relation to the definition of a feature film as in A-Z M.250 in Film and

Television. The focus is on the title of the film and the book or work on
which the film is based.

• Additional descriptive details are then added such as the name of the
screenwriter, director, composer, main actors and the duration and format.

A-Z M.250
‘The Film’ means a feature length cinematograph film entitled [Title]
based on [Work] of which the following are brief particulars:

• Screenwriter [–] Individual Producer [–] Director [–]

• Composer(s) [–] Principal Artist [–]

• Running Time [–] [Colour Process/Gauge/Format] [–].

• Although format rights may or may not exist in some countries that does not
mean they cannot be defined, licensed and exploited as in A-Z M.255 in
Film and Television.

• This type of definition of format can be used for a format for a quiz or game
or a competition or a series of films based on a book.

• The essence of this definition is that as much detail as possible about the
format is set out in an appendix and attached as part of the agreement.

• The reason for the extensive definition and description is that this will form
the basis for the grant of the licence for the use of the format.

A-Z M.255
‘The Format’ shall be the original concept and novel idea for the structure
of a series of films which are briefly described as follows [–]. Full details
of which are attached to and form part of this Agreement in Appendix [–].
 [Title, script, characters, plot, storyline, location, intellectual property
rights, running order, sequence, design and layout of set, presentation of
questions and answers, score system, prizes, slogans, graphics, costumes,
telephone line recordings, website material and text messaging material
and icons].

• The definition of the website material is entirely based on content which is

found on, or associated with, a website in A-Z M.302 in Internet and
Websites.

• The definition includes all the content and any domain name, web reference
and any associated computer software.

• As well as advertising, promotional and publicity material and other different

forms of material.

• Note this clause only relates to material specified in the definition owned and
controlled by the person specified in the agreement not any third party.

• The benefit of this wide definition is that it can be used to provide a grant of
the licence.

• It can also be used to ensure that one contracting party confirms that it has
cleared and paid for all the copyright and other intellectual property rights in
the material listed.

A-Z M.302
‘The Website Material’ shall mean the domain name and website reference
[specify] and all the content, databases, downloads and associated material,
but not any other website. The material shall include text, scripts, titles,
index, data, footnotes, headings, publications, images, graphics,
photographs, drawings, illustrations, plans, sketches, computer generated
material, design rights, background, tables, maps, sounds, sounds, sound
recordings, music, ringtones, icons, logos, trade marks, icons, characters,
trading names, slogans, catchphrases, banners, bookmarks, borders,
captions, clip art, and any advertising, promotional and publicity material
and associated computer software, discs, CD-Roms and other methods of
storage and retrieval of the material held, owned and/or controlled by
[Name].
• An agreement may require material to be delivered so that it can be
transmitted or broadcast or reproduced as in A-Z M.226 in DVD Video and
Discs.

• The emphasis here is on the delivery of suitable technical material and a

laboratory access letter for additional material or copies.

• The matters in 1.3 to 1.7 are all required for the successful administration and
marketing of the project.

• 1.6 and 1.7 allow a decision to be made as to which material is available to

use for marketing and promotional purposes and for the correct credits and
copyright notices, logos and trade marks to be reproduced.

A-Z M.226
‘The Material’ shall be the following material of the [Film]:

1.1 Technical material suitable for [purpose] comprising of [–].

1.2 Laboratory access letter.

1.3 Typed final script.

1.4 Typed running order.

1.5 Music cue sheet.

1.6 Labels, packaging, any master material of trademarks, service marks,

images of artists, stills, slogans, and any advertising, promotional,
publicity and marketing material.

1.7 A full and comprehensive statement [with extracts of supporting

documents if required] setting out all contractual obligations,
copyright, consents, releases, moral right assertions and waivers, trade
marks, service marks, logos, credits, images, copyright notices,
copyright warnings and disclaimers in relation to the [Film] and any
other material to be supplied, produced or created including packaging,
publicity and advertising. The detail must include a description, image,
duration, position, colour, context and background.
• Supplying, creating and reproducing material may incur additional costs as in
A-Z M.408 in Sponsorship.

• Where company A incurs additional costs and expenses to market sponsor B

at the event. Then the sponsor shall pay those additional costs in advance.

• A list is provided of the types of examples where additional costs may be

incurred. These extend beyond marketing to security, additional staff and
transport.

A-Z M.408
Where the [Company] has to incur additional costs and expenses in order
to reproduce, adapt and/or display, exhibit and promote and market the
[Sponsor] at the [Event/Festival]. Then the [Sponsor] shall be obliged to
pay for all such additional costs and expenses in advance upon request by
the [Company]. The [Sponsor] agrees and accepts that these additional
costs may include flyers, brochure, posters, transport, labour, equipment,
security, hire of staff, reproduction and manufacture costs, freight,
insurance and administration.

• An electronic or digital file in A-Z M.305 in Internet and Websites is broadly

defined to be consistent with the interpretation under the legislation in the
United Kingdom which focuses on the medium and method by which the
material is supplied or distributed rather than the form of the material itself.

A-Z M.305
‘The Electronic Digital File’ shall mean the digitised [and compressed]
record of the words, text, sounds, music, logos, images, graphics, film,
recordings and sound recordings which can be conveyed, transferred,
supplied and/or distributed by electric, magnetic, electro-magnetic, electro-
chemical, electro-mechanical means through any method or material and/or
any telecommunication system and/or by any other means in electronic
form [whether in existence now and/or created in the future]. This shall
include but not be limited to use, display, exhibit, supply, license,
reproduce, distribute and exploit in any medium and material in relation to
the internet, websites, computers, telephones, mobiles, and any other
gadgets and devices in any shape, form, process and method.
• There is no reason to use the definition of electronic or any reference to
software or other processes when defining an app.

• The focus can be not on the method of production and distribution but on the
practical aspects of what it is called and whether it is available for free or
sold as in A-Z M.312 in Internet and Websites.

• The reference to a website may be replaced by an online store or other

platform.

A-Z M.312
‘The App’ is entitled [specify] and features [specify] and is available to the
public as a free download and/or accessible from [website] on [specify].

• A project may involve many different types of material as in A-Z M.383 in

Publishing.

• The project is summarised and defined by reference to all the elements which
are to be created by the distributor B.

• Note the definition also acknowledges that the project is based on an original
concept by another third party referred to as the author or creator.

A-Z M.383
‘The Project’ shall be the website, app, blog and associated educational
published works to be created, developed and developed by the
[Distributor] based on the original concept and work of [Author].

• You may need to create a definition which covers the work produced by a
contributor under an agreement as in A-Z M.306 in Internet and Websites.

• In this agreement the contributor has provided an interview for a podcast. The
definition is needed so that the product of the contributor’s work is then
assigned to the company.

• The definition also defines the scope of the work to be provided and
completed by the contributor and a summary attached which forms part of
the agreement.
 A-Z M.306
‘The Contributor’s Work’ shall mean the audiovisual interview with the
[Contributor] on the subject of [specify] which shall be filmed, recorded
and edited for a Podcast for the [Company]. A summary of which is
attached and forms part of this Agreement in Schedule [–].

• A contributor’s work may be a report or an article for a magazine or a book

as in A-Z M.410 in University Library and Educational.

• Here the definition relates to the fact that the work is original.

• The contributor is supplying a preface, artwork, photographs, and index and

an agreed number of pages of text.

• In this definition there is also reference to the synopsis and a copy is attached
and forms part of the agreement.

A-Z M.410
‘The Contributor’s Work’ shall mean the original work of the [Contributor]
including the preface, artwork, photographs, index and headings based on
the synopsis provisionally entitled [–] which shall consist of approximately
[number] typed A4 pages. A copy of the synopsis is attached to and forms
part of this Agreement.

• Where a definition of products or services is required it may be very detailed

as in A-Z M.389 in Purchase and Supply of Products.

• A two-dimensional representation may be attached or photographs of the

three-dimensional version and finished product.

• The aim in this definition is not only to describe the product or service but
also to set out the legal and contractual obligations which may exist and any
sums which may become due if the product is exploited.

• There would be additional clauses which also deal with these matters.

A-Z M.389
‘The Company’s Products’ shall mean the products and services of the
[Company] which is briefly described as follows [–].
 A two dimensional copy of the [Company’s Products] is attached to and
forms part of this Agreement in Schedule [–] setting out all intellectual
property rights and where they should be displayed or located including
copyright, trade marks, service marks, logos, designs, slogans, text,
artwork, recordings, scripts, music, photographs, artistes, graphics,
computer generated material, all consents, releases, moral rights,
contractual obligations, clearances and releases and any sums owed and
due.

• It is also possible to keep the definition quite simple and refer to logos or
trade marks separately from the product or services as in A-Z M.390 in
Purchase and Supply of Products.

• The licensor’s logo is defined to cover any trade mark, service mark, design,
logo, slogan, text, graphics or other material.

• The main function of this definition is to attach examples in a schedule and to

confirm that they form part of the agreement.

A-Z M.390
‘The Licensor’s Logo’ shall be the following trade mark, service mark,
design or logo, slogan, text, graphics or other material. A two-dimensional
copy of the [Licensor’s Logo] is attached to and forms part of this
Agreement in Schedule [–].

• In an agreement where there is a sponsor funding a sportsperson as in A-Z

M.403 in Sponsorship.

• The sponsor A may be providing at its sole cost products, clothing,

equipment, facilities and medical cover.

A-Z M.403
The [Sponsor] agrees to provide the following items and benefits to the
[Sportsperson] at the [Sponsor’s] sole cost and expense for the duration of
this Agreement [Sponsor’s Product/Clothing/Equipment/Facilities/Medical
Benefits/Other].

Restrictions and undertakings regarding use

• There may be restrictions and other contractual undertakings set out in an
agreement which effect the use of material.

• In A-Z M.210 in DVD Video and Discs licensee B is providing undertakings

not to reproduce or exploit the material except as set out in the agreement.

A-Z M.210
The [Licensee] undertakes not to supply, sell, hire, rent, transfer and/or
distribute to any third party any of the material supplied in accordance with
this Agreement. Neither shall the [Licensee] reproduce or exploit and/or
authorize any third party to do so except as specified in this Agreement.

• There may be a confirmation that a film or book or music does not or will
contain any material by a third party.

• In A-Z M.225 in DVD Video and Discs the assignor A confirms that only the
musical work shall be used unless the assignee B provides its consent in
advance.

A-Z M.225
The [Assignor] confirms that the film shall not contain any other music,
sound recordings, recordings or sound effects other than the [Musical
Work] unless there is prior written consent by the [Assignee].

• A clause may be necessary in relation to material or a work which has been

delivered that a person or author A may not make any adaptation as in A-Z
M.266 in Film and Television.

• This is a very wide restriction which applies not only to any adaptation of the
work in whole or part, but also anything strikingly similar.

A-Z M.266
The [Author] agrees and undertakes that he/she shall not have the right to
create, develop, adapt and/or produce any sequel, strikingly similar work or
material and/or subsequent film, mini-series, DVD, storyline, publication,
or otherwise in any media at any time based on the whole and/or part of the
[Work].
• You may include an acknowledgement or confirmation that one party does
not retain any further rights or interest either in the work itself or the
associated material.

• In A-Z M.297 in General Business and Commercial the assignor A agrees

that it shall not retain any right or interest in either the defined work or the
defined work material.

A-Z M.297
The [Assignor] agrees that it shall not retain any right and/or interest in the
[Work] and/or the [Work Material].

• If a product or article is to be created, whatever the medium, then it makes

sense to have a sample or prototype delivered as in A-Z M.328 in
Merchandising.

• In this clause licensee B agrees to deliver the samples of the licensed articles
in the exact form and material in which it would like to manufacture the
licensed articles.

• The licensee pays for the cost of the samples and cannot proceed until
licensor A provides written approval.

A-Z M.328
The [Licensee] agrees that the [Licensor] shall be entitled to approve the
[Licensed Articles] prior to manufacture and distribution. The [Licensee]
undertakes to supply such samples of the [Licensed Articles] in the exact
form and material in which the [Licensee] proposes to manufacture,
distribute, market, advertise, promote and sell the [Licensed Articles] at the
[Licensee’s] sole cost. The [Licensee] acknowledges that such approval
must be in writing from the [Licensor].

• A licensor or assignor may require free samples of a licensed product or

article as in A-Z M.329 in Merchandising.

• The number is specified and the fact that licensee B must pay for the cost.

A-Z M.329
The [Licensee] agrees to provide the [Licensor] with not less than [number]
 [Licensed Articles] in each and every form in which they are released
and/or sold to the general public at the [Licensee’s] cost./

• If a product or service has a logo or trade mark or there is a potential domain

name associated with a title or character. Then you may not wish a licensee
to attempt to register any interest as in A-Z M.347 in Publishing.

• The issue is specifically dealt with in this clause and there is a contractual
obligation by licensee B not to register certain matters.

• Either as a domain name, trade mark or with any collecting society or

international organisation.

• The scope of the restriction relates to the original work as well as any
adaptation and includes any title, fictional character name or place, catch
phrases, images, text and translation in any language.

A-Z M.347
The [Licensee] agrees that it shall not be entitled to register as a domain
name, trade mark and/or with any collecting society and/or government
and/or international organisation any title, chapter headings and/or other
any fictional character names, places names, catch phrases and/or any other
images, text and/or themes associated with the [Work] and/or any part
either in its original form and/or as adapted under this Agreement including
any translation in any language.
 MEDIATION

• There are 13 clauses in the A-Z relating to Mediation from A-Z M.413 to A-
Z M.425. All the clauses are under the sub-heading General Business and
Commercial.

• This section can be cross referenced with the main clause headings in the A-
Z of Arbitration, Default, Disputes, Indemnity, Legal Proceedings,
Liability, Novation, Product Liability, Settlement, Suspension and
Termination.

• The sections on Indemnity, Legal Proceedings, Liability, Novation,

Settlement and Termination in this work may also be useful.

What is mediation?

• Mediation is a very simple concept which means to find the middle or the
median.

• The fundamental status of a mediator is one who is in the middle of the

dispute and whose function is to find a mutually agreeable solution to the
differences between the parties.

• Where there are opposing views or different interpretations of a clause or a

matter was never raised in a contract. A mediator will aim to resolve the
dispute by a process of liaison and discussion with both parties to find a
resolution and settlement of the matter between them without resort to legal
proceedings.

• The procedure and process of mediation may vary and who bears the costs of
the mediation may also differ. The form of mediation may be agreed in
advance in a clause or clauses in the original agreement by the parties before
a dispute arises.
• The mediation clause may nominate a trade or governing organisation to be
appointed as a mediator. That organisation may have its own policy
guidelines in place for any mediation procedure.

• The parties to an agreement may agree to appoint a named individual who is

qualified to act as a mediator.

Alternative dispute resolution, arbitration and appointment of an

expert

• There are many different forms of mediation and alternative dispute

resolution is simply one form of mediation.

• The concept of alternative dispute resolution or its abbreviated term, ADR

does not have any particular legal status. It is merely a descriptive term used
in a practice direction to describe alternatives routes to resolve disputes to try
to avoid litigation.

• The subject heading of alternative dispute resolution in the United Kingdom

is raised in the Practice Direction for Civil Procedure Rules for the Civil
Courts. In the section entitled Pre-Action Conduct and Direction for
Protocols there is a reference to Settlement and Alternative Dispute
Resolution.

• The reference is as follows:

– Litigation should be a last resort

– As part of a relevant pre-action protocol or this Practice Direction, the

parties should consider whether negotiation or some other form of ADR
might enable them to settle their dispute without commencing
proceedings

• In a wider commercial sense, alternative dispute resolution can take many

different forms and the method and procedure and cost will vary based on
the organisation and country.

• In practice there are two major cynical perspectives which undermine the
mediation process. The first is that the obligation to mediate is open to abuse
 if one party goes through the process in bad faith, merely going through the
motions, seeking to acquire a tactical advantage in forcing the other side to
disclose their strategy and arguments in support of their care.

• The courts will not seek to go behind the reasons why the mediation was
unsuccessful. As a rough guide around a fifth of mediations are not only
unsuccessful but arguably counter-productive.

• The other criticism of mediation is that the process by its very nature is not
binding at its inception. Although the parties at the end of a long day may
agree a binding resolution. The parties enter into the process on the basis that
there is no obligation to settle the matter, only an obligation to seek a
resolution.

• This section does not seek to address the particular issues around arbitration
in contrast to mediation. There is a main clause heading on Arbitration in
the A-Z.

• Arbitration in contrast to mediation is a procedure which can result in is

legally binding decision on the parties. An agreement may mention
arbitration but no other forms of mediation or resolution of disputes.
Arbitration is often a preferred route in some industries as it is considered
cheaper and quicker than legal proceedings.

• An alternative route is for the parties to agree to appoint a respected

individual to review their arguments and disputes and to write a report. This
report and its decisions does not have to be binding although the parties may
agree that it should.

• Contract 14 in The Media and Business Contract Handbook 5th edition

by the authors contains a document which is intended to be a progressive
form of resolution. The parties agree in a dedicated contract to appoint a
third party to resolve in a binding manner a dispute between the parties.

• The fundamental point, as always, is that the parties are free to enter into
whatever process they decide is the best way to resolve a dispute in a cost
effective manner on a professional basis.

• One advantage of mediation in whatever form it takes is the opportunity

mediation provides of finding creative and constructive options to explore
 during a good faith exchange of views between commercially aware parties.

Costs of mediation

• There are serious – potentially catastrophic – cost impacts in the event that
either one or both parties refuse to cooperate in a process of alternative
dispute resolution or mediation. The obligation is on both parties to show
evidence that they have complied with the Practice Direction in the United
Kingdom and made an effort to seek a means of resolving the dispute before
litigation is commenced.

• The courts in the United Kingdom will even award costs against a party for
this reason despite the fact that their claim or defence has been successful. In
the event that it is shown that she partly has clearly ignored or failed to abide
by the obligation in the pre-litigation protocols to take part in negotiations to
resolve the dispute before litigation.

• All forms of mediation will involve costs and expenses both for the
preparation and the actual mediation itself. Costs will include the fees for the
mediator, the cost of the venue, administration, telephone, travel and
accommodation costs. The costs and expenses of professional advisors
including agents, accountants, legal advisors and any third parties providing
information may also need to be considered.

• To give some benchmarks: the costs of a mediator usually relate to the

experience of the mediator and the time it takes for the mediator to prepare
for the case. In the United Kingdom for a one-day mediation requiring the
mediator half a day’s preparation, a fixed fee may be agreed. Although some
mediators will seek fees not based solely on time but by reference to the
amount in dispute.

• Some professional mediation firms assist with finding a selection of possible

mediators for the parties to consider. As well as to assist in help negotiate the
fees and find a venue acceptable to all parties.

• The main costs will be the costs of external professional advisors to assist in
the preparation of the documents for the mediation. Where a solicitor and
counsel are engaged due to the complexity of the case then the costs will be
higher. Most parties in mediation pay their own costs of preparation for the
 mediation. There are exceptional instances where one party will pay some or
all of the costs of preparation for the other parties involved but this is subject
to negotiation in advance.

• The cost of the mediator and venue may be paid for by one or more parties.

Drafting clauses relating to mediation

• When considering mediation or any types of clauses relating to how to

resolve disputes between the parties you have to consider:

– The level of the dispute you are intending the clause to address

– Whether the form of mediation will be binding on both parties or not

– The person or body or other company who you may wish to help resolve
the issue and who is to pay the costs and expenses for their services

– Whether you want to have a choice of jurisdictions under the agreement

in relation to different forms of mediation

– Whether you want to be able to choose the form of mediation at the time
of the dispute or have a list of choices and not be bound to simply one

• Where the company has an agreement with a distributor as in A-Z M.417 the
clause has been drafted widely. Here the first option would be for the parties
to resolve any dispute or problem through negotiation. It is not worded so
that it is an obligation but it states their intentions.

• Then the clause states that the parties shall try to agree to appoint a mediator
without prejudice to any legal claim or remedy. The use of these words
means that the discussions with the mediator will not be binding unless the
parties agree this at a later date.

• The use of the mediation process is seen as a mechanism to attempt to avoid

litigation but does not mean that legal action may not be taken.

• Also note that there are no timescales or dates or period set for any
discussions in relation to a dispute in this clause.
 A-Z M.417
The [Company] and the [Distributor] agree that in the event of any dispute,
difference or problem that may arise under this Agreement which cannot be
resolved by negotiation between the parties. Without prejudice to any legal
claim or remedy, the parties shall use their reasonable efforts and resources
to agree the appointment of a third party to act as mediator between the
parties on terms to be agreed.

• Most parties pay for their own costs for the preparation of the mediation
itself, but share half the costs of the appointed mediator and the venue as in
A-Z M.415.

• The decision of any mediator appointed is not referred to as binding by this

clause. Where the parties cannot settle the matter through mediation either
may take legal action.

A-Z M.415
Without prejudice to any rights or remedies of either party to this
Agreement, the [Manager] and the [Sportsperson] agree that prior to the
commencement of any legal proceedings in the event of a dispute,
difference or other problems which arise pursuant to this Agreement which
cannot be resolved by negotiation between the parties they shall endeavour
to agree the appointment of a third party to assist in the resolution of the
matter. The cost of such mediator shall be shared equally between the
parties, irrespective of the eventual outcome of the dispute.

• Where there is a licensor and sub-licensee as in A-Z M.421, if there is a trade

organisation for their industry then it is helpful to use that established
process to try to resolve matters. The organisation and a specific person may
be set out in detail in the clause.

• In this clause the parties have tried to set a cost for any mediation so that it is
fixed. The parties have also agreed to each pay half of that fixed cost. Any
additional cost is then open to negotiation as to who pays that sum.

A-Z M.421
The [Licensee] and the [Sub-Licensee] agree that where they are in dispute
in respect of any matter under this Agreement that [Name] of
 [organisation] shall be appointed as a mediator at [cost] which shall be paid
by each party in equal shares.

• The point to appreciate in regard to a mediation is that there is an emphasis

on the obligation to seek a resolution but not necessarily to reach an
agreement on a dispute as in clause A-Z M.414.

A-Z M.414
The [Licensor] and [Licensee] agree that in the event that any dispute
arises pursuant to this Agreement which cannot be resolved by negotiation
between the parties they shall endeavour to agree the appointment of a
third person to assist in the resolution of the matter. The cost of the services
of such person to resolve the dispute shall be shared equally between the
parties.

• A mediation clause may list many different forms of means of resolving a

dispute which a party can choose from based on the facts. Some of the
choices may result in binding decisions and some may not. This type of
clause would suit a situation where the parties are not clear and would prefer
to keep the options of each party open at the time of the signature of the
agreement.

• In A-Z M.419 the parties have agreed that prior to taking any legal action
they will consider and take action in respect of one or more of the options
listed below. Option 1.4 is a new version such as the appointment of an
independent expert that both parties respect and agree upon to write an
opinion.

A-Z M.419
Prior to taking any legal action the parties agree that they shall first use one
of the following processes and methods to try to reach a resolution of the
dispute:

1.1 Arbitration.

1.2 Mediation.

1.3 Alternative Dispute Resolution.

 1.4 Appointment of a third party who is independent and a legal expert to
provide a written opinion. Both parties will have the opportunity to
provide the written arguments of their case, and a conference prior to
any report and/or decision.

• Where the parties do not want any reference to mediation or arbitration or

disputes in an agreement. There should be a clause which states that fact
rather than make no reference so that it appears as if it was a drafting
omission when the agreement is looked at later as in A-Z M.418.

A-Z M.418
There shall be no provision as to arbitration, mediation, complaints
procedure, appeal, code of practice or other method of resolution of any
disputes or problems under this Agreement.

• Although the parties may agree that mediation will be considered before
litigation they may not want any such agreement to be binding. The parties
may also want to go ahead and take legal action if the other party is clearly
not acting in good faith.

• The clause A-Z M.420 is a first option through an agreed organisation but
there is no mention of costs. If one or both parties do not act in good faith in
the mediation process or it is not resolved to the satisfaction of them both.
Then party either has the right to take legal action.

A-Z M.420
The parties agree that in the event of any dispute, threat of legal action,
threat of termination of the agreement and/or failure to deliver and/or
adhere to the terms of this Agreement. Then as the first option both parties
agree that they shall avoid litigation and opt instead for mediation through
[specify organisation]. In the event that either party refuses to cooperate
with the mediation process in good faith and/or matter is not resolved to the
satisfaction of either party. Then either party shall have the right to take
legal action against the other at its sole discretion.

• A clause may also refer to the country and jurisdiction for any mediation
rather than the form of mediation as in A-Z M.422. Note there is no mention
of the country or jurisdiction for the legal proceedings either party may take.
 There is likely to be a governing law or jurisdiction clause. There may also
be a clause which covers legal proceedings and allegations and settlements.
Any indemnity provisions would also be relevant to a claim by one party to
an agreement against another for a breach or any action by third parties.
Please look at the main clause headings Jurisdiction, Indemnity, Liability
and Legal Proceedings in the A-Z and other such clauses.

A-Z M.422
The [Sponsor] and the [Company] agree and undertakes that where there is
a dispute between the parties. That the parties shall endeavour to reach
terms for the appointment of a mediator to resolve the matter in [country].
That if they are unable to agree terms and/or the mediation is unsuccessful
then either party may issue legal proceedings.
 MORAL RIGHTS

• There are 82 clauses relating specifically to Moral Rights in the A-Z, from
A-Z M.452 to A-Z M.533.

• This section can be considered in conjunction with Copyright Clearance,

Copyright Notice, Copyright Warnings, Credits, Editorial Control,
Material, Quality Control, Rights and Title.

The meaning and purpose of moral rights

• Moral rights exist in the United Kingdom as a result of legislation.

• It is not a right which is recognised in common law in the United Kingdom.

• A moral right is not the same as copyright.

• Moral rights only exist in relation to certain material in which copyright

exists and in which copyright is held by the person who created that original
material.

• Moral rights do not exist in relation to all material in which there is

copyright. A computer program and computer-generated material are not
included.

• The essence of moral rights is to ensure that the original creator who owns
the copyright in the work has certain rights. Whether the original creator and
author is an artist, musician, writer or director of a film.

• The moral rights exist under the Copyright Design and Patents Act 1988 as
amended, sections 77– 89, 94 and 103, in the United Kingdom.

• These sections create moral rights for an author of an original literary work,
artistic work or musical work or dramatic work in which copyright exists or
 for a director of a film in which copyright exists.

• The copyright must exist in relation to the ownership of the copyright by the
author or the director.

• The three rights include:

– the right to be identified as the author

– the right to object to derogatory treatment of the work

– the right not to have the work falsely attributed to a third party

• Note there is no obligation to exercise the moral rights. You have the choice
to use them or not.

• The moral rights created by legislation in the United Kingdom do not cover
every type of creation and development and reproduction of rights and
material.

• The first moral right is the right to be identified as the author.

• The right to be identified only applies to authors of a copyright in a literary,

dramatic, musical or an artistic work. In addition it applies to a director of a
copyright film.

• The moral right to be identified as the author must be asserted.

• The right to be identified applies essentially to a release to the public, or

exhibition or commercial exploitation. There are a number of exceptions set
out in the legislation.

• The words in the legislation make it clear that the author must be identified,
clearly and prominently. These words are often repeated in the contract
clause for the assertion by the author.

• If a person or company is not the original creator and does not own the
copyright then they cannot assert any moral right to be identified.

• The right to be identified as an author or a director does not apply to

 employees.

• In an agreement there may be clauses which relate to moral rights as well as

credits, copyright notices, copyright warnings and trade marks. You will
have to look at the other main clause headings in the A-Z for relevant clauses
in Credits, Copyright Notice, Copyright Warnings and Trade Marks.

• A writer may therefore assert his or her moral right to have a credit on all
copies of a book in hardback and paperback to be published by a company.
As well as on all copies of any adaptation of the work such as DVDs, toys
and any subsequent television series.

• The writer has a moral right to be identified as the author as he or she is the
original creator of the literary work which is to be published and distributed
and sold as a book.

• It is a well-established practice for authors of written works to assert their

moral rights. Mainly the right to be identified as the author of the work. This
assertion may be in addition to any clause in which the publisher agrees to
provide as a credit or copyright notice to the author.

• A director of a film may assert his or her right to be identified as the director
of the film for cinema release and in any version for television or DVD.
Provided that the director was the original director for the film when it was
made.

• A writer of a play may assert his or her right to be identified by their name as
the author in relation to the play. The credit clause may also seek to ensure
that the writer receives a credit on all programmes, posters, publicity on a
website and any other marketing material.

• Note however that the legislation regarding moral rights makes no reference
to the packaging, marketing and promotional material. The moral right is
directed at the copies or adaptations which are made of the original literary,
dramatic, musical or artistic work in which copyright is held by the author.

• A musician in a band who has created and developed the music and lyrics
may assert his or her right to be identified as the author if the music and
lyrics are reproduced on any sound recording, download, soundtrack to a
film or any other adaptation.
• In addition you would want a clause where the musician was entitled to a
credit in any packaging, merchandising, advertising and promotional
material whether for the original material or any events and tours.

• There is therefore a great deal of interaction with the main clause headings on
this subject of Material, Marketing and Rights in the A-Z.

• The second right is the right to object to derogatory treatment of the work.

• Here again the right is restricted to the original author of the work or a
director of a film in which copyright exists.

• The copyright in the work must be held by the original author in a literary,
dramatic, musical or artistic work or by a director of a copyright film.

• While there is no legal obligation to assert the right to object to derogatory

treatment. If this is included in the contract as a very similar clause then you
have the opportunity to rely both the contract and the legislation.

• The first hurdle that must be passed is that there must be copyright in the
literary work, dramatic work, musical work or artistic work which is held by
the author. Alternatively a film in which copyright exists and is held by the
director.

• Then the author or the director have the right to object to derogatory
treatment of the work or film.

• Treatment is defined as meaning any addition to, deletion from or adaptation

of the work.

• A translation into another language of a literary work or a new arrangement

with no more than a change of key in a musical work are specifically
excluded from treatment.

• The treatment of the work or film will be derogatory if it amounts to a

distortion or mutilation of the work or is otherwise prejudicial to the honour
or reputation of the author or director.

• The right extends to parts of a work which have been subject to previous
treatment by someone else other than the author or director. If those parts are
 attributed to, or likely to be regarded as the work of, the author or director.

• The third moral right is for the author not to have the work or the director the
film falsely attributed to another person or company.

• The attribution may be stated expressly or implied from the facts.

• This moral right applies where copies are also falsely attributed to a person or
company as the author or director.

• This moral rights does not have to be asserted.

• The legislation is very detailed and these explanations are only a broad
summary. There are exceptions and caveats.

• A moral right cannot be assigned and it is personal to the copyright owner of

the work or the director of the film.

• All or some of the moral rights can be waived and this must be done in
writing. For more on this topic please look at the main clause heading in the
A-Z of Waiver.

• It would be reasonable to expect to be paid an additional sum for the waiver

as it has some value. It is not however a legal requirement. However if there
was no consideration at all under the document then you should make a
nominal payment.

• A waiver may be conditional or unconditional. The waiver may for instance

be given because there are credit and copyright notice clauses agreed in the
document.

• There may also be a clause regarding editorial control and any proposals for
changes and adaptations may be done through a process of approvals or
consultation. For more on these subjects please look at the main clause
headings Editorial Control, Consultation and Adaptation in the A-Z.

• It would be more likely that a person agrees to a waiver where the whole
original intent was that the persons’ contribution was to be hidden as for a
ghostwriter.
• You would not normally agree to a waiver of moral rights for a licence
although you might where there is an assignment.

• Note the waiver may apply to an existing work or one to be created in the
future.

• Moral rights refer however to an existing work or film in which copyright has
already been created.

• An infringement of a moral right is a breach of a right under a statute.

• When drafting contract clauses you may decide to assert moral rights which
the legislation does not require to be asserted.

• You may endeavour to draft a contract where all moral rights are waived and
a person is provided with no right to any credit or copyright notice either in
respect of the original copyright which they held or any subsequent
adaptations.

• You may get another party to agree to waive their moral rights based on the
fact that you have agreed to a credit and copyright both in relation to the
original rights and material and also any copies or other forms of
exploitation.

• In such a case there may be a process of approval of samples and packaging

and marketing material which the copyright owner may view and assess.

• It will be necessary to consider in which format the original material exists as

well as the formats in which it will be developed and exploited in the future.

• The requirements for any labels, packaging, advertising, marketing and

promotional material will vary. Although these matters do not fall within the
ambit of moral rights then are never the less relevant.

Drafting clauses relating to moral rights

• The author asserts his or her moral right to be identified as the author in A-Z
M.461 in General Business and Commercial.

• The clause actually specifies the name which the author requires to be used as
 the credit.

• Although the clause refers to the fact that the author’s name must be
reasonably and prominently displayed. It does not specify any detail.

A-Z M.461
The [Author] declares his/her moral right to be recognised and
acknowledged as the original [creator/author/other] of the [Work] and to be
clearly, identifiably and prominently brought to the attention of the public
to be known as [–] on all copies of any material distributed or exploited by
the [Company] based on, referring to and/or copies of the [Work].

• The author may go further than the legislation as in A-Z M.484 in

Merchandising.

• The author is asserting his or her moral right to be identified on all copies of
the work and any adaptations.

• The assertion is in relation to the licensee and relates not only to all copies
produced and distributed by the licensee but also any packaging.

• The licensee and author have agreed the wording of a copyright notice and
acknowledgement for the author in the agreement.

A-Z M.484
The [Author] asserts his/her moral rights in respect of the [Artwork/Text]
to be credited as the copyright owner of the [Artwork/Text] in respect of all
copies of any adaptations produced, reproduced, sold, supplied and/or
distributed by the [Licensee] on both the article itself and any packaging
under this Agreement in the following manner: © [year] [Name] [The
original Artwork and Text of Title].

• In A-Z M.531 in University Library and Educational contributor A seeks to

assert all his or her right moral rights as against institute B. As well as
against any third parties or successors in title.

• So that if the work in which copyright was originally owned by contributor A

is sold then the subsequent purchaser would have to recognise the moral
rights of the contributor.
• Note here the obligation of the moral rights is imposed not through
legislation but as a contractual agreement between the parties.

• The contributor cannot be an employee of the institute.

• The contributor is seeking to oblige the institute and any subsequent third
party to identify the contributor as the author of the work.

• The clause specifies the name by which the contributor wishes to be

identified.

• The clause is not limited to the term of the agreement.

• The contributor also asserts his or her right to object to derogatory treatment
of the work.

• If the material in question did not have the copyright owned by the
contributor in the first place or was not original the moral rights in legislation
would not apply. You would not then use a moral right clause but consider a
credit.

A-Z M.531
The [Contributor] as the original author asserts all her moral rights to the
[Institute] and any third parties or successors in title in respect of the
[Work/Project]. The [Contributor] asserts that she must be clearly
identified as follows [–] in respect of the [Work/Project] and on all copies
and any adaptations thereof whether during the Term of this Agreement or
not. In addition the [Contributor] asserts her right to object to derogatory
treatment of the [Work/Project].

• There may be one clause for the assertion of the right to be identified. Then a
second clause which covers another moral right as in A-Z M.494 in
Publishing.

• There is in fact no obligation to assert the right not to have a work subject to
derogatory treatment.

• The third moral right deals with the issue of the author not having his or her
work falsely attributed to another person. Whereas this clause relates to the
 company falsely attributing another work to the author.

• The company has agreed to make third parties aware of the assertion by the
author. This is a contractual obligation.

A-Z M.494
The [Author] further asserts the right not to have the [Work] subject to
derogatory treatment and/or to have any other work falsely attributed to
him/her. The [Company] acknowledges this assertion and agrees to advise
and make it a condition of any contract with third parties.

• In A-Z M.489 in Merchandising in 1.1 the person A asserts his or her rights
to be identified as the author of the work. The right is asserted in relation to
any character, artwork and storylines and any adaptation based on the work
and any language at any time.

• The assertion is not limited by the term of the agreement or the licence
period.

• The person A shall be provided with sample material of all proposed

copyright notices, trade notices and credits for person A and any third party
for any format.

• Where person A does not approve any sample material then the project
cannot proceed.

• Trade marks are relevant as well as logos, as new ones are often created for
new products and projects. You may wish to draft a clause which addresses
ownership of this new material which will be created in the future.

A-Z M.489

1.1 [Name] asserts his/her moral rights to be identified as the author of the
[Work] and all the characters, artwork and storylines entitled [specify]
and any adaptation which may be developed and/or created based on
that [Work] in any language at any time in any country.

1.2 [Name] shall be entitled to approve all proposed copyright notices,

trade mark notices and other credits for [Name] and any third party in
 respect of the [Work] in any media and/or format at any time. In the
event that [Name] does not approve and provide written consent then
the proposal cannot proceed and must be cancelled.

• In A-Z M.480 in Internet and Websites this clause is an acknowledgement by

a company that the author has asserted their moral rights in respect of a
specific work.

• That the author has asserted the right to be reasonably prominently and
clearly identified with a specific name.

• That the name is to be used on the website by the company in relation to the
work. As well in regard to any downloads, copies or adaptations.

A-Z M.480
The [Company] acknowledges that the [Author] asserts his/her moral rights
generally in respect of the [Work] under the [Copyright, Designs and
Patents Act 1988 as amended] and in particular to be reasonably,
prominently and clearly identified as follows [–] on the [Website] by the
[Company] at all times and on any downloads, copies and/or adaptations.

• There is a similar type of a clause in A-Z M.530 in University Library and

Educational.

• The institute agrees and acknowledges that the author has asserted their moral
right to be identified.

A-Z M.530
The [Institute] acknowledges that the [Author] asserts her/his moral right in
respect of the [Work] to be reasonably, prominently and clearly identified
as follows [–] on all copies of the [Work] to be distributed to the public
during the Term of this Agreement.

• In A-Z M.527 in Sponsorship the company has agreed not to subject the
work of the designer to derogatory treatment. The company has agreed not to
distort or mutilate the work or to do anything prejudicial to the reputation or
honour of the designer unless the designer and the sponsor have provided
their written consent.
• This clause is not based directly on a moral right under the legislation in the
United Kingdom except in relation to the broad concept that a person may
not have their work subject to derogatory treatment.

A-Z M.527
The [Company] shall not be entitled to subject the [Work] to derogatory
treatment in the form of distortion and/or mutilation and/or to do anything
which is prejudicial to the reputation and/or honour of the [Designer]
without the prior written consent of the [Sponsor] and the [Designer].

• The clause in A-Z M.473 in General Business and Commercial is from the
company to the author and is not therefore moral rights under the legislation
in the United Kingdom. It is using the words to create an acknowledgement.

• However it should be noted there is no obligation on the author to have such

a contractual clause or to assert the right to object to derogatory treatment.

• The company recognises the author and the work and the work is described in
detail.

• The company acknowledges the author’s right to object to derogatory

treatment of the work.

• Treatment is defined as a deletion from, alteration to, or adaptation of the

work.

• The treatment of a work is also derogatory if it amounts to a distortion or a

mutilation of the work.

• The treatment of a work may also be derogatory if it is prejudicial to the

honour or reputation of the author.

• The work must be commercially exploited or displayed and shown to the

public.

A-Z M.473
The [Company] recognises that the [Author] of the artistic work entitled [–]
has the right to object to and not have his/her work subjected to derogatory
treatment. Treatment of a work means any addition to, deletion from,
 alteration to or adaptation of the work. The treatment of a work is
derogatory if it amounts to distortion or mutilation of the work or is
otherwise prejudicial to the honour or reputation of the [Author]. In the
case of an artistic work the right is infringed by the [Company] or any third
party authorised by the [Company] who:

1.1 Publishes commercially or exhibits in public a derogatory treatment of

the work or broadcasts or includes in a cable programme service a
visual image derogatory of the work.

1.2 Shows in public a film including a visual image of a derogatory

treatment of the work or issues to the public copies of such a film; or

1.3 In the case of a work of architecture, in the form of a building, a

sculpture or a work of artistic craftsmanship, issues to the public copies
of a graphic work representing or a photograph of a derogatory
treatment of the work.

• In A-Z M.485 in Merchandising the licensee has agreed that it is obliged to

notify any sub-licensee, agent distributor or third party of the assertion of the
moral rights by the author.

A-Z M.485
The [Licensee] agrees and undertakes to notify any sub-licensee, agent,
distributor and all other third parties who acquire a licence or interest in the
work or any adaptation thereof of this assertion of moral rights by the
[Author].

• The parties to an agreement may also want to agree what will happen when
there is no identification, credit, copyright notice or trade mark appears on a
copy of the product or packaging or marketing material.

• In A-Z M.488 in Merchandising company B has agreed that it shall be

obliged to withdraw any such material at its own cost and expense and verify
the disposal or destruction to the licensor.

A-Z M.488
The [Company] agrees that in the event that any [Products] which are
 produced do not bear the relevant copyright, credits and trade mark notices
specified by the [Licensor] on all items and on all packaging and marketing
and promotional material. That the [Company] shall be obliged to
withdraw such material at its own cost and expense and shall be obliged to
destroy and verify the disposal of all such items and material to the
[Licensor].

Waiver of moral rights

• There is a main clause heading on Waiver in the A-Z.

• It is possible to waiver copyright and other intellectual property rights,

delivery dates, moral rights, credits and other matters.

• For a waiver you should be consider the following:

– The subject matter of the waiver and what is included and excluded

– Term or duration of waiver and the start and end date

– Whether the waiver can be used to apply to another set of facts which
occur or arise later or not under the agreement

– Which party provides the waiver and which party has the benefit of the
waiver

– The consideration and payment for the waiver if any

– Any conditions which may be imposed as part of the agreement to a

waiver

– The impact and consequences of the failure to comply with the

conditions of the waiver

• An author may waive his or her moral rights and impose no conditions as in
A-Z M.492 in Publishing.

• Author A waives his or her moral rights both in the original work which is
likely to be a literary work and the artwork.
• The clause makes reference to the legislation in the United Kingdom.

• The author has waived the right to be identified in respect of the work and
artwork.

• The presumption is that the author has also waived the other moral rights but
these are not mentioned specifically.

• There may be additional clause which deals with a credit to the author and a
copyright notice in the agreement.

• There may also be a clause which deals with editorial control and who has
the final decision in respect of changes and adaptations to the text and
artwork.

• This clause provides a consideration of the assignment fee for the waiver.

A-Z M.492
In consideration of the Assignment Fee the [Author] agrees that he/she
shall unconditionally waive all moral rights in the [Work] and the artwork
which he/she may have [under the Copyright, Designs and Patents Act
1988 as amended] including the right to be identified as the original
[Author] of the [Work] and the artwork.

• A-Z M.476 in General Business and Commercial is a waiver of moral rights

which is clearly much wider.

• In this clause the subject matter of the waiver is described in detail.

• The waiver applies to the author’s right to be identified as the author in 1.1.

• The waiver applies to the author’s right to object to derogatory treatment of

the work in 1.2.

• The waiver applies to the company and any licensees who acquire an interest
or successors in title and assignees.

• Note that in 1.4 the waiver is conditional on the fact that the company must
pay all the sums due to the author during the term of the agreement.
• In the event that the sums are not paid then the author shall have the right to
revoke the waiver by notice in writing up to five years from the date of the
agreement.

• It is possible to have no limit on the right to revoke period.

A-Z M.476
The [Author] waives all moral rights [under the Copyright, Designs and
Patents Act 1988 as amended] in the [Work] entitled [–] [Brief
Description]. The waiver shall apply to:

1.1 The right to be identified as the author.

1.2 The right to object to derogatory treatment of the work.

1.3 The waiver shall apply to the [Company] and any licensees, or other
parties who may acquire an interest or right in the exploitation of the
[Work] as well as all successors in title and assignees of the
[Company].

1.4 The waiver in this clause is conditional upon the full payment of all
sums due to the [Author] being made under the terms of this
Agreement. In the event that all or part of the sums are not paid or
accounted for in full then the [Author] shall be entitled to revoke the
waiver by notice in writing to that effect to the [Company] at any time
up to [five] years from the date of this Agreement.

• Where there is a ghostwriter for a book, then you would normally expect the
assignment to include a waiver of moral rights as in A-Z M.490 in
Publishing.

• In fact the ghostwriter has agreed that he or she shall not be entitled to any
credit or acknowledgement by the any person or company in any media at
any time.

• The clause makes reference to the work delivered by the ghostwriter and all
the product of his or her services.

A-Z M.490
 The [Ghostwriter] agrees that he/she shall not be entitled to any credit or
acknowledgment in respect of the exploitation of the [Work] by individual
or any third party in any media at any time. Accordingly, the [Ghostwriter]
unconditionally waives all moral rights [under the Copyright, Designs and
Patents Act 1988 as amended] in respect of the [Work] and all the product
of his services to [Name] pursuant to this Agreement.

• The author may waive the moral right to be identified and impose a credit as
a condition as in A-Z M.465 in General Business and Commercial.

A-Z M.465
In consideration of the payments made and due to be made under this
Agreement the [Author] waives all moral rights [under the Copyright,
Designs and Patents Act 1988 as amended] except to the extent that the
[Author] shall be given the credit as detailed under Clause [–].

• A more complicated waiver appears in A-Z M.503 in Publishing where

author A has provided a waiver to company B and its licensees but not to any
successors in title who may acquire the company.

• In this case company B is paying a sum of money for the waiver which is not
part of the advance and cannot be recouped from the royalties in 1.1.

• Company B has agreed in 1.2 to provide a credit to author A on the cover,

binding and inside the work on all copies it may publish or distribute.

• In 1.3 company B has also agreed to give a credit to the author in all
marketing, publicity and advertising material.

• 1.4 confirms the credit to be given to the author.

• 1.5 confirms that the author shall have the right to be identified as the author
of the work in any adaptation, translation and exploitation by the company or
any licensees.

• 1.6 makes it clear that any changes to the original work which may be needed
by the company or a licensee must first be approved by the author in each
case.
• In 1.7 the company agrees that it shall ensure that the work is not subject to
derogatory treatment which is prejudicial to the honour or reputation of the
author. If it does happen then the company has agreed to destroy all copies.

• In 1.8 the company agrees that it shall not falsely attribute the work in its
original form or in any adaptation or translation to another person as the
author.

A-Z M.503
The [Author] waives all moral rights [under the Copyright, Designs and
Patents Act 1988 as amended] in respect of the [Work] entitled
[Description] to the [Company] and any licensees but not any successors in
title upon the following terms:

1.1 That in consideration of the waiver the [Company] shall pay the
[Author] the sum of [–] by [date] which should not be added to the
advance and/or recouped from the royalties due to the [Author].

1.2 The [Company] agrees and undertakes to identify the [Author] as the
author of the [Work] in a suitable and reasonably prominent position
on the [cover, binding, inside front pages] of the [Work] on all copies
that it may publish and/or distribute.

1.3 That the [Author] shall be identified in all marketing, publicity and
advertising material as the author of the [Work] by the [Company].

1.4 That the [Author] shall be identified as follows [–].

1.5 That the [Author] shall have the right to be identified as the author of
the [Work] in any translation, adaptation, serialisation or other
exploitation of the rights granted in this Agreement by the [Company]
or any third party licensee appointed by the [Company].

1.6 That any changes of any nature of the original [Work] by the
[Company] or any third party licensee appointed by the [Company]
shall be subject to the prior approval of the [Author] who shall be
provided with full details of the proposed changes in each case.

1.7 The [Company] shall endeavour to ensure that there is no derogatory

treatment of the [Work] which is prejudicial to the honour or
 reputation of the [Author] by the [Company] or any third party which it
licenses or appoints in respect of the [Work]. In the event that there is
clear evidence of derogatory treatment the [Company] shall arrange for
all copies to be destroyed and publicly apologise to the [Author] in
[–]..

1.8 The [Publisher] shall not license, permit or otherwise consent to any
other person being identified as the author of the [Work] in its original
form, or any translation, adaptation or otherwise

• A much shorter waiver is in A-Z M.528 in Sponsorship.

• Sponsor A waives all moral rights in respect of the material and products
supplied to company B.

• The waiver only applies to company B.

A-Z M.528
The [Sponsor] has and/or will obtain waivers of all moral rights in respect
of the material and products supplied by the [Sponsor] to the [Company]
under this Agreement. These waivers shall not apply to any third parties
and/or any successors in title of the [Company].

No moral rights

• There may be no moral rights which can be asserted by an employee as in A-

Z M.455 in Employment. The main emphasis of this clause is that the
employee agrees that literary, dramatic or musical or artistic work created
during the course of his or her employment belongs to the company.

• This clause could be wider in its reference to rights and material which
belong to the company. Please also look at the main clause headings
Assignment and Rights in the A-Z.

A-Z M.455
The [Employee] acknowledges that there are no moral rights in works
produced by the [Employee] in the course of his/her employment under this
Agreement. The [Employee] acknowledges that when a literary, dramatic,
 musical or artistic work is made by the [Employee] in the course of his/her
employment the [Company] shall be the first owner of any copyright in the
work.

• Where a researcher works on a project you may wish to make it clear that
there are no rights to a credit or acknowledgement.

• The researcher has no moral rights but in any event waives them in A-Z
M.479 in General Business and Commercial.

• This clause also confirms that no further payments are due for any
exploitation or adaptation or sub-licence.

A-Z M.479
The [Researcher] acknowledges that he/she shall have no right to be
credited and/or acknowledged as the person who created, developed and/or
edited and/or annotated and/or indexed the [Material/Database] which was
commissioned by [Name]. That for the avoidance of doubt the [Researcher]
waives all moral rights of any nature and agrees that [Name] may exploit,
adapt and sub-licence the [Material/Database] as he/she thinks fit at any
time and no further payments shall be due.
 NET RECEIPTS

• There are over one hundred clauses for Net Receipts in the A-Z from A-Z
N.001 to A-Z N.105.

• This subject should be read in conjunction with the following main clause
headings in the A-Z of Accounting Provisions, Budget, Costs,
Distribution Expenses, Gross Receipts, Inspection of Records and
Accounts, Material, Payment, Royalties, Sell-Off Period and Set-Off.

The meaning and purpose of net receipts

• Net receipts can be drafted in many different ways but basically the term
refers to the sums received by an assignee or licensee after deductions.

• In order to draft a net receipts clause you need to also look at how gross
receipts clauses are drafted. For more on this subject refer to the main clause
heading in the A-Z and this book of Gross Receipts.

• You will now appreciate that some gross receipts clauses are in fact a net
receipts deal as there are deductions allowed which are more than just
government taxes on the sale or supply of products or services.

• The first element of a net receipts clause is to set out where the money and
funds are coming from and by whom they may be received and retained.

• A net receipts clause can be drafted in such a way that you are not even
entitled to all sums received from the exploitation of a work or a service or a
project. The net receipts may only relate to the exploitation of certain rights.

• The net receipts are often linked to a certain fixed royalty based on the
exploitation of certain rights.

• This has sometimes meant that where rights are exploited and even though
 sums are received. No payments have been for those specific rights as there
was no royalty rate set.

• Net receipts are therefore also closely connected with the main clause
headings in the A-Z and this book of Rights and Royalties.

• In order to create and draft a net receipts clause when you have established
from where the funds are to be received.

• Then a decision is made as to whether those sums constitute the gross

receipts or not. That will depend on the facts and the drafting of the clause.

• In any event, in order to reach a figure which constitutes the net receipts. The
definition of the clause must either allow the deduction of fixed sums or a
percentage of sums or provide no limit at all to the amount of deductions.

• The deductions may be limited to certain categories of expenses which relate

to the work or project and which are authorised.

• The deduction may be drafted very widely so that the distributor or licensee
is permitted to deduct most of its business costs as well as those of any third
parties before any net figure is calculated.

• This wide definition of the deductions allowed has occurred in many film
distribution agreements for very successful films. Royalties have not been
paid on the net receipts as the production, distribution and marketing costs
were all deducted and retained before the calculation of any royalty on the
net receipts.

• So the point to appreciate is that if you are the company who is to receive a
royalty and must make a choice between a gross receipts agreement and a
lower royalty or a net receipts agreement with a higher royalty. Do not
assume that automatically the net receipts agreement is better where there are
likely to be large deductions.

• The net receipts can be defined as the gross receipts less the distribution
expenses. For more on the subject please look at the main clause heading
Distribution Expenses in the A-Z.

• An alternative is to define the net receipts as the gross receipts less the
 budget. For more on the subject please look at the main clause heading
Budget in the A-Z.

• The net receipts may also be defined as the gross receipts or sums received
less the costs and expenses. For more on the subject please look at the main
clause heading Costs and Expenses in the A-Z.

• The drafting of the definition of the net receipts may therefore use other
definitions such as gross receipts from which the net receipts is calculated.

• If the definition of gross receipts or sums received is drafted narrowly then it

follows that there will be less net receipts from which you can have a
percentage as a royalty.

• It may be critical to the final figure that the deductions permitted from the
gross receipts are:

– a fixed amount in total; or

– are limited for any accounting period; or

– certain costs and expenses are not allowed and are specifically excluded

• It is not uncommon for some film deal agreements to list pages of expenses
and costs which can be deducted from the gross receipts or the net receipts
before a figure is arrived at from which a percentage royalty is calculated. In
such instances there is little chance that you will receive any future payments
as the company seeks to recoup every sum that it has spent to create,
develop, reproduce, market and exploit the work or project.

• It is not unreasonable to be quite firm as to which costs a person or company

must pay for themselves and which cannot be set-off or recouped against
sums that may be received.

• This is very important – that it is made clear which costs and expenses must
be paid for by a company or person. As failure to do so will often result in
deductions for administrative running costs, copyright and contractual
clearances or marketing expenses which were never originally envisaged by
you at the time of the contract.
• If the wording of the definitions is wide and the deductions are also wide and
very vague they may be able to justify these deductions. It is much better that
the contract establishes that certain costs and expenses are excluded so that
you have a contract clause to rely upon.

• Often it is thought that is sufficient to add the word – reasonable – so that the
deductions must be reasonable. This really does not solve the problem of
deductions being made which can be justified by invoices and payment
records or which were not expected.

• The deductions may involve the costs of material or marketing for a project.
For more on these subjects please look at the main clause headings Material
and Marketing in the A-Z.

• It is much more effective to set a financial limit rather than to engage in a

debate at a later date as to what is reasonable.

• Also when negotiating where there are deductions which are going to be
made under an agreement. In the process of negotiation ask for examples of
the categories and the expected expenditure based on similar projects.

• You need to be able to calculate the financial feasibility of the project and
create a timeline as to when you will receive any payments. This is linked to
the payment of any advance, royalty or other sums as well as the accounting
period. For more on these subjects please look at the main clause headings
Payment, Advance, Royalties and Accounting Provisions in the A-Z.

• Always look at each agreement and understand the calculation of the figures
in the agreement. A net receipts figure can be defined in many ways. Many
companies have their own version of net figures which allow deductions
which do not occur in other agreements. The simple addition of a few words
may allow a significant amount of money to be deducted before you are paid.

• The payment you receive may not be derived from a net figure after
deductions from a gross figure. The starting point may already be a net sum
from which deductions are made and then you get paid. You therefore
receive a payment after two levels of deductions.

• Never make the assumption that the definition of net receipts, or any
definition, is either drafted the same or means the same even where the
 heading is the same.

• Where the definition of net receipts is drafted in relation to sums received or

income received rather than a gross receipts definition with deductions. Then
you need to consider:

– where the money is to come from

– who is to receive the money

– whether it should apply to sums received or also those credited or other

benefits

– what happens to money which cannot be transferred for some reason and
is therefore not received

– Whether the receipt of the money is limited to receipt in a specific

country

– whether the sums should be those received directly and indirectly

– whether the sums should be also those received by a parent company,

associate, subsidiary or other third party

• An agent’s or manager’s commission could be based on either the gross

receipts or the net receipts. If the percentage remains the same in both
instances the agent or manager would receive more on a gross sum rather
than on a net sum.

• The basis upon which an agent’s or manager’s commission is calculated will

affect the net sum upon which you receive your payments or royalties.

• In any clause relating to payment it is significant as to whether payment

applies only during the term of the agreement. Whether sums received after
the expiry or termination must be paid in full direct to the original licensor or
whether payments continue in accordance with the agreement.

Drafting clauses for net receipts

• In an agreement where the gross receipts and the distribution expenses are
 defined as in A-Z N.015 in Film and Television.

• The net receipts are defined as the defined gross receipts less the defined
distribution expenses.

• The royalties are then a percentage of the net receipts.

• Any advance may be set-off and recouped against the net receipts provided
that the agreement allows the licensee to do so.

A-Z N.015
‘Net Receipts’ shall be the Gross Receipts less the Distribution Expenses.

• A different style is used in A-Z N.031 in General Business and Commercial.

Here the net receipts are defined as the gross receipts less any agreed
expenses.

A-Z N.031
‘Net Receipts’ shall mean all the Gross Receipts less any agreed Expenses.

• Where there is an agent involved as in A-Z N.053 in Merchandising. The net

receipts are defined as the gross receipts less the agents’ commission.

• Note in this clause there are no other deductions for expenses and costs
before the net figure is arrived at.

A-Z N.053
‘The Net Receipts’ shall be the Gross Receipts less the
[Distributor’s/Agent’s] Commission.

• It is necessary to ensure that it was made quite clear that the agent was not
receiving any costs and expenses for his or her work as in A-Z N.054 in
Merchandising.

• Agent A agrees that it is responsible for all the costs and expenses which it
incurs for their services under the agreement.

• Agent A agrees that no costs and expenses can be deducted from the gross
 receipts.

A-Z N.054
The [Agent] acknowledges that he/she is solely responsible for all costs
and expenses he/she may incur in respect of their services under this
Agreement and that they are not to be deducted from the Gross Receipts.

• There may be more than one defined deduction as in A-Z N.018 in Film and
Television.

• The net receipts are defined as the defined gross receipts less:

– the defined approved budget; and

– the defined distribution expenses

• The final calculation will depend on the wording of all three definitions.

A-Z N.018
‘Net Receipts’ shall be the Gross Receipts less the Approved Budget and
the Distribution Expenses.

• Instead of deducting the approved budget the deduction may relate to the
defined production costs as in A-Z N.019 in Film and Television.

• The net receipts are defined as the defined gross receipts less:

– the defined production costs; and

– the defined distribution expenses

A-Z N.019
‘Net Receipts’ shall be the Gross Receipts less the Production Costs and
the Distribution Expenses.

• The net receipts may be drafted in relation to income or sums received rather
than in relation to a gross receipts definition as in A-Z N.087 in Services.

• The net receipts are defined as:

 – all income

– received directly or indirectly

– by manager B

– from the performance of the obligations of both parties to this agreement

– less the manager’s defined expenses

A-Z N.087
‘Net Receipts’ shall mean all income received directly or indirectly by the
[Manager] as a result of the performance of the obligations of both parties
to this Agreement less the [Manager’s] Expenses.

• In A-Z N.088 in Services the net receipts are defined as the gross receipts
less:

– the agent’s defined commission; and

– the agent’s defined expenses

• The final calculation of the net receipts therefore depends on how the gross
receipts, agent’s commission and agent’s expenses are all defined in the
agreement and whether there are any financial limits set.

A-Z N.088
‘Net Receipts’ shall mean the Gross Receipts less the [Agent’s]
Commission and the [Agent’s] Expenses.

• The agent may not be allowed any expenses as in A-Z N.089 in Services.

• In this definition of net receipts agent B is only allowed to deduct his or her
defined commission.

A-Z N.089
‘The Net Receipts’ shall be the Gross Receipts less the Agent’s
Commission.
• Another alternative is that there may be no commission or agency fees but
authorised expenses may be deducted as in A-Z N.090 in Services.

• The net receipts are defined as the gross receipts less the defined authorised
expenses.

A-Z N.090
‘The Net Receipts’ shall be the Gross Receipts less the Authorised
Expenses.

• In an agreement an agent’s or manager’s commission is likely to be based on

the net receipts as in A-Z N.091.

• The managers’ commission is a percentage of the defined net receipts.

A-Z N.091
‘The Manager’s Commission’ shall be the following percentage of the Net
Receipts [–].

• In an agreement with between a manager and a sportsperson as in A-Z N.092

in Services.

• The fees due to sportsperson A are a percentage of the defined net receipts
less the manager’s commission.

• In this type of agreement it is important to ensure that there is an obligation to

pay the sportsperson any money received after the expiry or termination of
the agreement.

A-Z N.092
‘The Sportsperson’s Fees’ shall be the Net Receipts less the Manager’s
Commission.

• A net receipt clause may be defined with reference to gross receipts as in A-Z
N.072 in Publishing.

• The net receipts are defined as:

 – the sums received by publisher B

– from the exploitation of the defined rights

– in the defined work

– at any time

– from all countries outside the excluded countries

• The sums received are linked to the rights and the work and the duration of
the agreement and the countries which it covers.

• The rights refer to the copyright and intellectual property rights in the work
which are granted under the agreement by the licensor A to the publisher B.

A-Z N.072
‘The Net Receipts’ shall mean the sums actually received by the
[Publishers] from the exploitation of the [specify] Rights in the [Work] [at
any time/during the Term of this Agreement] from all countries outside
[specify territory].

• The net receipts may relate to ticket sales, sponsorship and merchandise as in
A-Z N.042 in General Business and Commercial.

• The net receipts shall be:

– the total sums received by person A

– from the sale of tickets, sponsorship and other exploitation at the event

– fess any costs and expenses incurred by person A supported by invoices

before a fixed date

• There are no deductions after the fixed date.

• There is some ambiguity here as to whether the net receipts end on the fixed
date. To avoid this problem add the words – at any time – after received in
the first line.
• If you want to limit it to the licence period or term of the agreement then add
those words instead.

A-Z N.042
‘Net Receipts’ shall be the total of all sums received by [Name] from the
sale of tickets, sponsorship and other forms of exploitation of the [Event]
less any expenses and costs incurred by [Name] of any nature which have
been paid and/or are due to any third party from the [Event] which are
supported by receipts and invoices before [date].

• A net receipt clause may also refer to the currency in which it is to be held as
in A-Z N.045 in Internet and Websites.

• The net receipts are defined as:

– the total sum of all monies received

– by company B

– in the agreed currency

– at any time

– when the product is sold, made available, disposed of or transferred to

any third party

– whether fixed price, discount, fee or under subscription

– less the company’s commission of a fixed percentage

A-Z N.045
‘The Net Receipts’ shall be the total sum of all monies received by the
[Company] in [currency] at any time when [specify subject] is sold, made
available, disposed of, or transferred to any third party by the [Company]
whether for a fixed price, discount, fee and/or under subscription less the
[Company’s] Commission of [number] per cent.

• A net receipt clause may be defined very widely so that reasonable costs,
expenses, commission and other matters may be deducted for the licensee
 and any sub-agent or sub-distribution as in A-Z N.004 in DVD Video and
Discs.

• The net receipts are defined as:

– the total proceeds of the exploitation of the DVD

– of the film in whole or parts

– actually received by licensee B

– after deduction of all reasonable costs, expenses, commission, charges,

insurance, freight, taxes, duties

– and other sums which may be incurred by licensee B or any sub-agent or

sub-distributor

– including any sums paid under any indemnity provision

A-Z N.004
‘Net Receipts’ shall mean the total proceeds of the exploitation of the
[DVD/Video/Disc] Rights in the [Film] and/or part(s) actually received by
the [Licensee] after there shall have been deducted or paid from such sums
all reasonable costs, expenses, commission, charges, insurance, freight,
taxes, duties and other sums which may be incurred and/or arise by the
[Licensee] and/or any sub-agent and/or sub-distributor and/or sub-licensee
including any sums paid under any indemnity provision.

• A net receipts clause may be drafted based on the rights granted in an

agreement as in A-Z N.005 in DVD Video and Discs.

• The net receipts are the aggregate of the proceeds from the exploitation of the
film but only in respect of the defined DVD and video rights. This clause
does not refer to money from any other source.

• The money that falls within the definition of the net receipts may be received
by the company or a nominated distributor or agent or other authorised third
party.

• The net receipt figure is only calculated after the deduction of:
 – all costs and expenses

– relating to the production, reproduction, distribution, sale or other

exploitation

– of the DVD of the film or parts

• There is however a maximum fixed limit agreed which can either be deducted
in total during the term of the agreement or in any accounting period or in
any calendar year.

A-Z N.005
‘The Net Receipts’ shall mean the aggregate of the proceeds of exploitation
of the [DVD/Video/Disc] Rights in the [Film] received by the [Company]
(or its nominated distributor, agent or other authorised third party) in freely
convertible currency after there shall have been paid or deducted from such
proceeds all costs and expenses of and relating to the production,
reproduction, distribution, sale or other exploitation of the [DVD] of the
[Film] and/or parts up to a maximum limit of [figure/currency] [in total
during the Agreement/in any accounting period/in any one calendar year].

• A net receipts clause may include sums received in damages and

compensation as in A-Z N.035 in General Business and Commercial.

• The net receipts received by licensee B are:

– the total sums received from any third party

– from the exploitation of the rights granted

– at any time whether during the term of the agreement or not

• The sums – include – but are not limited to – compensation, damages,

advances and royalties.

• Note this definition also states that the licensee shall not be able to deduct
any costs and expenses from the money received from third parties.

A-Z N.035
‘The Net Receipts’ shall be the total sums received from any third party by
 the [Licensee] pursuant to the exploitation of the rights granted in this
Agreement at any time (whether during the Term of this Agreement or not)
including, but not limited to, compensation, damages, advances, royalties,
or otherwise. The [Licensee] shall not be entitled to deduct any costs or
expenses from the sum.

• Where a net receipts clause is used in a publishing contract it often refers to

ways of selling as in A-Z N.070 in Publishing.

• The net receipts are:

– the total proceeds

– from the distribution and exploitation of the defined work

– examples include retail, sale, hire, license or otherwise

– throughout the defined territory for which the rights are granted

– at any time

– received by or credited to the publisher B or its sub-agents or its sub-

licensees

– after deducting any value added tax, sales tax and commission fees of
any collection agencies

• The net receipts are not limited to the term of the agreement or licence
period.

• The funds received directly relate to the exploitation of the defined work.
This clause makes no direct reference to adaptations. This could be presumed
from the other clauses in the agreement but it is better that there is a wider
explanation of the forms of exploitation.

• The permitted deductions from the sums received cover taxes and
commission from collecting agencies. The agencies could be specified rather
than left to interpretation.

A-Z N.070
 ‘The Net Receipts’ shall be the total proceeds from the distribution and
exploitation of the [Work] whether by retail, sale, hire, license or otherwise
throughout the Territory at any time received by or credited to the
[Publisher] or its sub-agents or its sub-licensees after the deduction of any
value added tax, sales tax and any commission fees of any collection
agencies.

• The definition may specify details as to the range of costs and expenses that
may be deducted as in A-Z N.023 in Film and Television.

• The net receipts shall be:

– the total proceeds of any sums received by distributor B

– from the exploitation of the rights granted

– less the reasonable commission, costs and expenses which are specified

• In 1.1 it is agreed that the distributor may deduct a fixed percentage of the
sums received.

• In 1.2 there is a long list of potential costs and expenses which may arise
which it has been agreed can be deducted if they are reasonable.

• These include the costs of supply, distribution, promotion, advertising and

marketing. The list that follows is only by way of example and not
exhaustive as the words are added – including but not limited to.

• There a wide list of potential costs and expenses in this clause which the
distributor would then be able to deduct before reaching the calculation of
the net receipts from which licensor A receives a percentage.

• Under this agreement the distributor would therefore be able to deduct costs
and expenses relating to:

– processing, reproduction costs

– material, merchandising, packaging, storage

– customs, freight, insurance

 – currency conversion costs and charges

– brochures, catalogues, website and internet material

– mobile, telephone and telecommunication system material

– competitions, promotions

– trade fairs, exhibitions

– advertising, publicity and promotion

– clearances, copyright and consents payments

– performance, mechanical reproduction, reproduction, transmission and

exploitation

• This is a long list and therefore a significant amount could be deducted.

There is no limit on any of the sums which could be deducted and the
distributor does not bear any of the costs and expenses.

• In this clause distributor B and licensor A share the final sums which are left
after the deductions in 1.1 and 1.2. Licensor A receives the payment of the
net receipts in 1.3.

• In this clause the costs and expenses are permitted in 1.2 as a deduction but
they could just as easily not be allowed and specifically excluded.

A-Z N.023
‘The Net Receipts’ shall be the total proceeds of any sums received by the
[Distributor] from the exploitation of any of the rights granted under this
Agreement less the following reasonable commission costs and expenses:

1.1 A Distribution Fee to the Distributor of [specify percentage in words

and figures] of the total sums received.

1.2 The actual cost of supply, distribution, promotion, advertising and

marketing including, but not limited to processing, reproduction costs,
material, merchandising, packaging, storage, customs, freight,
insurance, currency conversion costs and charges, brochures,
 catalogues, website and internet material, mobile, telephone and
telecommunication system material, competitions, promotions, trade
fairs, exhibitions, advertising, publicity and promotion, clearances,
copyright and consents payments that may be due in respect of any
material, stills, graphics, artists, director, contributor, music, computer
generated material, sound recording, voice-over, the performance
and/or mechanical reproduction and/or reproduction and/or
transmission and/or exploitation.

1.3 The balance of the sum after such deduction shall be split equally
between the parties. The [Distributor] shall then receive [specify
percentage] of the balance of the sum, and the remaining sum shall be
the Net Receipts due to the [Licensor].

• In an agreement for the creation, development and exploitation of an app in

A-Z N.050 in Internet and Website. A company may accept that it must bear
certain costs and expenses related to the project and not seek to deduct any
such sums from the money received from the exploitation.

• In this clause company B agrees and undertakes that it will not deduct certain
sums.

• Company B must therefore pay the cost of:

– any design, development and production

– computer software

– marketing, promotion and advertising

– any agency or distributor

– copyright clearance payments and other intellectual property payments

– collecting societies for any music

– any other contribution

– legal and other advisors and consultants

 – and any other matter

• The only exception where sums may be deducted is referred to at the end of
the clause.

A-Z N.050
The [Company] agrees and undertakes that it shall not be entitled to deduct
any design, development and/o production and/or computer software
and/or marketing, promotional and/or advertising costs and expenses
and/or agency and/or distributor and/or copyright clearance payments and
other intellectual property payments and/or any costs and expenses due to
collecting societies and/or for any music and/or other contribution and/or
any legal and/or other advisors and/or consultants and/or any other matter
from the sums received except those set out in clause [–] in respect of the
[App/Download/other].

• The net receipts may also be defined to allow a company or distributor to

deduct a list of expenses and costs as in A-Z N.048 in Internet and Websites.

• Here the net receipts are:

– the actual sums received by the company

– in respect of the work, product or service

– less the listed deductions of expenses and costs

• The agreed expenses and costs include:

– commission and any agency fees for sub-agents, sub-distributors or other

third parties

– reproduction and conversion costs and charges

– freight, customs duties

– packaging, insurance

– payments due for the clearance and use of any copyright, intellectual
property rights or any other interest
 – any sums due to any collecting society

– any sum due for advertising, marketing, merchandising, trade fairs, and
exhibitions

– taxes due to any government which form a distinct element of the price
and are not refundable

– discounts, refunds, rebates or any payments due to loss or damage

– legal, accountancy costs and expenses

– legal proceedings or any settlement

– currency conversion costs and bank charges

• Note there is no financial limit set for the deductions. Individual areas could
be set with a limit for the full period of the agreement or in any accounting
period.

• The initial figure only covers sums actually received and so if a payment is
not made to the company or distributor it is not included in the calculation
and may even not be reported.

A-Z N.048
‘The Net Receipts’ shall be the actual sums received by the [Company] in
respect of the [Work/Product/Service] less any deductions for any of the
following expenses and costs:

1.1 Commission and any agency fees due to any sub-agent, sub-distributor
or other third party.

1.2 Reproduction and conversion costs and charges, freight, customs

duties, packaging, insurance and payments arising from the clearance
of and exercise of any copyright, intellectual property rights, and/or
any other interest.

1.3 Any sums due to any collecting society.

1.4 Any sum due for advertising, marketing, merchandising, trade fairs,
 and exhibitions.

1.5 Taxes due to any government which form a distinct element of the
price and are not recoverable.

1.6 Discounts, refunds, rebates and/or any payments due to loss and/or
damage.

1.7 Legal and accountancy costs and expenses.

1.8 The cost of any legal proceedings whether to sue and/or to defend
and/or the cost of any settlement.

1.9 The cost of currency conversion costs and bank charges.

• The range of costs which can be deducted in the calculation of the net
receipts may be very general as in A-Z N.099 in University, Library and
Educational.

• The initial figure for the net receipts is:

– the total sum received by or credited

– which is cleared and retained in an agreed currency

– at any time

– from the exploitation of the work or service or product

– there are then agreed deductions from 1.1 to 1.11

• The deductions allowed in this definition include some additional new areas.
In 1.6 the company can deduct the cost of registration of any rights, domain
names, trade marks, computer software or patent and any legal or agent’s
fees and costs. The costs and expenses involved could be considerable. The
agreement would also have to address the issue of ownership in relation to
these matters and whose name should be registered.

A-Z N.099
‘The Net Receipts’ shall be the total sum of all monies received by and/or
 credited to the [Institute] which has been cleared and retained by the
[Institute] in [currency] at any time from the exploitation of the
[Work/Service/Product] after the deduction of:

1.1 Value Added Tax or other similar taxes which form a distinct element
of the price and are not recoverable.

1.2 Commission charges and expenses of any agency, licensees and

distributors.

1.3 Discounts, refunds, or rebates to any third parties.

1.4 The cost of development, materials, production, publication,

packaging, distribution, and exploitation.

1.5 Legal and accountancy costs and expenses.

1.6 The cost of registration of any rights, domain names, trade marks,
computer software and/or patent and any legal or agents fees and costs.

1.7 The cost of advertising, marketing, merchandising, brochures,

photographs, artwork, graphics, leaflets, packaging, trade marks and
logos, publicity and promotional expenses, website and internet
material, mobile, telephone and telecommunication system material,
competitions, trade fairs, exhibitions.

1.8 The cost of customs duties, freight, storage and insurance.

1.9 The cost of copyright clearance and payments, contractual obligations,

consents and fees, clearance and payments of any sums to collecting
societies.

1.10 The cost of currency conversion costs and bank charges.

1.11 The cost of any legal settlement or litigation with a third party relating
to any matter regarding the [Work/Service/Product].

• In A-Z N.040 in General Business and Commercial. although deductions are

allowed. each area has a fixed limit which applies for the duration of the
agreement.
• The definition has been extended to apply to all sums – received, credited to
or transferred – to the company in respect of the project or service.

• It is not just limited to money received from certain defined copyright or

intellectual property rights. The focus is not on the format or detailed nature
of the exploitation but wider and more general.

• In 1.1 development, production, manufacture, reproduction, supply,

distribution, packaging, freight and sales costs may be deducted up to a fixed
total.

• In 1.2 advertising, marketing, merchandising, promotions, competitions and

any telephone service costs may be deducted up to a fixed total.

• In 1.3 any costs relating to liability, legal proceedings, actions, refunds,

compensation, indemnity, fines, cancellations and disputes may be deducted
up to a fixed total.

A-Z N.040
‘Net Receipts shall mean all sums received by, credited to or transferred to
the [Company] in respect of the [Project/Product/Service] in any currency
after the deduction of the following costs and expenses:

1.1 Development, production, manufacture, reproduction, supply,

distribution, packaging, freight and sales costs [up to a total maximum
of [figure/currency].

1.2 Advertising, marketing, merchandising, promotions, competitions,

telephone service [up to a total maximum of [figure/currency].

1.3 [Project/Product/Service], liability, legal proceedings, actions and

costs, refunds, compensation, indemnity payments, fines, cancellations
and disputes up to a total maximum of [figure/currency].

• A similar pattern of fixed limitations on deductions is in an app agreement in

A-Z N.051 in Internet and Websites.

• The net receipts are:

 – the sums paid to the distributor which are retained

– received from the exploitation of the app or any part on the defined
website

– or by any other means

– in any medium

– in any format

– at any time

– subject to the agreed deductions

• The sums received relate therefore to any exploitation of the app even if it is
not envisaged at the time the agreement was signed.

• If the agreement had been limited to the use of the app on the site then there
may not have been a right to receive money from another form of use.

• Sums can be deducted up to a fixed maximum for:

– development, production, design, artwork and computer software

– registration of any domain name, trade mark, design

– to engage the services of legal and other advisors in the creation,

development and/or licensing of the app

– copyright and intellectual property and computer software clearance

payments

– collecting society payments

– commission, agency fees and other payments for affiliations

– advertising, promotion and marketing

A-Z N.051
‘The Net Receipts’ shall be the sums paid to the [Distributor] which are
 retained and not returned to any third party which are received from the
exploitation of the [App] and/or any part on [website] and/or by any other
means and/or telecommunication system, website and/or other form in any
medium in any format during [the term of this Agreement/at any time] less
the following costs and expenses:

1.1 Sums paid for the development, production, design, artwork and
computer software up to a maximum of [number/currency].

1.2 Sums paid to register any domain name, trade mark, design and/or to
engage the services of third party legal and other advisors in the
creation, development and/or licensing of the [App] up to a maximum
of [number currency].

1.3 Sums paid for copyright and intellectual property and computer
software clearance payments and any other collecting society payments
up to a maximum of [number/currency].

1.4 Sums paid in commission, agency fees and other payments for
affiliations and/or links up to a maximum of [currency/number].

1.5 Sums paid for advertising, promotion and marketing up to a maximum

of [currency/number].

• It is useful to get a company to accept responsibility for costs in an agreement

as in A-Z N.101 in University Library and Educational.

• The distributor agrees it shall be responsible for all costs incurred in:

– development, production, manufacture, distribution, marketing,

promotion, advertising, sales and exploitation of the work or service or
product

– and that no such sums shall be offset against any sums or net receipts due
to the institute A

A-Z N.101
The [Distributor] agrees that it shall be solely responsible in respect of all
costs incurred in the development, production, manufacture, distribution,
 marketing, promotion, advertising, sales and exploitation of the
[Work/Service/Product] and that such sums shall not be offset against any
Net Receipts due to the [Institute] under this Agreement.

• It may be necessary for company B to confirm that they cannot set off any
advance against the net receipts or any other sums due to the licensor A as in
A-Z N.008 in DVD Video and Discs.

A-Z N.008
The [Distributor] agrees and undertakes that it shall not offset the Advance
to the [Licensor] in Clause [–] against the Net Receipts and/or any sums
due to the [Licensor].

• The parties may also agree that the advance can be recouped and set off as in
A-Z N.007 in DVD Video and Discs.

A-Z N.007
The [Licensor] agrees and undertakes that the [Distributor] shall be entitled
to offset the Advance to the [Licensor] in Clause [–] against the Net
Receipts due to the [Licensor] until such time as the Advance has been
recouped in full.

• Where there has been an agreed budget which has been spent for a project as
in A-Z N.027 in Film and Television. Assignor A and assignee B may agree
that the budget cannot be recouped from the gross receipts. In this clause the
only permitted deduction is the defined distribution expenses.

A-Z N.027
The [Assignee] agrees that it shall not offset the Budget against the Gross
Receipts only the Distribution Expenses.

• Licensee B in A-Z N.056 in Merchandising may have to bear the cost of the
licence fee paid to licensor as it cannot be set off or recovered and is non-
refundable.

A-Z N.056
The [Licensee] acknowledges that the Licence Fee shall not be offset
 against the Gross Receipts, the Net Receipts and/or the [Licensor’s]
Royalties.

• A company may not be entitled to deduct staff and administrative costs as in

A-Z N.041 in General Business and Commercial.

• The company B has agreed that it may not deduct the following costs:

– Staff, personnel, administrative, transport, accommodation, catering,

entertainment and benefits

– Currency conversion charges, taxes, duties, national insurance, insurance,

health and safety compliance, environmental compliance

A-Z N.041
The [Company] shall not be entitled to deduct the following costs and
expenses from the sums received prior to the calculation of the Net
Receipts:

1.1 Staff, personnel and administrative costs, and related transport,

accommodation, catering, entertainment and benefits costs.

1.2 Currency conversion costs and charges, taxes, duties, national

insurance, insurance, health and safety compliance, environmental
compliance.

• A distributor may agree to pay all the costs of a project as in A-Z N.062 in
Merchandising.

• Distributor B agrees that it shall pay all costs for:

– development, production, manufacture

– distribution, marketing, promotion, advertising

– sales and exploitation of the licensed articles

• That these costs will not be offset against those due under the agreement.
 A-Z N.062
The [Distributor] agrees that it shall be solely responsible in respect of all
costs incurred in the development, production, manufacture, distribution,
marketing, promotion, advertising, sales and exploitation of the [Licensed
Articles] and that such sums shall not be offset against any sums under this
Agreement.

• Even if there are deductions allowed under an agreement to recoup costs and
expenses. There may still be areas in which a company or distributor must
pay for their own costs as in A-Z N.076.

• The distributor agrees not to deduct the cost and expense of:

– The operation and administration of the distributor

– The appointment of any legal, accountancy, trade mark advisors,

consultants, recruitment or marketing agencies or any third party
agreements for development of computer software or technology

– Development of designs, artwork, covers, labels, competitions,

newsletters or any creation of any format or reproduction of any samples
or prototypes or any website or app or blog

– Any losses, damages or other sums incurred due to destruction or

withdrawal of stock or delays in publication or translation of the work or
the creation of an audio and/or braille edition at any time

A-Z N.076
The [Distributor] shall not be entitled to deduct the following costs and
expenses from the sums received either from the published price, whole
sale price and/or any other sums received from any form of exploitation of
the [Work]:

1.1 The cost and expenses relating to the operation and administration at
the [Company] and the appointment of any legal and/or accountancy
and/or trade mark advisors, consultants, recruitment and/or marketing
agencies and/or any third party agreements for development of
computer software and/or technology.
1.2 The cost and expenses relating to development of designs, artwork,
covers, labels, competitions, newsletters and/or any creation of any
format and/or reproduction of any samples and/or prototypes and/or
any website and/or app and/or blog.

1.3 Any losses, damages and/or other sums incurred due to destruction
and/or withdrawal of stock and/or delays in publication and/or
translation of the [Work] and/or the creation of an audio and/or braille
edition at any time.
 NOVATION

• Novation is addressed in the A-Z from A-Z N.180 to A-Z N.192 under the
sub-heading of General Business and Commercial.

• Novation should also be looked at in conjunction with the main clause

headings Assignment, Assignment Period, Copyright Clearance, Third
Party Transfer and Title in the A-Z.

What is a novation?

• A novation usually arises where one party, company A, has an agreement

with person B. Company A wants to transfer and assign all the rights and
obligations of the agreement with person B to a new company C.

• Company A cannot rely upon or use any terms in its existing agreement with
person B in order to transfer all the obligations and benefits of the agreement
to company C.

• Therefore company A needs to seek the consent of person B to allow

company A to novate the agreement to company C.

• A new novation agreement is created for that purpose. The best method of
achieving a novation is a document for all three parties. The alternative is to
sign two new documents, one of which end sthe agreement between
company A and person B and one of which is an agreement between person
B and company C.

• The novation has the effect of the rights and obligations agreed between party
A and party B being transferred to party A and party C and such a process is
called a novation.

• The important wording in a novation is that the new company C will assume
and bear responsibility for the the benefit and burden of the original contract
 with person B.

• The new company C is as equally responsible for the performance of the

contract as the original company A was to person B.

• The guiding principle should be that the original contract between company
A and person B is not to be changed by the novation and there is merely a
substitution of company C for company A.

• Note any sale of shares in a company is not a novation.

• It is common to see the words ‘including any successors in business or title’

at the beginning of the contract where the names and address of the parties
are listed. The words will appear after the names of one or more parties and
will only apply to each party where it is included.

• These words are a way of allowing a company to have the rights to transfer
the rights and obligations in the contract to a company who buys either all
the assets of the company and all the shares or who buys just some of the
assets.

• The key here is that these words provide consent to that effect so that no
further consent is needed. So there is no novation but a third party transfer
based on the words successors in business or title.

• When looking at a contract, even if you see these words there may be a
clause on third party transfer in the agreement itself which states that no third
party transfer can take place without consent.

• In addition the third party transfer may also state that such consent shall not
be unreasonably refused, withheld or delayed by the person or company from
whom permission has been sought.

• There is a difference between a third party transfer and a novation.

• Both a novation and a third party transfer must be made by way of an

assignment and so must be in writing and signed by both parties.

• If there is no consideration then the assignment will in either case fail due to
a lack of consideration.
• For more clauses relating to Assignment and Third Party Transfer please
look at the main clause heading in the A-Z and this work.

• If an agreement allows one party A to transfer and assign the rights to a third
party – both the obligations and the benefits. A third party transfer can take
place and the new party C takes over the role of legal obligations of party B.

• If there is no right to make a third party transfer by party B in a contract to a

third party C. The consent of party A will be required and a new agreement
completed which would be called a novation.

• Therefore one party is allowing the other party to be released from some or
all of their obligations under an agreement and a new third party substituted
in their place.

• There may also be copyright clearance issues relating to rights and payments
which arise and relate to when and how an agreement is transferred and
assigned to a third party or by means of a novation agreement between the
parties.

• This section is not concerned with the extensive laws and regulations often
referred to as TUPE in the United Kingdom which arise in the context of
employment contracts.

• A company may dispose of its assets to third parties in many ways to

maximise the revenue, either by selling off a subsidiary or associated
company or by disposing of parcels of assets or lists.

• A publishing company may sell off a list of books or a television company a

list of archive films. This is a way of raising capital without disposing of any
company shares.

• As a general principle if company A is transferring a list of books or films or

products which it has acquired under a contract with all its obligation and
benefits to another company B. The rights of the original parties who have
the contracts with company A in respect of the books, films or products must
be considered and their consent provided to effect any novation.

• In any event each individual personal agreement needs to be reviewed and an

informed judgement made as to whether the other party has already provided
 their consent to a third party transfer or not.

• Where there are authors, photographers, designers and artists involved in any
project. Then there is often a dislike of one company selling off a person and
their work to another company and consent may be refused to any request for
a novation.

• If you are involved at any time in this sort of process then it is necessary for
the company which wants the novation to take place to develop a strategy to
overcome the negative aspects of such a transfer to an unknown third party.

• It is also possible that the original agreement can address the issue of a
potential novation in the future by one or both parties.

Drafting clauses in relation to novation

• Most of the clauses which we will discuss below relate to raising the issue of
novation in the original contract and not the final novation document itself.

• Contract 33 is a complete novation agreement in The Media and Business

Contracts Handbook 5th edition by the authors.

• In A-Z N.183 both parties to the agreement acknowledge that the company
shall be able to assign the benefit and burden of the terms of the agreement
to any successors in title of the company without the prior consent of the
parties.

• This clause only applies to those third parties who buy the whole company
not parts of its assets.

A-Z N.183
The parties to this Agreement acknowledge that any successors in title to
the [Company] shall be entitled to the benefit and burden of the terms of
this Agreement without the prior consent of the parties.

• In an agreement between a television company and a publisher in A-Z N.181.

The publisher has agreed that the television company may assign all or part
of the benefit of the agreement to a third party.
• The television company must give the publisher notice in writing.

• The publisher has agreed to cooperate and to enter into a novation agreement
on the same terms with a third party.

• This will be subject to the proviso that the television company can show that
third party is capable of fulfilling the agreement and the publisher will not be
worse off.

A-Z N.181
The [Television Company] shall be entitled to assign the whole or any part
of the benefit of this Agreement to a third party. The [Television Company]
shall give the [Publisher] notice in writing of any proposed assignment and
the [Publisher] agrees that it shall co-operate with the novation of this
Agreement and enter into an Agreement on the same terms with the third
party. Provided that the [Television Company] and the third party can
provide sufficient evidence that the third party can and will fulfil all the
terms of the original Agreement and that there shall be no detriment to the
[Publisher] from such action.

• A different approach is to set out some basic rules for any intended novation
in the future. At present many contracts do not contain any clauses in the
original agreement relating to novation. The reason for this would be that the
parties do not anticipate such a situation.

• There are termination provisions in the agreement and so it is just as feasible

to include a clause for nomination.

• It is possible to set some ground rules for any future novation of an

agreement by either party.

• The clause may apply to a broad range of novations, as in A-Z N.192. The
new novation must address key issues as set out in 1.1 to 1.8. As you will see
these matters relate to:

– Payment

– The effective date of the novation

 – Copyright ownership and other intellectual property ownership both of
the rights and any physical material

– Accounting and paying for outstanding sums

– The transfer of any associated registration such as with collecting

societies or domain names

– The supply of documents for any continuing obligations such as licences

and payments due

– The supply of documents relating to any buy-out or assignment

– Supply of documents relating to any threatened or potential legal actions

• These are all surrounding administrative issues that may affect the successful
transfer and assignment of a project.

A-Z N.192
Where either party wishes to novate and/or transfer the benefits and
liabilities of this Agreement to a third party in respect of the
[Service/Work/Project]. Then a new agreement must be drawn up between
the parties setting out:

1.1 The sums to be paid to any party.

1.2 The date on which the novation and/or transfer takes effect.

1.3 The ownership of all physical and intellectual property and copyright
material which may exist

1.4 The accounting process for outstanding sums due if any.

1.5 The transfer of any registrations with any collecting society and/or
government body and/or international organisation in respect of
domain names, trade marks, service marks and/or otherwise.

1.6 The supply of documents relating to any continuing payments and/or

obligations to third parties.
 1.7 The supply of documents relating to the buyout and/or assignment of
any rights.

1.8 The supply of documents relating to any active legal and/or contractual
and/or other claims, actions and/or investigations by third parties.

• An individual or company may set additional grounds for their agreement to

a novation which may include:

– an additional fee

– an agreed new budget for marketing and promotion by the new company

– an agreed promotional campaign

No novation

• A person or company may have a clause in an agreement that there is to be

no third party transfer which would of course necessarily prohibit a novation.

• There may be a clause which specifically prohibits a novation as in A-Z

N.186 where the agreement is limited to a named company and imprint.

A-Z N.186
There are no rights of novation by the [Company] under this Agreement,
either to a different company or a related body whether there is a change of
policy, ownership or control or otherwise. The Agreement is only with the
[Company] for the particular imprint agreed namely [–].

• Another alternative is that where a parent company of a distributor has

transferred ownership of the parent company to a third party. The individual
shall has the option to terminate the agreement with the distributor and pay
back some agreed sums in order to get a reversion of rights and be able to
conclude a new publishing agreement as in A-Z N.188.

A-Z N.188
Where the ownership of a parent company changes to a third party. The
[Author] shall have the option to terminate the agreement with the parent
company and/or the subsidiary with immediate effect and to notify the
[Company] that he/she wants a full reversion of all rights with immediate
effect. Provided that the [Author] shall repay [number] per cent of any
advance royalty payments after the conclusion of a publishing agreement
with another party.
 OPTION

• There are 57 clauses in the A-Z for an Option from A-Z O.093 to A-Z
O.149.

• This section can also be considered in conjunction with the main clause
heading First Refusal, Rights and Licence Period in the A-Z.

• Contract 63 in The Media and Business Contracts Handbook 5th edition

is a pre-production option to acquire an exclusive licence in an author’s
work.

The meaning and purpose of an option

• An option can be a useful tool in an agreement. It can be used to acquire

rights with a payment at a later date rather than at the time of signature of the
agreement.

• There may be an additional fee or sum negotiated at the time of the original
agreement which specifically relates to the option. Alternatively the sum to
be paid may not be defined but included in the consideration as part of the
general sums paid.

• An option can be offered as an additional bargaining point to another party

from which they will benefit.

• An option in an agreement usually arises in two very different scenarios as a

means of:

– having the choice to extend a licence period for an existing product or

service; or

– having the choice to acquire the rights to produce, market and exploit a
new product or service
• An option is the right to acquire something if a party wishes to do so. A party
will therefore have an option whether to exercise the rights. Note that there is
no obligation to exercise an option.

• Where the option is on a work to be created in the future it is always a

problem as to whether a party has undervalued the rights in a work by
granting an option too soon before it is created or written.

• If you have an option on a product, book or film or other material you will
often pay an additional fee. This fee will be paid either at the time of the
original agreement or within the option period for the right to exercise the
option and conclude a further agreement which relates to the option.

• There may then be a second exclusive licence agreement or assignment

concluded which is in respect of the rights which were set out in the option
which you have acquired for a project. The further agreement is needed as
the parties must conclude a full and detailed agreement as to the exploitation
of any such rights.

• An option may be limited to the right to acquire certain rights such as the
DVD or television rights.

• The option may relate to the right to produce, distribute and exploit a film
based on a book.

• The option may be to produce, sell and distribute a merchandising character

which has appeared in the storyline of a film.

• The option may be for all the media rights in a work.

• A publisher may have an option for the sequel to an existing book which it
sells and markets.

• Whether the option relates to an existing or future work the same principles
will apply.

• How long has the option been granted for? State a start and end date by
which time the option will must be exercised and notice given to exercise the
option and payment of the option fee made.
• There may be payment for the benefit of the option included in the advance
to a company as well as an additional option fee payable when it is
exercised. There may then be an additional advance and royalties from the
exclusive agreements which is then concluded for the rights.

• The question of whether the option fee can be recouped from the sums
received as royalties under the later agreement should be made clear. You
would not normally expect the other party to be able to recoup an option fee.

• You may wish to state in a clause that, if the option is not exercised within
the agreed period, that period cannot and will not be extended whatever the
reason.

• Many agreements which have an option do not have the agreement attached
which it is intended the parties will sign if the option is exercised.

• If no agreement is attached then the basic terms are not agreed and you may
find that the option is exercised and then terms offered which are not what
you expected.

• At the very least you may want to attach heads of agreement which set out
the payments and rights and territory covered and whether it will be a licence
or assignment.

• The option may be quite particular as to how the option is to be exercised and
on whom notice is served and how the option fee is paid. You may draft the
clause so that failure to comply with these requirements means that the
option has not been exercised.

• You may wish to specify how notice is to be served and on whom. For more
clauses please look at the main clause heading Notices in the A-Z.

• There may a clause which covers the issue of failure to exercise the option
which makes it clear that it has ended.

• It is also possible to have an option over an event or use of and access to a

venue and its facilities.

• An option may apply to physical material on its own as opposed to any rights.
• It is therefore easy to see that there can be a wide variety of types of options
and the drafting of the wording is crucial to the meaning.

• As with other terms care must be taken to ensure that drafting of the option
clause relates to the intention of the parties. The term option and its
consequences may not have the same meaning to each party and so it should
be discussed in detail.

• It is possible for an option to have more than one payment or even an annual
option fee.

• Where the period for an agreement is extended as a result of the exercise of

an option. It may need to be stated that the agreement cannot be further
extended for an additional period

• A party to an agreement may also state that there is only one option and that
no additional options apply.

• A right of first refusal is not the same as an option. It is often adopted in

order to avoid granting an option.

• A right of first refusal is not the same as an option because the right in
question is not the right to choose but the right to accept or refuse terms to be
offered in the future by one party to the other.

• The distinction between an option and a right of first refusal is of

fundamental importance and often resolves a deadlock between one party
which insists on an option and the other who is equally opposed to the very
idea of an option.

• For more clauses please look at the main clause heading First Refusal in the
A-Z.

• There may also be situations where neither party wishes there to be any
options or first rights of refusal. That should be stated in the agreement so
that the other party cannot argue that they presumed they had an option at a
later date. This might be particularly important where any option was
considered in negotiations between the parties.

• The clauses in the main clause headings Rights, Territory, Licence Period
 and Term of the Agreement can all be used to adapt the drafting of an
option clause.

• An option is unlikely to be exercised unless there are commercial grounds for

doing so therefore it is an issue that tends to be resolved to both parties’
satisfaction if a reasonable and constructive solution can be agreed because
an option, by its nature, tends to be predicated upon a presumption of
success.

Drafting clauses for an option

• There may be a number of staged payments which you can ask for under an
agreement to maximise the amount of money a company pays for an option.

• In A-Z O.095 in DVD, Video and Discs there is an option fee which
company B must pay to name A in order to have the right to an option which
it can exercise in 1.1.

• The option only relates to the right to produce a film based on the work by
name A.

• The option only allows the DVD and video rights to be exploited in this
clause but it could be expanded to cover television, publishing and
merchandising.

• These rights will only be for a specific country and fixed period of time but
could be expanded to suit the facts.

• There is a start date and end date during which company B may exercise the
option.

• There is an additional sum to be paid in 1.2 in order to exercise the option.

• In 1.3 if the option is exercised by the company then the parties will enter
into an exclusive licence agreement for which the main terms have been
agreed and form part of the original agreement.

• 1.4 deals with the failure to exercise the option or pay the additional sum due.
The company B will have no further rights in the work.
 A-Z O.095
1.1 In consideration of the Option Fee of [figure/currency] [Name] grants
to the [Company] the sole and exclusive right to exercise an option to
produce a [Film] based on the [Work] and to exercise and exploit the
[DVD/Video/Disc] Rights in [country] from [date to [date].

1.2 The right to exercise the Option shall commence [date/date of this
Agreement] and end [date]. Notice must be in writing and an additional
sum paid of [figure/currency] to [Name] in order to exercise the
Option.

1.3 In the event that the [Company] exercises the Option and has made the
second payment, then [Name and the [Company] agree to enter into an
[exclusive licence/other agreement] with the following main terms
[specify].

1.4 The [Company] acknowledges that if the parties fail to agree terms and
conclude an agreement or the [Company] does not exercise the Option
and/or pay the sums due the [Company] shall have no further rights in
the [Work].

• A simpler option is in A-Z O.119 in General Business and Commercial. Here

again an option fee is paid to acquire the rights. Both these terms may be
defined separately from this clause or within the clause itself.

A-Z O.119
‘The Option’ shall mean the sole and exclusive option and right to acquire
the [specify Rights] during the period [date] to [date] by the [specify party]
by notice of the exercise of the rights and the payment of the [Option Fee].

• There may be an option to extend an original licence period as in A-Z O.151

in University Library and Educational.

• The institute has the exclusive option with two choices:

– the first to extend the licence for 12 months and/or

– to enter into a new licence for two years

• The option must be exercised by notice in writing by the institute by the
notice date.

• If the option is not exercised then there is a specified date upon which the
agreement will expire.

• Note there is no additional payment shown in this clause as consideration. It

is part of the general agreement between the parties.

• This type of clause could be for products or services.

A-Z O.151
The [Institute] shall have the exclusive option to extend this licence for
[twelve months] and/or to enter into a further licence on the same terms
and conditions for [two years]. The [Institute] must exercise the option by
notice in writing to the [Company] by [notice date]. If the option is not
exercised and/or notice received then this Agreement shall expire on [end
date].

• A person or company may also grant an option to another over any future
work that they may create. This type of option can be very narrow and
related to the sequel to a book or very wide and cover all types of work, not
just those written by that person.

• This is a very dangerous type of clause and if a person is not careful they
could be creating an option over all their future artworks, lyrics, recordings
and performances without appreciating the extent of this clause.

• Where an author decides to grant an option over the next future full length
work by the author. It may be drafted in such a way as to make sure that the
author is actually not obliged to enter into a binding agreement unless the
parties can agree final terms as in A-Z O.142 in Publishing.

• The clause makes the publisher accept that the author is not to be paid less
than the existing agreement and that the rights and territory are to be the
same.

• If the parties cannot agree terms in a fixed period after which the author has
delivered a manuscript of the book to the publisher. Then the option ends and
 the author can go to a third party to exploit the work.

A-Z O.142
The [Author] agrees to give the [Publisher] the first option to publish [in
volume form] the next full-length work by the [Author] on such reasonable
and fair terms to be agreed between the parties for the purpose of granting
the same Rights and Territories as have been agreed for the [Work]. The
Advance and Royalties are not to be less than those set out in this
Agreement, but in any event are subject to such sums being agreed between
the parties. The [Publisher] agrees that such option shall only last for a
period of [specify duration] from the date that the [Author] delivers the
next full-length work to the [Publisher]. In the event that the parties fail to
agree terms then the [Publisher] shall return all copies of the [Work] to the
[Author] at the [Publisher’s] expense.

• The parties may use the option clause to encourage and protect the
relationship between the parties as in A-Z O.132.

• In this clause a developer of apps has granted a company an option on a fixed

number of future apps.

• The option only comes into existence if in 1.1 the distributor pays an option
fee by an agreed date.

• The option does not prevent the developer of the apps having discussions
with third parties but he or she have agreed not to sign any agreements.

• The aim is for the distributor and developer to reach and sign an agreement in
the period agreed for the option.

• Note if no agreement is signed the developer does not have to repay the
option fee.

• If an agreement is concluded the option fee is not part of the new agreement
for the new app.

A-Z O.132
[Name] agrees to grant the [Distributor] an exclusive option to enter into an
agreement to be licenced the next [number] original apps that he/she shall
 create, develop and produce subject to the following terms:

1.1 The [Distributor] pays [Name] an option fee of [number/currency]

within [number] days and/or by [date] at the latest.

1.2 If the option fee is paid in 1.1 then the [Distributor] shall have a period
of [number] months where [Name] agrees not to enter into agreement
with any third party for the next [number] original apps he/she will
create. This shall not prevent [Name] from having discussions with
third parties.

1.3 During the option period if the [Distributor] and [Name] do not agree
and conclude an agreement then [Name] shall not be obliged to repay
the option fee. If the parties do conclude an agreement then the option
fee shall not form any part of that agreement.

• It is often important to make it clear that, if an option is not exercised, then

no transfer of any rights or interest has taken place as in A-Z O.111 in Film
and Television. The failure to comply with the terms of the option will result
in the rights remaining with the author.

A-Z O.111
In the event that the option is not exercised then all copyright, intellectual
property rights, computer software and all other rights in the [Work], title,
format, and any associated material shall remain vested in and belong to
the [Author].

• The option clause may ensure that the fee cannot be offset and is non-
returnable as in A-Z O.115.

A-Z O.115
‘The Option Fee’ shall be the sum of [figure/currency] which shall be
payable upon signature of this Agreement by the [Licensee]. This sum
(which shall be an additional sum to any other payments due under this
Agreement) shall be non - returnable and not offset against any future
payments to which the [Licensor] may be entitled.

• A very short clause may be used for an option payment for distribution rights
 for a product or service where the licence agreement is attached to the main
document as in A-Z O.130.

• The distributor has an exclusive option to acquire the distribution rights to the
product for which he or she must pay an option fee by an agreed date. The
parties will then conclude the attached licence agreement.

A-Z O.130
The [Distributor] shall pay to the [Company] an option payment of
[figure/currency] by [date]. The [Company] grants the [Distributor] the
exclusive option to acquire the [Distribution] Rights for the [Product] in
accordance with the terms and conditions set out in the Licence in
Appendix [–] which forms part of this Agreement.

No option

• If the parties have discussed the possibility of an option but cannot agree on
the wording. If the choice of a first refusal clause is also not acceptable. Then
it is best to confirm that to be the case as in A-Z O.097 in DVD Video and
Discs.

A-Z.O.097
There is no option and/or first right of refusal granted in respect of any
subsequent [Work/Sound Recording/Film] which is based on and/or
associated with the [Work/Sound Recording/Film] by the [Licensor].

• It may be necessary to ensure that there is no right to any option over an

existing work or service or any sequel or adaptation or future development as
in A-Z O.150 in University, Library and Educational.

A-Z O.150
The [Institute] does not grant any option and/or rights to the [Company]
which can be exercised in respect of the [Work/Service] and/or any sequel,
adaptation, new edition, development and/or subsequent version of the
[Work/Service] or any part.

• In many publishing agreements there is a clause relating to the writing of a

new edition of the work and an obligation to update the work. For many
 authors this may effectively be like writing a new book and so they will not
want to do this without a new agreement.

• In A-Z O.148 in Publishing the publishers agree and acknowledge that the
contract only relates to the first edition. The publishers have also agreed that
they have no option or right of first refusal over any further work of the
author or any subsequent edition or any adaptation.

A-Z O.148
The [Publishers] acknowledge and agree that this Agreement is solely
limited to the first edition of the [Work] in [format]. The [Publishers] shall
have no right of first refusal, option, or prior claim to any further work of
the [Author] and or any sequel and/or subsequent edition and/or any
version for any film, DVD, and/or sound recording or any other media
whether based on, derived from and or adapted from the [Work] or not
including any character, plot, storyline, name, words, images, illustrations
or otherwise.

• A shorter version is in A-Z O.138 in Publishing. There may be no option in

the agreement but for the avoidance of doubt this clause may prove useful.

A-Z O.138
Unless otherwise stated nothing herein is to be taken as granting or
implying the grant of an option to the [Publisher] over any of the
[Author’s] future works.
 PAYMENT

• The section on Payment in the A-Z contains nearly 200 clauses from A-Z
P.060 to A-Z P.254.

• This subject should be cross referenced to the main clause headings in the A-
Z of Accounting Provisions, Assignment Fee, Budget, Costs, Delivery,
Distribution Expenses, Exclusivity, Force Majeure, Gross Receipts,
Inspection of Accounts and Records, Interest, Liability, Licence Fee,
Licence Period, Net Receipts, Option, Rates of Exchange, Rejection,
Rights, Risk, Royalties, Set Off, Term of the Agreement, Termination
and Title.

The significance and purpose of payment

• Whatever the type of agreement you are drafting it should be clear through all
the documents as to how the money is calculated and to whom it gets paid. If
the definitions are so complicated that you cannot understand them then you
have not got a good agreement.

• You should be able to take a random example of a real situation in which the
company is already involved and be able to work through the actual figures
and the documents so that they match and you can see the revenue stream
which you have created.

• The only reason that someone would draft definitions which are
overcomplicated and extensive is to be able to deduct sums before any
payments are due.

• The payments may be directly linked to the copyright and intellectual

property rights which you have granted under a licence or assigned in an
assignment to another party.

• If you want to maximise revenue then you grant as few rights as possible for
 the shortest licence period and only those from which you will definitely
obtain payment. For more clauses on these topics please look at Exclusivity,
Rights, Licence Period and Term of the Agreement in the A-Z.

• Just because a definition is given a certain title such as Gross Receipts from
which you think you are being paid royalties. Do not assume that the
definition is actually drafted to mean gross receipts – in other words all the
money which is received or accrued without any deduction except for
legitimate taxes.

• Many definitions which pretend to be gross receipts in agreements are in fact

net receipts because they allow deductions of sums before any money is
paid. For more on the subjects of Gross Receipts and Net Receipts please
look at the main clause headings in the A-Z and this work.

• There has been more than one major film and merchandising agreement for
which a licensor has not received any money because they did not appreciate
that they allowed the licensee to deduct large sums before any royalties
payments would be made.

• Even if you allow deductions and the royalty is derived from a net receipt as
opposed to a gross receipt you can still impose a limit on the total amount of
deductions. The deduction can be limited for the whole period of the
agreement or just each accounting period. For more on Distribution
Expenses please look at the main clause headings in the A-Z.

• Wherever there is any reference to a payment of any type the following

should be stated:

– The amount in words and figures together with the currency

– Which company is making the payment

– Which person or company receives the payment

– The currency in which the payment is to be made

– Which party is to bear the cost of any bank or currency conversion

charges
 – Whether interest is payable if payment is delayed

– The method of payment

– How any bank details are to be notified

– Whether an invoice is required

– Whether any taxes such as vat and sales tax are applicable or not and that
these are in addition to payment

• Where a company such as a distributor or an agent or manager are holding

money in their own accounts before it is distributed. It is important to
consider the protection of those funds and whether they should be kept
separately from the general business of the distributor or agent.

• There have been a number of individuals who have lost large sums of money
because their agent has gone bankrupt and the money owed to them was not
held in a clearly identifiable separate account.

• You may also wish to ensure that the accounting periods are short and that
payment is made swiftly for larger sums. You will also want to have access
to inspect the contracts, invoices, bank records and expenses of any such
third party so that you can verify the sums paid. For more on the subject of
Accounting Provisions and Inspection of Accounts and Records please
look at the main clause headings in the A-Z.

• You may agree that the sums received can be mixed with the other monies of
a company. Quite often an agreement is silent on the matter and the issue is
not raised.

• This is a mistake because the whole issue of payment relates to how and
where money is held and how it is paid.

• Wherever possible you will want to ensure that the funds from your project
are not mixed with other money and that all sums and expenses are
processed through a dedicated account. The withdrawal of payments must
have two authorised signatories.

• You may also wish to agree that any payments can only be made if approved
 and authorised on each occasion.

• The whole aim is to control access to the funds and to avoid fraud, scams and
payments for expenses and costs which are not agreed as part of the
agreement.

• For example the agreement not only ensures that monies are paid into a
dedicated account but specifies that monies can only be withdrawn by the
issuing of a counter-signed cheque.

• Even in this advanced digital age of internet banking it is still an accepted

procedure – and sometimes a policy of certain banks – to allow monies only
to be paid by cheque with two or more signatories. The advance of internet
banking has made it much easier for an individual with knowledge of the
relevant passwords and secure access details to make payments which do not
fall within the terms of the agreement.

• It is also necessary when reviewing the subject of payments to consider

liability and indemnity. If distributor C does not pay licensee B the sums
due. Then who is liable to pay you – licensor A – your money? An
agreement needs to be drafted so that the licensee B accepts responsibility
and liability for the non-payment by distributor C.

• In reverse if you, the licensee, do not want to be liable for the failure of a
third party who does not pay any sums due for the exploitation of a product.
Then you need to exclude such liability to the licensor under the agreement.

• You may wish to exclude liability not only in relation to payment but also to
other circumstances which may arise in relation to third parties. Please look
at the topics Liability and Indemnity in the A-Z.

• A project may have a fixed budget which is to be used – this is often set out
in a schedule which can be attached to and form part of the agreement. The
other extreme is that the budget is a rough quote based on a broad estimate of
the work to be undertaken.

• There have been many instances relating to website or software development

where a company or charity or local authority have been quoted a price for
the creation of a website or software only to find that many additional costs
and expenses are added at a later date.
• In some instances the website or software has not even been developed so
that it is useable and functions in the way that was originally discussed and
agreed.

• The lesson here is to be very precise as to what work is to be carried out for
the money you are paying.

• Payments should be linked to achievement of the functions you have

expected and performance related rather than based on specific dates or the
financial needs of the party providing the work.

• If you are the person or company being commissioned to do the work then
you want to be paid as much upfront as possible and be paid by fixed dates
rather than on completion of work.

• It is a common problem that the specifications of a project change as it

develops and so rather than wait until this happens. It is much better than an
element of contingency for this type of work is added into the cost or budget.

• You may also want to address the issue of additional charges and the rate
within the original agreement.

• Any additional costs may require additional prior approval and consent.

• For more on this subject please look at the main clause heading Budget in the
A-Z.

• It is possible in an agreement to define the gross receipts, the net receipts as

well as how the distribution expenses or costs or expenses will be deducted
or paid. For more on the subject of Costs and Expenses please look at the
main clause headings in the A-Z.

• As a general principle specify in detail a description of the costs and expenses

which will be paid as well as those that will not.

• You may set a financial limit on any costs and expenses which is based on a
month, a year or the whole period of the agreement.

• In both an employment agreement which is a contract of service or a

consultancy agreement which is a contract for services. It should be stated
 when the payment will be made and who is liable for any national insurance,
personal taxes, value added tax or pension which is applicable.

• It is also relevant to raise the issue of personal insurance, health care costs,
travel and mobile phone costs under such agreements.

• There are many ways in which a company set outs its terms and conditions
for payment – in a catalogue, on a website, on the back of an invoice or via
the use of third party companies which process online payments and take a
commission.

• The deductions and costs which can be made will be authorised by the
drafting of the terms in each case.

• There are Standard Terms and Conditions for a website in Contract 5 in The
Media and Business Contracts Handbook 5th edition by the authors.

• There are many different definitions and words used to define the type of
payment. The title itself is almost irrelevant – it is what the words drafted
actually mean in reality which is important.

• You may receive a percentage of a wholesale selling price or an eprice or

dealer price. They could all potentially be drafted in a variety of ways which
would result in you getting more or less money.

• A gross receipts clause should not have any deductions except taxes. When
defining this type of clause the sums which fall within this definition will
depend on how widely it is drafted.

• If you are going to permit the deduction of distribution expenses and costs
then be very precise as to what is or is not permitted. It may for instance
cover a fixed commission for the licensee and a sub-agent as well as freight
costs but not packaging, marketing and promotion costs.

• You need to discuss at the negotiation stage the expected costs and expenses
so that they can be either agreed or excluded.

• You may not wish to pay for first class travel for an agent and the cost of
hotels or the cost of an exhibition stand at a festival.
• The net receipts are calculated by deducting the distribution expenses from
the gross receipts. The preferred route is to define all three so that it is clear
what is authorised and what is not.

• An often forgotten cost in agreements is the cost of material and marketing.

The agreement should cover the issue of who is paying for the supply of
material and any subsequent development costs. It should be made clear
whether these can be deducted as authorised costs or not. For more on the
subject please look at the main clause headings Material and Marketing in
the A-Z.

• Where the agreement states that there is to be an advance payment then this
can be defined as an advance, a licence fee or an assignment fee.

• These are not however the only words which can be used to define a
payment. The use of the word assignment fee, however, as opposed to
licence fee will tend to give the impression as to the type of document which
may in some circumstances be misleading.

• The agreement must make it clear as whether the advance is refundable or not
and whether any payment can be set off against future royalties as well as
any other agreement with that person or company.

• For more on these subjects please look at the main clause headings Advance,
Licence Fee, Assignment Fee and Royalties in the A-Z.

• Where you will receive a percentage of any money then ensure that the
definition from which your percentage is derived is as wide and detailed as
possible. You would for instance not want the definition to exclude money
from certain forms of exploitation.

• Nor would you want the definition of the source of the payments to exclude
copyright and other rights and developments and formats that may be created
in the future.

• There have been many cases where performers and writers and artists have
not received any royalty payments because the particular form and method of
exploitation was only developed many years after the agreement had been
concluded.
• The licensee or distributor has then argued that as there was no mention of
that particular form of exploitation linked to an agreed royalty rate and that
no payment is therefore due.

• It is of fundamental importance to use language that both parties understand

to reflect their agreement and to clarify where the opportunity presents itself
to define as many specific terms as are necessary and appropriate to the
circumstances.

• There are also other subjects which may have an impact on whether a
payment is made or not. This may be because an agreement cannot be
performed due to force majeure and is delayed.

• An order is not delivered in accordance with the specifications and quality

required and so is rejected.

• The agreement has been terminated due to the fact that the services were not
of the expected standard.

• No payment will be made until the work has been completed and delivered in
the required format.

• Therefore the main clause headings Delivery, Force Majeure, Rejection and
Termination in the A-Z all need to be considered in any draft document to
see what impact those clauses may have on payment.

• Where you are commissioning or ordering a service or product then the risk
and title and ownership may not pass to you until all the payment has been
made in full. Please look at the main clause headings Risk and Title in the
A-Z for more on these subjects.

• In the same way that an agreement may state the terms upon which payment
may be made. It is equally important to establish reasons for and grounds on
which payment may not be made. This may include for instance:

– The failure to supply the service or order as required

– The sub-standard quality of the products

– Ill-health and absence

 – The cancellation of the event

Drafting clauses relating to payment

• A payment schedule may be attached which forms part of the agreement as in

A-Z P.213 in Services.

• The payments are still subject to satisfactory completion of the work and an
invoice.

A-Z P.213
‘Payment Schedule’ shall mean Schedule [–] which specifies the payments
by the [Company to the [Designer] and the conditions to be fulfilled by the
[Designer].

The [Company] shall make such payments as are agreed under this
Agreement in accordance with the Payment Schedule subject to completion
of the required work to a satisfactory standard to the [Designer] within [28
days] of receipt of a VAT invoice. Further the [Company] agrees to make
such payments to the [Designer] as may be agreed in accordance with the
Support Services under Schedule [–].

• In an assignment agreement in A-Z P.083 in DVD Video and Discs.

Assignee B has agreed to pay assignor A an assignment fee which is defined
as a separate definition and sets out the total sum of money to be paid.

• The assignment fee is to be paid in stages the first payment in 1.1 is subject to
signature of the agreement by both parties.

• In 1.2 assignor A must deliver the master material of the film and it must be
accepted by assignee B before any payment is made.

• Note delivery is not the same as acceptance of the technical quality.

• The third payment in 1.3 which is less common is for the delivery by assignor
A and the acceptance by assignee B of the advertising, promotional and
marketing material.

• The last payment in 1.4 is due upon first public release of the DVD of the
 film in a specific country. In case the film is for any reason not released on
DVD. The clause also has a date by which the payment will be made in any
event.

• The clauses states – but in any event not later than – a certain date. It is
important where any payment is linked to any event or delivery. That you
consider whether there should in any event be a date by which payment will
be made regardless.

• You may not wish to make payment if delivery has not occurred and the
material has not been accepted. You could therefore make 1.4 subject to
completion of 1.2.

A-Z P.083
In consideration of the rights and obligations imposed upon the [Assignor]
and the [Assignee] under the terms of this Agreement the [Assignee] shall
pay to the [Assignor] the Assignment Fee as follows:

1.1 [figure/currency] upon full signature of this Agreement by both parties.

1.2 [figure/currency] upon delivery and acceptance of the [Master Material

of the [Film] by the [Assignee].

1.3 [figure/currency] upon delivery and acceptance of all the promotional,

advertising and marketing material by the [Assignee].

1.4 [figure/currency] upon first public release of the [DVDs/Discs] of the

[Film] by [date] in [country] but in any event no later than [date].

• In A-Z P.089 in DVD Video and Discs licensee B has agreed to pay licensor
A an advance which cannot be claimed back in 1.1. There would be a
separate definition for the advance in the agreement.

• The licensee is entitled to set off the advance against the gross receipts which
it receives in 1.2. There would be a separate gross receipt definition in the
agreement.

• The licensee will not pay any sums to the licensor until the advance has been
recouped.
 A-Z P.089
1.1 The [Licensee] shall pay to the [Licensor] a non-returnable Advance.

1.2 The [Licensee] may recoup the non-returnable Advance against the
[Licensor’s] share of the Gross Receipts as they arise.

1.3 No payment shall be due to the [Licensor] until the Advance sum shall
be recovered by the [Licensee] in full.

• There is a much shorter version in A-Z P.162 in Merchandising in which the

licence fee is defined. The licence fee is non-refundable but can be recouped
against royalties.

A-Z P.162
‘The Licence Fee’ shall be the non-returnable and recoupable advance
against the [Authors’/Licensors’] royalties which is the sum of
[figure/currency] [words].

• A clause may make it clear that not only can an advance not be paid back but
that it cannot be set off against other agreements.

• In A-Z P.216 in Services company A agrees it cannot claim back the advance
from artist B which are not recouped from royalties.

• Company A also agrees that it cannot offset any unearned advance against
royalties due under another agreement to artist B.

A-Z P.216
The [Company] agrees and undertakes that it is not entitled to claim any
unearned advance back from the [Artist] which is not recouped against
royalties nor can the unearned advance be offset against royalties due to the
[Artist] under any other agreement which the [Artist] has with the
[Company].

• In an agreement for the assignment of a film in A-Z P.097 in Film and

Television. Assignee B has agreed to pay assignor A an assignment fee
which would be defined in the agreement.
• The assignment fee is to be paid in stages – the first payment in 1.1 is subject
to the signature of the agreement by both parties.

• The second payment in 1.2 will be made when the final approved script is
delivered.

• The third payment in 1.3 is subject to the commencement of principal

photography which would be the start of the filming.

• The fourth payment in 1.4 is the first public release of the film anywhere in
any country which falls within the definition of Territory used in the
assignment.

• If for some reason 1.2 and 1.3 fail then another sum to be paid by the asignee
is set in 1.5.

A-Z P.097
In consideration of the rights and obligations imposed upon the [Assignor]
and the [Assignee] under the terms of this Agreement the [Assignee] shall
pay to the [Assignor] the Assignment Fee as follows:

1.1 [–] upon full signature of this Agreement by both parties; and

1.2 [–] upon delivery of the final approved script; and

1.3 [–] upon commencement of principal photography; and

1.4 [–] upon first public release of the [Film] by [specify] anywhere in the
Territory.

1.5 In the event that the contingencies envisaged under Sub-Clauses 1.2
and 1.3 above are not fulfilled, the [Assignee] shall pay to the
[Assignor] in lieu thereof the sum of [–] not later than the following
date [–].

• In a merchandising agreement which is a licence as in A-Z P.161 in

Merchandising. The parties have agreed an advance which is defined as a
licence fee.

• The total sum of the licence fee would be set out in the agreement as a
 separate definition.

• The licence fee is paid in five stages:

– Signature of the agreement

– By a fixed date subject to acceptance of the material

– Upon approval by the licensor of the samples of the licensed articles or

products

– Upon approval by the licensor of the labels, packaging and advertising of

the licensed articles or products

– Upon first availability of the licensed articles or products to the public

anywhere in the world

A-Z P.161
In consideration of the rights granted under this Agreement the
[Distributor] shall pay to the [Licensor] the Licence Fee as follows:

1.1 [figure/currency] upon signature of this Agreement.

1.2 [figure/currency] on or before [date] subject to acceptance of the

[Material].

1.3 [figure/currency] upon approval of the sample of the [Licensed

Articles] by the [Licensor].

1.4 [figure/currency] upon approval of the labels, packaging and

advertising of the [Licensed Articles] by the [Licensor].

1.5 [figure/currency] upon first availability of the [Licensed Articles] by

the [Licensor] to the general public anywhere in the world.

• Although payment of the licence fee in stages may be linked to events as in

A-Z P.163 in Merchandising.

• In this case there is an final date by which payment will be made whether or
not the event takes place.
• The licence fee is defined in a separate clause and this clause deals with the
payment.

• Payment is in stages:

– Upon full signature of the agreement

– By an agreed date provided the agreement is signed by both parties

– Upon acceptance of the final script by the author but in any event no later
than a fixed date

– Upon first release on television in specified country but in any event no

later than a fixed date

– Upon first release on DVD in specified country but in any event no later
than fixed date

– Upon first release of computer game in specified country but in any event
no later than a fixed date

• This clause is in favour of the author as they will be paid regardless of

whether the events described in 1.3 to 1.5 happen.

A-Z P.163
In consideration of the rights granted under this Agreement the [Company]
shall pay the Licence Fee to the [Authors/Licensor] as follows:

1.1 [figure/currency] upon full signature of this Agreement by both parties.

1.2 [figure/currency] on or before date [date] subject to 1.1 has been

completed.

1.3 [figure/currency] upon acceptance by the [Author] of the final version

of the Script, but in any event no later than [date].

1.4 [figure/currency] upon first television release in [country], but no later

than [date].

1.5 [figure/currency] upon first DVD release in [country], but no later than
 [date].

1.6 [figure/currency] upon first release of the [Computer Game/Product] in

[country], [but no later than date].

• Where company A is providing a service to institute B as in A-Z P.248.

Institute B has agreed to pay the total sum agreed for the work based on the
progress of the work completed by company A.

• There are four equal instalments which are paid:

– Upon acceptance of the order by the company in 1.1

– Approval of the sample or prototype by the institute in 1.2

– Approval of the completed work or service by the company in 1.3

– A final payment is one month after completion provided there are no

defects or errors in 1.4

A-Z P.248
The [Institute] shall pay the [Company] the total sum of [figure/currency]
(exclusive of value added tax) for the [Work/Service/Product]. The sum
shall be paid in four equal instalments:

1.1 [figure/currency] upon acceptance and confirmation of the order by the

[Company].

1.2 [figure/currency] upon approval of the [draft/sample/pilot/prototype]

by the [Institute].

1.3 [figure/currency] upon delivery and approval of the completed

[Work/Service] by the [Institute].

1.4 [figure/currency] by [date] provided that the [Work/Product] has been

in operation for [one month] without any failure, defects and/or errors
effecting the [Work/Service/Product].

• The publication or selling or retail price is often an issue and many

 distributors will not confirm this in an agreement. They regard the marketing
and price as within their control. You can set a minimum price but you need
to provide details of the service or product to which this relates.

• In A-Z P.165 in Publishing the author agrees that the publisher has the final
decision as to the selling price of the work.

• There may be a different price based on the format in which the work by the
author is made available.

• The publisher has agreed to consult with the author not on all prices but the
decision in respect of the retail recommended price.

A-Z P.165
The [Author] acknowledges that the selling price of the [Work] shall be
within the sole and exclusive discretion of the [Publisher]. The [Publisher]
shall consult with the [Author] prior to making a final decision on the
recommended retail price.

• A company may agree that they will open a new bank account to hold all the
funds which are received from a project as in A-Z P.131 in General Business
and Commercial.

• The company has agreed to open a bank account at a specific bank and
branch in a nominated name.

• The company has agreed that the countersignature of the licensor shall be
required for all withdrawals.

A-Z P.131
The [Company] shall open an account in the name of [Bank] of [address]
entitled [specify Name]. It is agreed that it shall be a condition of the
account that all withdrawals shall be made on cheques countersigned by a
representative of the [Licensor] and that the instructions to each bank shall
not be altered without the prior written consent of the [Licensor].

• If a company or person nominates a third party to receive payments under an

agreement as in A-Z P.126 in General Business and Commercial.
• Where the licensee pays the sums due as requested by the company as set out
in 1.1 and 1.2.

• Then the licensee has discharged its obligation to make payment to the
company which is confirmed in 1.3.

A-Z P.126
All monies payable by the [Licensee] to the [Company] under this
Agreement shall be paid to the following representatives of the [Company]
as follows:

1.1 [number per cent] thereof to [Name] of [address] or at such other

address as may be notified to the [Licensee] in writing by the
[Company]; and

1.2 [number per cent] thereof to [Bank] of [address] for the credit of the
account in the names of [–] or such other account as may be notified in
writing to the [Licensee] by the [Company].

1.3 The receipt of the monies by the parties in 1.1 and 1.2 shall be good
and sufficient discharge to the [Company] of the sums paid.

• It may be agreed that any sums received shall be held in a new bank account
which is not mixed with other funds as in A-Z P.094 in DVD Video and
Discs.

A-Z P.094
The [Licensee] agrees to ensure that all [Sub-Licensees] shall keep any
sums received from the exploitation of [the Sound Recordings/Disc] in a
separate bank account and shall not mix such sums with those of the rest of
the business and/or create any lien, charge and/or other claim over the sums
by a third party.

• The parties may agree that the money can be mixed with other funds as in A-
Z P.120 in General Business and Commercial.

A-Z P.120
Nothing herein contained shall be deemed to mean that any monies due or
payable to the [Licensor] hereunder are held in trust by the [Licensee] for
 the [Licensor]. It is the intention that the [Licensee] shall be entitled to mix
any part or portion of the [Licensor’s] share of Gross Receipts which may
be received by the [Licensee] with any of the [Licensee’s] own monies.

• An employment agreement is most likely to state the annual or gross salary as

in A-Z P.068 in Employment. Payments are usually made monthly in arrears
although they could be made weekly or any other interval. The payment
frequency is often guided by the software used in the finance department.

• In this clause there is reference not only to the annual salary but also other
benefits and allowances.

• The employee will receive increments in line with the union agreement.

• The clause confirms that payment is by credit transfer on a fixed date each
month.

A-Z P.068
The [Employee’s] rate of pay will be [figure/currency] payable every two
weeks in arrears. This equates to an annual salary of [figure/currency] and
includes [specify financial benefits] and [specify type] allowance. The
[Employee] will receive increments in accordance with the union
agreement [specify]. Payment to the [Employee] by the [Company] will be
made by credit transfer direct to his/her bank account. The [Employee’s]
salary will be received on [date].

• Payment may be made every four weeks in arrears as in A-Z P.072 in

Employment.

• The annual salary includes an additional allowance.

• It is agreed the salary will be reviewed each year.

• All payments are to the employee direct by bank transfer.

A-Z P.072
The [Employee’s] rate of pay will be [–] payable every four weeks in
arrears. This is an annual salary of [–] including [–]. The [Employee’s]
salary shall be reviewed each year on [date]. All payments shall be made to
 the [Employee] by credit transfer.

• In an agreement for the services of a presenter as in A-Z P.222 in Services.

The fee for the presenter’s services for each year is defined in the Presenter’s
Fee.

• The fees are all paid over a twelve-month period on the last day of each
calendar month.

• The first date of payment is a fixed date. You would have to adjust this clause
if the agreement did not start in January.

A-Z P.222
‘The Presenter’s Fee’ shall be the following sums:
[–] for the first twelve calendar months.
[–] for the following twelve calendar months.
[–] thereafter until [date].

In consideration of the [Presenter’s] services the [Company] agrees to pay

the [Presenter’s] Fee in equal instalments throughout the Term of the
Agreement on the last day of each calendar month. The first instalment
shall be due on [date].

• In an agreement for the services of a contributor as in A-Z P.224 in Services.

• The total sum to be paid is defined is the contributors’ fee. This fee is paid in
addition to expenses which are also defined.

• Payment is direct to the person’s bank account and the first payment is due
when the contract is signed by both parties.

• In 1.2 the contributor agrees that he or she is responsible for his or her
national insurance and tax liability arising from the agreement.

• No mention is made of personal insurance or pensions.

A-Z P.224

1.1 The [Contributor’s] Fee shall be the sum of [–] payable in equal
 monthly instalments one month in advance, such sum to be in addition
to the Expenses as defined in Clause [–] to this Agreement and
exclusive of any [VAT]. The first payment shall be made immediately
following the signing of this Agreement by both parties. Payment shall
be made directly into the [Contributor’s] bank account by electronic
transfer.

1.2 The [Contributor] confirms that he/she shall be liable for the
arrangement for and payment of his/her [National Insurance
Contributions] and any other sums which are or may be payable to the
[Inland Revenue] as a result of the payments made under this
Agreement.

• Where payment relates to the purchase of products or services from a website

as in A-Z P.150 in Internet and Websites. The payment may be made
through a third party as part of a secure procedure.

• In this clause the company states that no order is confirmed until payment has
been received by the company as opposed to a third party.

• The company does not accept any responsibility for problems with payments
with the third party company.

A-Z P.150:
All financial transactions and payments in respect of this [Website] are
made through [specify payment company] which is an independent and
separate legal entity and not part of the [Website Company]. No order shall
be sent until confirmation of payment has been received from the [payment
company]. No responsibility can be accepted by the [Website Company]
for any problems that may arise from the use of the [payment company]
and/or any loss, damage, costs and/or expenses that may be incurred.

• Payment may also be related to performance and success as in A-Z P.241 in

Sponsorship.

• In this clause there are the defined sponsorship fees and also the defined
performance-related fees which the sponsor has agreed to pay.

• The sponsorship fee is paid in three stages:

 – Signature of the agreement by the sponsor and sportsperson

– A fixed date

– Subject to completion of work set out in a clause in the agreement

• The performance-related payments which the sponsor has agreed to pay relate
to the achievements of winning races, medals or personal bests at events.
Payment must be made to the sportsperson by the sponsor within seven days
of notification.

A-Z P.241
‘The Performance Related Fee’ shall be the sums to be paid by the
[Sponsor] to the [Sportsperson] in the event that the [Sportsperson] wins or
achieves any of the events, records or other matters set out in the
Performance Related Schedule which is attached to and forms part of this
Agreement.

In consideration of the services provided under this Agreement the

[Sponsor] shall pay to the [Sportsperson] the Sponsorship Fee as follows:

1.1 [–] upon signature of this Agreement by all the parties.

1.2 [–] on or before [date].

1.3 [–] on or before [date] subject to the completion of the work specified
in clause [–].

The [Sponsor] agrees to pay to the [Sportsperson] the Performance Related

Fee subject to fulfilling any of the Performance Related Schedule. Payment
shall be made by the [Sponsor] within [7 days] of receipt of notice of the
event or occasion on which the [Sportsperson] achieves or wins in each
case. The [Sponsor] acknowledges that more than one sum may become
due for any one event or occasion.

• Where a company provides a quotation for a service or work or a product as

in A-Z P.194 in Purchase and Supply of Products. They may only wish to
quote to be applicable for a fixed period.
• In this clause the quotation can only be accepted at that price within 28 days.

• The company has still reserved the right to change the price in that 28-day
period if there are other factors which effect the price.

A-Z P.194
The price which is stated in the quotation provided by the [Company] shall
only be held for a maximum [twenty-eight days]. The price may be
changed by the [Company] at its entire discretion at any time within that
period if there is a major change of circumstances which effects the quoted
price including but not limited to cost increases in petrol, oil, transport,
taxes, exchange rates, or supply of materials. The price which is agreed to
by the [Company] shall be the price in the order form acknowledgement
with the order reference confirmed.

• A company may wish to be paid when a customer receives an invoice as in

A-Z P.203 in Purchase and Supply of Products.

• The invoice will specify a date by which payment is due.

• The company warns the customer that any charges involved in collecting
overdue accounts will be payable by the customer. In reality a company
would have to make a legal claim for any additional sums.

A-Z P.203
All orders are subject to payment on receipt of invoice, unless otherwise
agreed in writing by a Director of the [Company]. All accounts must be
settled by the agreed due date. Failure to do so will entitle the [Company]
to withdraw such facilities. All charges involved in the collection of
overdue accounts will be payable by the [Customer].
 REJECTION

• There are 81 clauses in the A-Z relating to Rejection from A-Z R.032 to A-Z
R.112.

• This subject can be cross referenced to the main clause headings Acceptance,
Cancellation, Compliance, Consultation, Costs, Damages, Delivery,
Error, Expenses, Liability, Material, Omission, Order, Payment,
Product Liability, Quality Control, Risk, Set-Off, Termination and Title
in the A-Z.

The meaning and purpose of a rejection clause

• The main purpose of the rejection clause to give a person or company more
grounds and rights of rejection then they would have under the law.

• The party who is able to use the grounds of rejection set out in the agreement
is in a much stronger position than one who has to rely on the law alone.

• The issue of whether material is rejected or not may involve a quality

assessment as to the material which has been delivered. An agreement
between a publisher and an author may contain grounds for rejection of the
manuscript for a book which allows an element of personal judgement by the
publisher.

• An agreement between a supplier of a product and a distributor may have a

rejection clause which allows the distributor to reject products which are not
of sufficient quality or which are defective or which are delivered late.

• A rejection clause may be used and drafted for the benefit of any party to an
agreement. There may be more than one rejection clause in an agreement.

• A rejection clause may be used to control the production of a product. So that

where sample prototypes are made they shall be submitted for approval to
 the licensor and may be accepted or rejected. If rejected then the licensee
may not proceed with production and must create a new sample for
consideration.

• The rejection may also be linked to the transfer of risk and ownership of the
products, services or material as it is likely that any payment will be delayed
or withheld.

• The clause may allow the party making the rejection not be required to make
any further payments until the matter is resolved.

• This may mean that title and ownership is not passed from one party to the
other. For more on these topics please look at the main clause headings
Payment, Risk and Title in the A-Z.

• A process of approval and rejection may also be used to control the use of
content on a website, the marketing of a film or the promotion of a festival.

• A clause in an agreement may require one party to provided copies of any

type of material to another party which they can then review and either
accept or reject. For more on this topic please look at the main clause
headings in the A-Z of Marketing and Material.

• In the specific context of goods and services provided to a consumer there are
very detailed rules, laws and regulations in the United Kingdom which need
consideration and which seek to protect a consumer against unreasonable or
unfair practices. Most recently the right of consumers to return a product has
been extended to 30 days.

– The Consumer Protection from Unfair Trading Regulations 2008, SI

2008/1277

– The Consumer Contracts (Information, Cancellation and Additional

Charges) Regulations 2013, SI 2013/3134

– Sale of Goods Act 1979 and the Sale of Goods and Services Act 1982 as
amended

• This work is not intended to address the details of any legislation or cases but
to examine ways in which rejection issues may be adapted and drafted as
 clauses in an agreement.

• It is important to realise that the legislation regarding consumers such as it

exists basically sets a minimum standard.

• There is nothing which prohibits a retailer or supplier allowing a consumer

greater rights to reject a product, service or material.

• It is also not possible to draft a clause between a company and a consumer

which excludes the liability of the company under the legislation to the
consumer. Such a clause would be unfair and unreasonable to the consumer
and would be excluded by any court. The term would be unenforceable as
well as contrary to the legislation.

• Two companies or an individual and a distributor, neither of whom fall

within the remit of a consumer, may negotiate and agree any terms which
they wish to conclude.

• The aim of any rejection clause should be clarity so that a person or company
will know how to serve a notice of rejection or return the products.

• If there are any freight costs and charges – which person or company will be
liable to pay them if any products are rejected and need to be returned.

• Some companies provide postage-paid bags for clothes or shoes to be

returned if they are unsuitable or do not fit the person when buying over the
internet. Whereas other companies require a person to return any item at
their own cost without any chance of being reimbursed.

• These type of decisions which effect the drafting of a rejection clause may
therefore also be dependent on a company policy as to costs and expenses.

• In any type of agreement where another person or company is supplying

products, services or material which you have ordered or commissioned or
which may be distributed and sold. It is useful to consider whether or not a
rejection clause should be included.

• You must also appreciate the basic principle that just because a company or
person has delivered material does not mean that it has to be accepted at the
point of delivery. You may want an additional period to allow you to view
 the material and make an assessment as to whether it meets your required
standards. For more on these subjects please look at the main clause
headings Acceptance and Delivery in the A-Z.

• In any event you would need a clause in the agreement which makes it clear
that delivery is not the same as an acceptance by you that the material has
fulfilled the order.

• There may be a number of clauses which need to be drafted dealing with the
issues which revolve around the issue of rejection. It is important that the
mechanism and process for rejection is clear and workable within the scope
of the agreement.

• A publishing agreement will often have a reference that the book must be in
accordance with the proposed synopsis. It is often the case that
improvements, developments and changes take place between the time the
agreement is concluded and the delivery of the final manuscript.

• In this context the question is whether the work can be rejected solely on the
grounds of the quality and failure to adhere to the agreed brief or whether
rejection can be made on the ground that there has been a change of editorial
direction and management.

• The rejection of a work on quality grounds is necessarily subjective on the

part of the editor and publisher. The author may have delivered a manuscript
which is either too short or long or which has not covered the content which
was agreed in the synopsis.

• Many publishers will work with authors and provide them with an
opportunity to change the work so that it meets the required standard and in
doing so extend the delivery date.

• Where the publisher has rejected the work and no revisions are permitted the
key issue then relates to the advance. The first point will be whether the
advance was drafted as refundable or non-refundable.

• Publisher A may agree that author B shall keep the original advance and may
enter into an agreement with another publisher C. The author is formally
released from the original agreement with publisher A to enter into a
publishing agreement with a new party C. Alternatively, the author agrees to
 pay back the advance he or she received from publisher A on a first proceeds
basis. Therefore the new advance from publisher C and any royalties are paid
by author B to publisher A until the advance is paid off. A first proceeds deal
is not a novation.

Drafting rejection clauses

• The first decision to make when drafting a rejection clause is to be certain as

to who you wish to intend to rely upon and benefit from the clause.

• The rejection clause may deal with a number of matters:

– To which parties the clause applies

– The broad basis on which there may be a rejection

– To stipulate that the failure to deliver the work by the agreed date is
crucial and a ground for rejection

– A more specific list of grounds of rejection that may be relied upon

– The method by which the rejection must be made such as in writing or by

email but not by telephone

– Whether the rejection must be accompanied by a reason or not

– Who is to collect the material or who is to pay any freight, postage or

other costs

– Whether there is any period during which the other party shall have the
opportunity at their cost to improve the situation and deliver better
material

– The duration which the other party is allowed to have to remedy the
reason for the rejection

– Whether any payment is delayed or withheld or must be repaid

– Whether the transfer of title and ownership is delayed or does not take
place
• There may be more than one rejection clause in an agreement as it relates to
different types of products, services, material, samples, marketing and
different forms of exploitation of rights.

• The clause in A-Z R.047 in Film and Television is deliberately short and
confirms that the company will reject or accept the material within a fixed
period from delivery.

• There is no confirmation as to how the rejection may be made.

• There is no limitation as to the grounds which may be used by the company.

• Nor is the company obliged to provide a reason for the rejection.

• The company has only a very wide and unlimited remit to only make the
rejection on reasonable grounds and in good faith.

• This clause also tells us nothing about what is to happen if the material is not
accepted or rejected.

A-Z R.047
The [Company] agrees to either accept or provide written reasons for their
rejection of the [scripts/storyboard/Advertisement Material] within [7
working days] of delivery in each case. The [Company] agrees that any
rejection shall be on reasonable grounds and in good faith.

• Whereas in A-Z R.053 in General Business and Commercial if the products

or work are delivered by name A to company B.

• Then company B has a fixed number of days to assess the products or work.

• Once that fixed period has expired then company B has agreed that they are –
deemed to have accepted delivery. They have lost the chance to make any
rejection.

A-Z R.053
[Name] agrees that the [Company] shall have a period of [number] days
after delivery to assess the quality and content of the [Products/Work] and
to decide whether to accept them. After that expiry of that period if the
 [Company] has not rejected the [Products/Work] then the [Company] shall
be deemed to have accepted delivery.

• The possibility that the product may not be delivered by the required date is
the key for the rejection in A-Z R.055 in Internet and Websites.

• The product may be rejected just because delivery was not by the agreed date.

• The supplier has to pay a full refund and the cost of returning the product
incurred by the customer.

A-Z R.055
If the [Supplier] does not deliver the [Product] by the Delivery Date, then
the [Customer] shall be entitled to reject the [Product] and return it to the
[Supplier] and request a full refund of all sums paid including delivery
costs.

• A company may wish to ensure that it has sufficient time after delivery to
accept or reject any service or product from a third party as in A-Z R.095.

• In this clause there is a fixed period to accept or reject the product or service.
If the products or service are rejected then the company must notify the
supplier or other third party and give them an agreed number of days to
resolve the problem.

• It is agreed that the company shall not make any payments for the products or
service until the matter has been resolved.

• Note this clause does not address the issue of a refund to the company if the
matter is not resolved.

A-Z R.095
The [Company] reserves the right to take up to [number] weeks to decide
whether to reject any service and/or products delivered by its suppliers
and/or other third parties. Where a service and/or delivery of products is
found to be below the standard required by the [Company]. Then the
supplier and/or other third party shall be notified and permitted [number]
days to remedy the problem. No payments are made until the problem has
been resolved to the standard required by the [Company].
• A company may find it useful in an agreement to set out potential grounds of
rejection which the parties agree are acceptable. These grounds may be more
specific and relate to issues of concern by one party rather than be restricted
to the legislation and the law in any country as in A-Z R.052 in General
Business and Commercial.

• As you will note some of the grounds bear similarity to some of the
legislation which exists in the United Kingdom, but they are wider.

• The aim is to ensure that the company gets the quality of work or service that
it believes it has commissioned or ordered. The supplier also therefore
recognises in the agreement that the company does not intend to accept work
or a service or material which does not fulfil its intended function.

• There have been many cases where software or a website has been
commissioned and the final version which has been completed has not met
the functions or standard which were originally discussed and expected by
one party.

• In this clause therefore failure to complete the project by the delivery date is a
valid ground of rejection in 1.11.

• The work or service may also be rejected as the content is not in accordance
with the approved sample in 1.5.

• There are a number of grounds relating to the quality and content and the
function of the work, service or material. There are grounds of rejection if
the workmanship is of poor quality and substandard in 1.3 and if the content
is not as specified in the agreement in 1.4.

• When you are commissioning a new product or website or other material it is

important to be very specific as to the content and the expected functions.
Where possible detailed schedules should be attached and form part of the
agreement. So that where the other party fails to deliver the quality and
content you commissioned you can use this as a ground of rejection.

A-Z R.052
The [Company] shall have the right to reject any [Material/Work/Service]
 under this Agreement on the grounds that:

1.1 It is not of merchantable quality and/or fit for its intended purpose.

1.2 That it is not of a professional standard.

1.3 The workmanship is of poor quality and substandard.

1.4 The content is not as specified in the contract.

1.5 The content is not in accordance with the approved sample and/or
presentation.

1.6 It is defective.

1.7 It does not operate as intended.

1.8 There are key elements which are missing.

1.9 There are serious errors in the content.

1.10 The dimensions [size/volume/weight/length/height] are inaccurate.

1.11 It has not been delivered by the delivery date.

1.12 The [title/label/content/artwork/words] is wrong, offensive, obscene,

or generally not suitable for the age category or market for which it
was intended.

1.13 A third party has threatened legal action and/or made claims of
ownership and/or allegations of infringement and/or breach of contract.

1.14 A government agency has raised concerns relating to product liability,

breach of any quotas and/or breach of any laws, regulations, directives
and/or standards.

• Where a company or institute allows third parties to submit material which it

may decide to publish or display on its website. They may require very
different grounds of rejection for such material which may be submitted as in
A-Z R.112 in University Library and Educational.
• The purpose of this clause is to protect the integrity, reputation and the brand
associated with the institute.

• In this clause a manuscript submitted by a contributor may be rejected by the

institute due to the fact that text or images have been taken from a third party
without any credit or acknowledgement in 1.1.

• The material may be rejected as the content would associate the institute with
a political party, religion or campaign in 1.2.

• The institute may also reject the material as they have taken the view that it is
potentially defamatory or is in contempt of court or could even lead to a civil
or criminal action against the institute in 1.3.

• 1.4 is much wider and basically allows the institute to reject the material if
they believe it will have a negative media impact on the institute. This would
relate to social media, newspapers and television coverage.

A-Z R.112
The [Institute] shall reject any manuscript submitted by any Contributor
which:

1.1 Contains material in text and/or images from a third party which has
been reproduced without sufficient credit and/or acknowledgement
and/or source reference.

1.2 Contains material which the [Institute] does not wish to publish as it
would associate the [Institute] with a political and/or religious and/or
other campaign.

1.3 Contains material which is potentially defamatory and/or could pose a

risk of contempt of court and/or may lead to criminal and/or civil
proceedings against any person named and/or the [Institute].

1.4 May lead to a negative media reaction against the [Institute].

• In a publishing agreement the publisher may have the right to reject the
manuscript because it is not delivered:
 – by the delivery date

– in the required format

– in accordance with the synopsis

– in accordance with the quality and style required

– in accordance with the quality and standard of the sample chapters

Or

– it is incomplete

– it has copied large sections from a third party without consent

– it has failed to provide credits and acknowledgements to third party

sources

• Many publishing agreements do not specify all these grounds but rely on a
more general reference that the manuscript does not meet the quality and
standard.

• The publisher may however reject the work on a number of grounds not
specifically mentioned in the agreement which relate to other clauses in the
agreement. For instance that the work shall be original to the author and that
the work shall not expose the publisher to civil or criminal proceedings.

• In A-Z R.069 in Publishing the right of rejection of the manuscript by the

publisher relates to the failure of the work to comply with the style, form and
content of the synopsis.

• 1.2 makes it clear that if the work is rejected the author must repay the
advance.

• It is for this reason that, where an author is entering into a publishing

agreement, it is important to try to argue that the advance is non-returnable if
a manuscript is delivered.

A-Z R.069
 1.1 The [Publisher] reserves the right to reject the [Work] if it is clear that
the contents of the [Work] do not conform to the style, form and
synopsis agreed in writing with the [Author] or the standard reasonably
expected of the [Author] by the [Publisher].

1.2 In the event that the [Publisher] rejects the [Work] or for any other
reason under this Agreement, the [Author] shall be obliged to repay to
the [Publisher] all sums previously paid to the [Author] as an Advance
against Royalties.

• It is not uncommon for an author of a written work to be given a reasonable

opportunity to be allowed to amend and change the content to address the
concerns that the publisher has raised with the work as in A-Z R.074 in
Publishing.

• Here the publisher has agreed to accept or reject the work within a fixed
period from the date of delivery in 1.1.

• The author is to be allowed a fixed period to amend the work if it is rejected

in 1.2.

• In this clause the actual grounds of rejection are not set out. The only criteria
are that the grounds are reasonable and that the publisher acts in good faith
which the author accepts in 1.3.

• There is reference to repayment of a sum in this clause – this figure does not
have to be all of the advance. This is not common and is an arguable point.

• Note this clause would be in addition to clauses regarding delivery date and
quality of the manuscript required.

A-Z R.074
1.1 The [Publisher] agrees either to accept or provide written reasons for
its rejection of the [Work] within [one month] of delivery.

1.2 The [Publisher] agrees that it shall provide the [Author] with a [three
month] period in which to remedy the reasons for the rejection of the
[Work] and that the [Author] may then resubmit the [Work] for
consideration.
 1.3 The [Author] agrees that in the event that the [Publisher] shall refuse to
accept the manuscript of the [Work] on reasonable grounds and in
good faith and has provided substantial written reasons for the
rejection of the manuscript and/or after it has been resubmitted, then
the [Author] shall be obliged to repay the [Publisher] the following
sum [figure/currency] by [date/method/other].

• It may be decided by the parties there should be no additional period allowed

to remedy the problems with a project as in A-Z R.107 in University Library
and Educational.

• In this clause rejection may occur within a fixed period from delivery and/or
initial operation of the project. There may be more than one right of rejection
required in an agreement as in 1.1.

• 1.2 makes it clear that the company providing the work shall not have any
right to an additional period to deal with the problems.

• If the project is rejected by the institute then provided the grounds are
reasonable. The company must repay all the sums it has received for the
project. In addition the company must pay for any costs, expenses, losses and
damages that the institute has incurred.

A-Z R.107
1.1 The [Institute] agrees to provide details of the reasons for any rejection
of the [Work/Project] in writing to the [Company] within [specify
duration] of delivery and/or the operation of the [Work/Project].

1.2 The [Institute] shall not be obliged to provide the [Company] with an
opportunity to remedy any defect, fault, error, omission and/or lack of
compliance with the original specifications.

1.3 In the event that the [Institute] rejects the [Work/Project] on reasonable
grounds and in good faith it shall be entitled to repayment of all the
sums paid by the [Institute] to the [Company] prior to the date of
delivery. Together with all direct consequential losses, damages, costs
and expenses.

• The parties may agree that there should be no right of rejection. If the work
 submitted is not suitable the parties will work together to improve it as in A-
Z R.079.

• The parties have also agreed that even if the work is not of sufficient standard
that there shall be no refund of any advance for the work.

A-Z R.079
There shall be no right to reject the manuscript and demand a refund of the
advance under this Agreement by the [Publisher]. The [Publisher] agrees
and undertakes that, in the event that the material submitted is not suitable
and/or to the standard expected, the parties shall work together to improve,
develop and edit the [Work].

• Where a project involves the creation of a promotional video, film or

television series as in A-Z R.049 in Film and Television.

• Here the grounds of rejection are focusing on different aspects of the project
that may cause problems and creating a right of rejection for name A.

• The focus for the grounds of rejection may not only be the quality of the
workmanship but also the use of key personnel or artists in 1.2. If a company
promises to use a certain actor and does not do so it may be a ground for
rejection.

• The quality of the music and/or soundtrack may be insufficient or not suitable
for the film as in 1.3.

• The film may be too short or long as in 1.4.

• The dialogue may not be in accordance with the agreed script or storyline for
the treatment as in 1.5.

• The material is not delivered by the deadlines as in 1.6.

• The content is defamatory, obscene or not suitable for the target age category
as in 1.7.

• The content has not been cleared for use in 1.8. This may cover copyright,
intellectual property rights, contracts with artists, music and performing
 rights or mechanical reproduction, trademarks or product placement.

• There may have been a threat or actual legal proceedings served on name A
as in 1.9 regarding either some of the content or the whole film.

A-Z R.049
[Name] shall have the right to reject any material under this Agreement on
the grounds that:

1.1 It is not of a high professional standard and workmanship.

1.2 It has not been produced using the key personnel and/or artists set out
in Clause [–].

1.3 The music and/or soundtrack is inaccurate, substandard or does not

correlate to the [Film].

1.4 The [Film] is too [long/short].

1.5 The [dialogue/storyline/computer graphics/costumes] are poor quality

and/or do not represent the features agreed in the [Treatment/Script].

1.6 The material has been delivered too late and not in accordance with the
stipulated date schedules.

1.7 The material is offensive, obscene, or generally not suitable for the age
category or market for which it was intended.

1.8 Not all the material has been properly cleared for use by [Name].

1.9 A third party has served legal proceedings or a Court Order on [Name]
concerning the material and/or the [Film].

• The licensing governing body for the television industry in the United
Kingdom is Ofcom. However A-Z R.042 in Film and Television is an
example how any governing body can be used as part of the reason for a
rejection clause.

• This clause, if adapted, may apply equally to a sports body or advertising

regulator.
• The company shall have a right to reject the film if the company or Ofcom or
any regulatory body in the United Kingdom decides it is unsuitable.

• Note reference here has been made to the country where the regulatory body
is based.

• The right of rejection must not be exercised unreasonably or without obvious

cause.

• Where there is a rejection of a film the company may agree to substitute

another from the licensor.

• This clause allows for an adjustment of the fee for the film if necessary.

A-Z R.042
The [Company] shall have the right to reject any of the [Films] if the
content of such [Films] is in the opinion of either the [Company] and/or
[Ofcom/other] or such other regulatory body within the [United
Kingdom/country] unsuitable for its film purposes. This right of rejection
shall not be exercised unreasonably or without obvious cause. In the event
of such rejection the [Company] may elect to accept substitute films in
place of each [Film] rejected. Such substitution to be mutually agreed in
good faith between the [Licensor] and the [Company]. Failing such
substitution the total Licence Fee payable hereunder shall be reduced by an
amount representing the Licence Fee due in respect of each [Film] so
rejected.

• A sports club or company may wish to have the right to reject products or
material as A-Z R.105 in Sponsorship which are based on other grounds.

• The club may reject the material or products supplied by the sponsor if they:

– Fail to comply with health and safety standards and current legislation as
in 1.1

– Are associated with a political organisation as in 1.2

– Are damaged, defective or flawed and/or not fit for purpose as in 1.3
• It is possible to extend these grounds further. 1.1 can be extended to include
code of practice and guidelines.

• In 1.2 this ground could be extended to cover competing organisations and

companies, charities or any person with whom an association would result in
adverse publicity.

• 1.3 could be extended by adding that the delivery did not match the sample
shown and approved and did not meet the specifications set out in the
agreement.

A-Z R.105
The [Club] shall be entitled to reject any material and/or products supplied
by the [Sponsor] on the following grounds:

1.1 Health and safety and failure to comply with current legislation as to
labels, content and/or product liability.

1.2 That the material and/or products are associated with a political
organisation.

1.3 That the material and/or products are damaged, defective, flawed
and/or not fit for their intended purpose.

• A clause may prohibit the delivery of products or material which can be

substituted for those originally ordered as in A-Z R.057 in Internet and
Websites.

• The products must comply with the description.

• The customer may reject the products for any reason for a fixed period after
delivery.

• After the expiry of the fixed period of the right of rejection there must be
evidence of a defect, failure or fault to reject the products.

• There is a caveat that the defect, failure or fault must not be due to misuse or
the work of a third party.

• This type of clause can be seen on some online shopping sites and also in
 relation to electrical products.

A-Z R.057
The [Company] shall not be entitled to deliver substituted
[Goods/Products] and undertakes that all [Goods/Products/other] shall
conform to the description as to content, the packaging, dimensions,
weight, colour and be safe for their intended and advertised purpose. The
image on the screen is intended for guidance only. The [Customer] may
reject the [Goods/Products] for any reason up to [specify period] after
delivery. After that time rejection must be on the grounds that there is a
defect, failure and/or fault which is not due to incorrect use and/or the work
of a third party.

• In a merchandising agreement for the exploitation of a licensed article as in

A-Z R.065 in Merchandising. The rejection clause relates to the supply of
samples and material by the company to the licensor.

• The company has agreed to provide, before production, at its own cost the
licensed article and any packaging in the exact form, shape, size and material
that it will be reproduced.

• Here it is made clear that the production cannot proceed unless the reasons
for the rejection are resolved and written approval given to go ahead and
produce the licensed articles.

A-Z R.065
The [Company] agrees that the [Licensor] shall have the right to approve
all aspects of the [Licensed Articles] and any associated material prior to
their production, manufacture, supply and distribution. The [Company]
shall supply at its cost to the [Licensor] such copies, samples and
packaging of the [Licensed Articles] in the exact form and material in
which it is intended that they should be exhibited, distributed or sold at any
time. In the event that the [Licensor] does not in each case provide written
approval then the [Company] must not proceed with production until the
reasons for the rejection have been resolved and written approval provided.

• The clause in A-Z R.066 in Merchandising is much wider and applies to all
samples, artwork, posters, packaging, the catalogue, the website, advertising,
 marketing and publicity material.

• The licensee B has to ensure that the licensor A is provided with copies of all
these matters and allowed to inspect, assess and either give written approval
or reject them.

• The parties have agreed that the licensor may reject any matter on the
grounds of:

– Artistic quality

– Size, colour, shape

– Safety, risks to health

– Legal, copyright issues

– Product liability

– Packaging

– Any other reason

• The use of the words above of – any other reason – means that the grounds
above are effectively examples of potential grounds.

A-Z R.066
The [Licensee] undertakes that the [Products/Articles] and all samples,
artwork, posters, packaging, catalogue, website, advertising, marketing and
publicity material shall not be produced and/or manufactured by the
[Licensee] and/or supplied and/or distributed and/or sold to any third party
and/or the public until they have each in turn been inspected, assessed and
written approval provided in each case by the [Licensor]. The [Licensor]
shall have the right to reject any matter on grounds of artistic quality, size,
colour, shape, safety, risks to health, legal, copyright, product liability,
packaging or any other reason.

• In a sponsorship agreement the concerns of the sponsor relate to its name,

logo and trade mark as in A-Z R.104 in Sponsorship.
• The sponsor shall have the right to approve or reject any material upon which
its name, logo or trade mark shall appear at the event or in any
merchandising, marketing or other material.

• The company has agreed to provide the sponsor with sample copies which
the sponsor must accept or reject within a fixed period of time.

• If the sponsor rejects any material it must state the reason and make a
suggestion as to how it can be changed.

• The parties have agreed that where the sponsor has not been provided with an
opportunity to view some material and this is a genuine error. That this
cannot be used as a ground for termination of the agreement.

A-Z R.104
The [Sponsor] shall have the right to approve and/or reject any material
upon which its name, logo and/or trade mark shall appear at the [Event]
and/or in any merchandising, marketing and advertising and/or any other
material. The [Company] shall supply a sample copy at the [Company’s]
cost on each occasion of any such material. The [Sponsor] agrees to
approve and/or reject the material within [number] days. If the [Sponsor]
rejects the material they shall specify the reason and make a
recommendation as to the solution required to gain approval. The
[Sponsor] agrees that they shall not be entitled to terminate the Agreement
on the grounds that the [Company] did not seek approval for any material
provided that it was a genuine error.
 RIGHTS

• The main clause heading section on Rights in the A-Z contains over three
hundred clauses from A-Z R.197 to A-Z R.513.

• This subject can be cross referenced with the following main clause headings
in the A-Z of Access, Adaptation, Assignment, Assignment Fee,
Assignment Period, Audio Files, Blog, Books, Brand, Budget, Buy-Out,
Collecting Societies, Commission, Competitions, Consultation,
Copyright Clearance, Copyright Notice, Copyright Warnings, Costs,
Credits, Data, Designs, Disclaimer, Domain Name, Downloads,
Dramatic Work, Editorial Control, Electronic, Escalator, Exclusivity,
Expenses, Films, First Refusal, Indemnity, Jurisdiction, Legal
Proceedings, Location Access, Moral Rights, Musical Work, Option,
Originality, Payment, Podcast, Product Liability, Quality Control, Risk,
Royalties, Scripts, Sell-Off Period, Set-Off, Software, Sound Recordings,
Sub-Licence, Tender, Term of the Agreement, Termination, Territory,
Third Party Transfer, Title, Trade Marks, Variation, Waiver, Website
and Work.

The meaning and purpose of rights

• If you appreciate that the acquisition and exploitation of rights may involve
many layers of different rights in one project. You find it easier to
understand the whole concept of the ownership of rights and how they may
be licensed and assigned.

• In order to exploit rights and material effectively it is crucial that proper

documents are created and archived so that a library record of assets and
supporting documents for each format is kept and stored.

• Failure to do so creates ambiguity and serious legal issues as there are no

accessible resources upon which legal ownership and exploitation of rights
 and material can be justified.

• The meaning and definition of what constitutes rights can be very varied and
it is all dependent on what the parties agree and how the terms and clauses
are drafted.

• The understanding of rights starts with assessing exactly what physical

material or rights you own and control.

• Note that the ownership or control of physical material is completely separate

from the issue of whether you have the right to licence or assign any rights in
that physical material in each form and medium in which it exists.

• You may own a photograph or a book or T shirt with a logo on it. However
that does not mean that you have the right to grant a licence to another
person or company to reproduce the photograph, the book or the T shirt.

• Rights can be limited to refer just to copyright but it can also be extended to
include many other intellectual property rights and also types of ownership
and title to other interests.

• In the United Kingdom there is no register of who owns or has the title to any
copyright which provides any legal status or protection.

• There is in the United Kingdom no copyright in an idea which is not

expressed in another form such as text, image, photograph, film, sound
recordings or other medium.

• When looking at the issue of copyright and intellectual property rights for
any project the focus is on material which exists now and also what new
material is being created in the future.

• From the basis of a practical approach to the material you can then decide
who owns or controls which rights or decide that there needs to be a clause
regarding ownership and title of the new material

• There are other criteria which must be addressed in order for a party to be
recognised as the copyright owner of an original work in the United
Kingdom which is protected by copyright which we will not consider in
detail in this book.
• The legislation in the United Kingdom broadly covers the following original
works which are created or developed as falling within the scope of
copyright for example:

– written works

– works which are spoken or sung

– tables, compilations

– computer programmes, preparatory design material for a computer

programme

– databases

– dramatic works

– musical works

– artistic works, graphics

– photographs

– sculptures

– collages

– work of architecture, models for a building

– works of artistic craftsmanship

– paintings, drawings, diagrams

– maps, charts, plans

– engravings, etchings

– lithographs, woodcuts

– sound recordings;
 – films

– broadcasts, cable programmes

– typographical arrangements of published works

– the reproduction of any of the above in the same format

– the adaptation and use of any of the above in a different format which is
recognised by the legislation

• You may find that the work is defined by the name of the type of material
such as the artwork or photographs. It is also possible just to refer to the
work.

• Note that where we have a definition in the agreement we use capital letters
for the start of those words.

• The legislation in the United Kingdom looks at the ways in which material
can be created in different formats but is does not cover all the media and
methods of exploitation which actually exist now.

• The definitions in the legislation in the United Kingdom are not the same as
the definitions, clauses and terms which can be used in the commercial
exploitation of the rights in an agreement.

• You will find that the definitions and clauses in the agreement use some
words from the legislation but in general do not correlate directly to the
wording used in the legislation.

• Any legislation is therefore background material but not the only issue as to
how the terms and clauses are drafted in an agreement.

• The legislation almost inevitably lags behind the technological developments

and the new methods and formats by which rights and material can be
exploited.

• The copyright legislation in the United Kingdom makes no direct reference to

digital rights although there may be a definition of the term in an agreement.
• The legislation refers to the word electronic which is defined.

• Despite the fact that for many years there was no definition in any legislation
of format rights or product placement, both of these forms of exploitation
existed and were used in agreements.

• Both of these types of agreements were in editions of The Media and

Business Contracts Handbook 5th edition by the authors long before they
were so extensively used in the television and media industry today.

• When drafting agreements to do with rights it is essential to consider not only

what is happening in terms of forms of use in an industry now but also where
the new technology and new methods of exploitation may go in the future.

• The A-Z of Contract Clauses by the authors was the first book to extend the
definition of territory to the universe and outer space. That was necessary
because of the use of satellites, but now many years later this practice of
acquiring rights in the world and universe has been adopted by many leading
entertainment and media companies.

• You cannot look at rights in isolation and must take into account domain
names, trade marks, logos, slogans and any potential associated material
including forms of marketing.

• The rights definition and the grant of rights in an agreement may refer to only
one particular aspect of ownership of copyright in relation to a specific item
such as an image or a photograph or a page of text.

• The rights may refer to a specific piece of music and/or singing which has
been reproduced in a sound recording or it may refer to a script which is to
be developed and reproduced as a film.

• An agreement may refer to many different forms of copyright and intellectual

property rights and be drafted very narrowly or very widely. You must make
a choice when drafting as to which you are aiming to achieve.

• If your stated purpose is to retain as many rights as possible and to sign away
as little as possible. You need to use this as a strategy in your negotiations as
well as your drafting to achieve that intended outcome.
• You would then treat every element as having a value and importance even
though you may find it difficult to quantify and justify any such figures.

• There is a market value but there is also the personal judgement which each
person or company uses to decide the appropriate sum which does not have
to be based on other examples but is purely subjective.

• In any agreement where you are granting a licence or assigning rights

whatever their nature. You will usually be expected to assure the other
company or person in a series of binding clauses that you actually either own
or control the rights and/or the physical material.

• It is therefore a very basic principle that you must ensure that you actually
own or control the rights before entering into any agreement.

• Do not make assumptions that because you commissioned the original work
or service or image or text that you necessarily own the rights. If there has
been no assignment in writing which is signed by the person or company
from whom the work was commissioned then it is unlikely that you either
own or control the rights or even ever acquired them.

• If there is an existing agreement which relates to the rights or material in

question. There may also be a problem if the third party transfer clause
prevents you from licensing or assigning either the rights or the physical
material.

• If person or company B has owned or controlled rights as a result of an

agreement which has expired or been terminated. The rights under that
agreement may have reverted to the original licensor or assignor A so that
they are no longer owned or controlled by that person or company B.

• So when reviewing documents and agreements which are relevant and which
are archived relating to that subject matter you need to look at the whole
agreement and any emails and letters to establish the true facts.

• You cannot as a matter of fact assign or licence something that you do not
own or control.

• Copyright ownership and title cannot be transferred completely from one

person to another or one company to another in the United Kingdom unless
 there has been a written assignment.

• There may be different distinct copyright owners of parts of a book. So that

one person or company is the copyright owner of the text and another the
copyright owner of the photographs or images.

• In the same way that one person or company may own the musical
composition but another person or company own the copyright to the lyrics.
A third person or company may own the sound recording where the music
and lyrics are reproduced under licence.

• It is also possible that copyright in the United Kingdom may be held by two
people as they have collaborated and each of their contributions cannot be
divided to form a distinct work.

• The key concepts therefore of joint copyright ownership are collaboration

and an absence of distinctiveness.

• Where one person is the writer and another the illustrator they will both own
the copyright in the material they have created quite separately. Each would
then receive a copyright credit on the final product as the writer and
copyright owner of the text and the designer and illustrator as the copyright
owner of the drawings or images.

• If the author has commissioned the illustrator to create the designs and
artwork for the characters for a storyline for a book. The author would need
to ensure that there was an assignment from the illustrator to the author and
an assignment and complete buy-out of all rights in all media in all formats.

• The author may still agree that the illustrator should receive a credit but the
copyright notice for the text and the designs and artwork would be in the
name of the copyright owner which would be the author.

• Note that would not be the case if there were no buy-out of the rights in all
media from the illustrator to the author.

• The agreement would also address the issue of moral rights which may be
asserted or waived in the assignment agreement.

• For more on the subject please look at the main clause headings in the A-Z of
 Assignment, Buy-Out, Credits, Copyright Notice, Moral Rights and
Waiver.

• It is absolutely essential that it also stated unequivocally in any agreement

who has the final editorial control and decisions in respect of the final
product or service or website or app as well as regard to any packaging or
marketing.

• An editorial control clause will be needed where there have been

commissioned material or there is a consortium of companies which have
contributed to a project or where there is a collaboration between two authors
or creators.

• For more on this subject please look at the main clause heading in the A-Z of
Editorial Control, Marketing and Publicity.

• The ownership and title of the final specified product or service or website or
app must be attributed to a specific person or company or more than one if
appropriate.

• The ownership and title of any prototypes, samples and merchandising or

licensed or assigned adaptations which may be created or developed must be
stated and a person or company set out as the legal owner of either each of
those specific rights or all of those rights.

• This enables the agreement to also refer to how the person or company who
has legal ownership and title will receive a copyright notice or credit or both.

• There will also be reference to how their moral rights may be dealt with and a
specific credit set out and a copyright notice.

• There may also be an assertion of moral rights in relation to altering the

original material and adaptations. This then also relates to the editorial
control clause in the agreement.

• There may be copyright or other rights in the original work which is quite
separate from the copyright or other rights in the later development which is
created. That is the case with translations.

• The copyright in sound recordings in the United Kingdom is separate from

 the defined film. So it is necessary to be very specific as to both elements in
an agreement.

• This practice should be repeated for every format and type of exploitation.

• Note this list is not intended to be exhaustive and definitive to cover every
form of right and exploitation in every medium. It is intended to show
different forms of developments, exploitation and adaptations which may
include for example:

– Translations into other languages

– Merchandising such as a toy or poster from a film character or a game

– A T-shirt, socks or a mug based on a sports club name and logo or trade
mark

– A film which is derived broadly from a specific book

– An original script for a film

– A DVD which is developed from an existing feature film

– An exercise video, blu-ray or download where the presenter is well

known on television

– A theme park based on storylines and characters from books or films

– A download of a soundtrack and CD to a laptop or mobile

– Download of text to a reading device

– A musical in a theatre based on an adaptation of a band’s songs

– An original script for a play

– A gambling website or app based on an original concept and treatment

– A childrens’ series for television based on a children’s book

– A quiz series based on an original script and format

 – A CD with a book

– Braille versions

– Subtitle versions

– Audio versions

• A publisher in the United Kingdom is generally recognised to be subject to

exceptions under an agreement to own and control the typographical
arrangements in a work which they have published. This would include the
layout and font but not the actual text and images or photographs which form
the material for the book submitted by the author or the photographer.

• If a book cover is not created and designed by an employee of the publisher

but by a third party. It is necessary to ensure that there is a complete buy-out
of all rights in all media of all formats. This will then ensure that the
copyright is transferred either to the publisher or author as set out in the
agreement.

• This buy-out and assignment should cover copyright and other intellectual
property rights as well as trade marks, logos and any slogans.

• There should be an assignment of any text and images to the author or

company which should refer both to the copyright and other intellectual
property rights but also all the material which may have been created in both
the draft form and the final version.

• An exclusive licence or an assignment must be in writing. The only exception

to a licence being in writing is a non-exclusive licence.

• Where a person has died and there is no written assignment then the
copyright passes as part of an estate.

• In the absence of any signed documents the onus is on the person who is not
the original owner of the copyright or rights or material to prove that
copyright ownership and title has been transferred to them.

• Title and ownership is therefore the key to all else that follows in relation to
rights. For more clauses on this subject please look at the main clause
 heading Title in the A-Z.

• Where a person or company has claimed that they have created and
developed the material and rights then there may be clauses which relate to
the originality.

• There cannot be any ownership as the first author or creator of the copyright
if the material is not original.

• If the material is adapted from or based on the work of a third party then it is
not original to that person or company.

• An author or artist may in an agreement confirm and undertake that the

product of their services is their own work and original. For more on these
subjects please look at the main clause headings Exclusivity, Originality
and Material in the A-Z.

• Where a person is an employee as opposed to a freelance or consultant with a

company. The presumption in the United Kingdom is that where an
employee creates or develops work during the course of their employment
that the copyright will be owned by the company.

• Note that is not the case where a person is not permanently employed but is
freelance or is a consultant. Or where the contract of employment makes it
clear in a specific clause that there is no such assignment or transfer of rights
to the company.

• It is a much safer route despite any presumption which may exist in law for a
company to have a wide assignment clause in its employment contracts
which extend beyond copyright and include trade marks, logos, patents,
inventions and even domain names.

• An agreement may be exclusive or non-exclusive. It is possible to grant some

rights which are exclusive and others which are non-exclusive.

• If an agreement is non-exclusive then you may grant the exact same licence
to another person or company for the same material and rights. Provided that
the non-exclusive agreement does not contain a prohibition or restriction.

• The transfer of copyright and intellectual property rights and other rights may
 take place by a licence or an assignment.

• Any such licence or assignment may be varied by:

– the copyright and intellectual property rights and other rights which are
licensed or assigned

– the original or other material to which it relates

– the product or use for which it is licensed or assigned

– the length or duration of the agreement

– the countries and territory which are covered

– the marketing which is permitted or authorised

– whether third parties may be appointed or not as sub-licensees,

distributors or agents

• For more on this subject please look at the main clause headings in the A-Z
of Assignment, Assignment Period, Exclusivity, Licence Period, Term of
the Agreement, Licence Area, Territory, Marketing and Sub-Licence.

• The transfer of title or ownership may relate to one form of copyright and one
form of exploitation or be in relation to all media and be a complete buy-out.
The assignment may have a duration which is not only for the period of
copyright but also any period beyond that in perpetuity. For more on this
subject please look at the main clause heading in the A-Z of Buy-Out and
Rights.

• In any agreement there must be consideration for the licence or assignment

even if that is only a nominal value of one pound sterling or a euro or a
dollar. Consideration may also be provided by other benefits and advantages
such as expenses, free products or services or enhancements of a person’s
career but these are not sufficient to substantiate an assignment of copyright
or other intellectual property rights.

• There should be an advance or royalties or fee or other payment such as a

budget for a project which clearly relates to the rights which are being
 licensed or granted in the agreement. For more on this subject please look at
the main clause headings Advance, Budget, Costs, Expenses, Royalties and
Payment.

• The clause relating to the rights may refer to present copyright and future
copyright. This distinction is recognised in legislation in the United
Kingdom.

• The copyright may not actually exist at the time at which the agreement is
signed. The new creation is to be developed after the date of signature of the
agreement. So it does not exist in copyright at that time in a recognised
format or medium but will do so in the future.

• When drafting definitions and grant of rights clauses and assignments you are
using a combination of the basic facts as to what the parties hope to achieve.
The type of material and rights which exist now and those which will be
created and developed at a later date.

• The definitions and the clauses in an agreement should be easily understood

so that the rights and undertaking and responsibilities of each person or
company are set out in detail in the agreement.

• Quite often the definitions are at the start of the agreement. This then allows
them to be used in the clauses of the main body of the agreement.

• It is much clearer if the rights, obligations and liabilities of each party are all
listed in full. So that you would start with the licensor and then draft the
clauses for the licensee. You would do the same with the assignor and
assignee.

• Some agreements start with the definitions and then have a separate section
for the licence or assignment and then address the issues related to each
party.

• Certain clauses such as governing law or jurisdiction, notices, third party

transfer and others tend to be placed at the end of an agreement.

• There are forms of exploitation and delivery of rights and material which are
not directly recognised in current legislation in the United Kingdom.
However in those circumstances the existing legislation is either ignored and
 is irrelevant to the agreement between the parties. Or the definition in the
legislation is used and parts are adapted.

• The most significant aspect of drafting clauses relating to rights is to think

logically and practically as to exactly what you want to create as the final
product or service or work and the methods and forms in which you wish to
exploit the rights and material.

• The definitions and the rights clauses then become very easy to understand as
you focus on the descriptive elements rather than the legislation.

• The definitions can vary by name and content and focus on the name and
duration and description of a book, film, website or app rather than the
breakdown of the elements of it in a legal sense.

• You will find many words used in commercial agreements, licenses and
assignments which are not defined in any legislation – such as download,
non-theatric rights, digital rights and merchandising rights.

• The streaming of media in recent years has changed the policy of many
companies as to the scope of copyrights and intellectual property rights that a
company must acquire in order to be able to win sales in a competitive
market and market their products or services.

• The television rights may be defined to include terrestrial television, free, pay
per view and subscription as well as cable and satellite. It is equally possible
to separate each of those into standard television rights, satellite rights and
cable rights. There may also be inclusion to permit access to television via
the internet and through websites and laptops.

• The way in which rights are defined must be constantly changing to take
account of the new ways in which material is accessed, used and distributed.
You change the definitions to suit the facts and the means of exploitation.

• Often a licensee or assignee will want to acquire related copyright and

intellectual property rights whether or not they will actually exploit them in
the immediate future.

• Alternatively where rights or material have not been acquired then you may
choose to include clauses which place a restriction or embargo for a period
 of time in respect of specific formats.

• Rights may be referred to in a definition which is then used in a clause in the

main agreement.

• Alternatively there may be no definitions at all and the rights are directly
listed in the clauses of the main agreement.

• The personal preference of the authors is to use definitions not just for rights
but for other matters which can be defined.

• We then use the definitions in the main clause and make the reference by the
use of the title of the definition which will start will capital letters.

• This is particularly helpful where a right or item must be repeated in the

clauses. If you use a definition then you do not have to keep repeating the
same information.

• The use of definitions also ensures that the parties have set out in some detail
the areas which they have agreed are covered by the agreement.

• Rights may be defined in many different ways, based on the facts of the
agreement and may include or exclude rights. Whatever rights you are
describing you may draft them to be very narrow or very wide.

• For instance a definition of television rights may be drafted to cover

terrestrial, cable, satellite as streaming and downloading on the internet and
the use of playback at a later time.

• It may also be defined to cover just terrestrial television and to exclude cable,
satellite and the internet.

• Here we have provided a list of examples of types of headings of definitions

and examples of types of other clauses which may be used. This list is not
intended to be exhaustive or definitive as to how rights and material may be
developed, reproduced, distributed or exploited. Note this is not a list which
is intended to be used all at the same time – it is intended to show the various
descriptions only and how extensive the variations of ways of describing
rights can be in an agreement:
– Reprographic rights

– Right to make copies and distribute to an educational establishment,

college or university

– Right to make copies and distribute to a business or company

– Right to make copies and supply to third parties in general

– Film rights including documentary and feature film

– The satellite rights

– The cable rights

– The standard television rights

– The television rights

– All forms of theatric and non-theatric exploitation including theatre,

readings, plays, exhibitions

– Non theatric rights

– Theatric rights

– DVD rights

– DVD and Video rights

– DVD, Video and Disc rights

– All forms of radio, television, video, and mechanical and/or electronic

forms of reproduction and/or storage and retrieval and/or playback
including videos, disks, DVDs, CD-Roms, cassettes, lasers

– Merchandising rights - the sole and exclusive right to manufacture,

reproduce and distribute a specific product or service based on a
character and its name and image

– Merchandising rights – title, names, storyline and series of characters

– All forms of merchandising and promotion including computer games,
toys, clothing, mugs, stationery, sponsorship, endorsement, product
placement. Note this does not include books, downloads and publication
rights

– Publishing rights

– Book publishing rights

– Volume Form rights

– Serialisation rights

– All forms of publication including hardback, paperback, digests,

serialisation, newspapers magazines, periodicals, quotations, anthologies,
translations including exploitation of the title, index and taxonomy (note
this does not include the internet and downloads)

– The computer software rights

– Computer software and disc rights

– Right of access and storage and retrieval from a hard drive and software
system

– Electronic rights

– Electronic publication Rights

– Digital rights

– Internet rights

– All forms of telecommunication systems, electronic communications,

internet, intranet and interactive multi-media exploitation, and any
method of reproduction, storage, access, retrieval and supply, including
landline and mobile telephones, mobile telephones and pagers, watches
and games, computer software, digital and electronic files

– The sole and exclusive right to produce, manufacture, supply, sell, rent,
 distribute, license, market and exploit the work and any parts of it,
including the artwork and any adaptations or developments whether in
existence now or created in the future in all forms of the media

– All media rights

– Rights to broadcast or transmit a performance

– Performing rights

– Mechanical reproduction rights

– Image rights

– Format rights

– Title rights

– Product placement

– Sponsorship

– Endorsement

– Marketing and promotional rights

– Theme park rights

– Right to reproduce and exploit music and lyrics

– Recording rights

– Music publishing rights

– Right to reproduce and exploit music and lyrics in sound recording and
the sound recording itself by means of mechanical reproduction,
broadcast, transmission, performance and other means

– Right to translate

– Right to adapt
 – Right to sub-licence and exploit rights and material

– Rights which relate to the product of services and work provided by a

person or company

– Right to transfer rights, material or agreement to a third party and third

party transfer

• In many clauses and more often in assignment agreements rather than

licences you will find a reference to not just copyright but also to – and other
intellectual property rights and other rights. This is often intended to cover
other matters which may include the following topics listed below.

– trade marks

– service marks

– community marks

– logos

– design rights

– computer software rights

– digital and electronic files

– inventions, patents modifications and improvements, processes,

– formulae, know-how,

– computer generated material

– rights to data and databases

– domain names

– moral rights

– confidential information
• It is better to use a descriptive list combined with the reference. So you would
draft the words – copyright and any other intellectual property rights and
other rights including but not limited to.

• This would be then followed by a list of those examples from the list above
that you specifically want included.

• You may also make specific reference to material which currently exists by
making another list which refers to specific material.

• The more detail the better otherwise the presumption may well be that the
rights or material are not included in the agreement.

• There is no definition of format rights, sponsorship or product placement in

any legislation in the United Kingdom.

• It may be the case that you have granted an exclusive option to a person or
company or the right of first refusal. In either instance this will affect your
right to exploit the material and rights which you may be entitled to exercise
and exploit. For more on these subjects please look at the main clause
headings in the A-Z of Option and Rights.

• Whatever the nature and format of the material which you are commissioning
you should ensure that as far as possible you are assigned the rights and
ownership of all the development material as well as the final product.

• If you commission artwork which is then turned into computer-generated

graphics then the assignment of the rights should relate to both types of
material as well as any new developments which may be created.

• There is a common mistake when commissioning a website to allow the

creator of the site to retain the copyright and other intellectual property rights
in the website and the development material. This then allows the website
designer or company to assert copyright ownership of the customised
website when you have paid for their services.

• If a website designer or company will not agree to assign all the rights then
you should choose another company who will enter into a written agreement
and assign all the rights rather than be left holding a website in which
someone else’s copyright notice appears.
• A website may be hosted by a third party company and you may use their
software but that is no reason why you cannot own the final version of the
website and all the content which you have created or commissioned as
original material.

• Where an employee creates and develops a new logo or artwork or text

during the course of their employment. The presumption in the United
Kingdom is that the ownership of the copyright they have created and
developed will belong to the company that employs the person.

• Where there is no contract of employment but a contract for services such as

with freelance or consultant B. There is no such presumption that company
A who has engaged them owns the product of the work of person B. If there
is no full assignment and buy-out clause in the agreement then the product of
the work of person B is owned by that person B and not company A.

• Numerous major and leading companies have failed to acquire the copyright
and intellectual property rights in material which they have commissioned
for plans, drawings, research reports, data, book covers, logos for product
labels for shoes, websites, photographs, marketing material, website links
and events.

• In any licence or assignment or agreement it is possible to include certain

rights or material. This is often done by providing a list of forms of
exploitation that may be included. This is done by the use of the words –
including but not limited to – before the list of examples.

• It is also possible – to exclude and reserve – certain rights and material which
exist now.

• You may also exclude and reserve rights and material which – do not exist –
at the time of the agreement but may be developed or created – in the future.

• A grant of rights may also make reference to the type of use which is
permitted. For example it may be commercial, charitable or educational.

• Even though there may be an assignment of rights and material in an

agreement it is helpful to have another clause in which the person or
company confirms that they do not retain any rights or interest or material in
respect of a project. This provides conclusive evidence in the agreement in
 addition to the assignment clause.

• In any agreement concerning the exploitation of rights you should always ask
yourself the question whether, at any stage of the forms of reproduction and
exploitation, a payment may be due to a collecting society. There may be
additional sums due for the performing rights, mechanical reproduction or
resale or other forms.

• For a performance, United Kingdom legislation requires that the literary,

dramatic or musical work must be protected by copyright and the
performance must be in public.

• The term performance covers a speech or lecture or sermon of an original

literary work which is protected by copyright.

• It also includes performance of a literary, dramatic or musical work which is

by means of:

– any mode of visual presentation

– any mode of acoustic presentation

– a sound recording

– a film

– broadcast on the television

– a cable or satellite programme

• The collecting societies can receive payments where copyright works which
are registered with them are performed all over the world.

• An agreement would need to state who is responsible for the clearance of any
rights and material and who is responsible and liable for any payments and
sums due. For more on this subject please look at the main clause headings
in the A-Z of Copyright Clearance and Collecting Societies.

• Even though there has been an assignment or licence clause in an agreement.

You may still wish to add an additional clause where one person or company
 confirms that they do not own or control either some specific rights or any
rights at all.

• In the same way you may get a company to agree and clarify that they have
not acquired certain rights or material under an agreement. These clauses are
not strictly necessary but provide an additional safeguard in case the
assignment or licence clause is challenged at a later date.

• There may also be approval processes for samples and prototypes and other
quality control clauses in the agreement. For more on this subject please look
at the main clause headings in Quality Control and Consultation in the A-
Z.

• It is recommended that where sub-licensing is being authorised as part of any

agreement that additional undertakings are included in the agreement. For
more on this subject please look at the main clause heading in the A-Z of
Sub-Licence.

Drafting clauses in relation to rights

• In clause A-Z R.501 in University Library and Educational you can see that
the photocopying rights are defined as the reprographic rights which uses the
reference to a work held in electronic form and copied by electronic means.
This definition covers a wide variety of machines and gadgets.

• Note that the definition specifically excludes a film or sound recording as it

does under the legislation.

A-Z R.501
‘The Reprographic Rights’ shall [be defined in accordance with the
Copyright, Designs and Patents Act 1988 as amended] mean the
reprographic copying by means of a reprographic process. Reprographic
process means a process for making facsimile copies or involving the use
of an appliance for making multiple copies and includes in relation to a
[Work] held in electronic form any copying by electronic means but not a
film or a sound recording.

• Whereas in A-Z R.503 in University Library and Educational a different –

more practical and narrower – approach is taken and any copying can only
 result in a two-dimensional version of the original work.

A-Z R.503
‘The Reprographic Rights’ shall mean the right to reproduce the [Work] by
photocopying and the reprographic means whether laser, photo images or
otherwise so that a mirror image copy of the text words, [illustrations,
drawings or other material] in the [Work] is exactly copied on to another
two-dimensional format.

• In A-Z R.432 in Publishing author A and publishing company B may agree a

clause in the agreement which states who owns the title of the work, the
design of the cover and the index.

• This clause can be amended to refer solely to the title of the work and logo or
slogan.

A-Z R.432
The title, design of the cover, layout, format and design of the content, and
index shall belong to [specify party].

• If the agreement relates to a band or choir or lead dancers or other performers

as in A-Z R.307 in Film and Television.

• Then you would list the people involved by name in detail. In this definition
we refer to the performers but you could equally use the heading the group or
the musician.

• The point here is that the detail of the matter is recorded in the agreement.
This would also then raise the issue as to how their consent was to be
provided and whether any additional agreements were required to be issued.

• It would also be necessary to have regard to an existing union agreement

which may be relevant in the country in which the work is provided which
may be relevant.

A-Z R.307
‘The Performer(s)’ shall be the following [Group/Artiste] [–].
• In A-Z R.371 in Merchandising the definition of the rights uses the words
sole and exclusive right to exploit the specified character.

• These same words may be used again in the grant of licence clause itself.

• The definition sets out in detail the ways in which the character may be
exploited and it is very wide.

• The rights are not limited to one type of item that can be reproduced and sold.

• The definition includes the right to manufacture, produce, distribute,

promote, supply and sale any type of article based on or derived from the
character.

• The definition gives examples of the forms of exploitation by the use of the
words – including but not limited to – so that the list is not intended to be
exhaustive and does not cover all the forms of rights or material.

• The detail of the character is specifically set out in the agreement and a
description provided of the name, any logo or trade mark. There may be two-
dimensional images and text in the attached description.

• The reason for this is that the grant of rights in the licence relates specifically
to the character. If you fail to describe the character in any detail then the
basis for the licence is too vague.

• There would be reference in the grant of the licence to the merchandising

rights and whether they were exclusive or non-exclusive.

• The licence period and the area covered by the licence – namely the territory
– would be defined and stated in the grant of the licence clause.

A-Z R.371
‘The Merchandising Rights’ shall mean the sole and exclusive right to
exploit the [Character] through the manufacture, production, distribution,
promotion, supply and sale of articles of any type based on or derived from
the [Character] including, but not limited to, posters, toys, games, computer
software, stationery, clothes, models, food, drinks, goods, comics,
publications, give-aways and promotions throughout the Territory for the
duration of the Licence Period.
 ‘The Character’ shall be the original concept and novel idea for a Character
which is briefly described as follows:

Name of Character [–] Trade mark/Logo [–]

Full details of the Character are attached to and form part of this
Agreement.

• An agreement may only relate to the reproduction and sale of a specific

licensed article or product as in A-Z R.372 in Merchandising.

• In this agreement the actual article which can be reproduced under the licence
is described in detail and defined as – the licensed article.

• The licensed article is the product to be produced and distributed by the

licensee.

• It is stated in the definition that the licensed article is based on the character
which is specified.

• A full description and also maybe an image of the licensed article are
attached.

• This level of detail prevents the licensee from making other formats and
products which have not been licensed.

• If the products and licensed articles are not consistent with the description
then the licensee will be in breach of the agreement.

• There may also be quality control clauses and approval mechanisms

regarding the content and features of the prototype and final product.

A-Z R.372
‘The Licensed Article’ shall be the licensed product to be produced and
distributed by the [Licensee] which shall be based on or derived from
[Character] and which is described as follows [–]. Full details of the
[Licensed Article] are attached to and form part of this Agreement.

• The defined licensed article can then be used in the grant of rights clause as
 in A-Z R.375 in Merchandising.

• The consideration for the rights is the payment of the licence fee. Note there
may also be royalties due which are set out in another clause.

• Licensor A grants to licensee B:

– the sole and exclusive right

– to produce, manufacture, distribute and sell the licensed article

– based on the character

– throughout the territory

– for the duration of the licence period

A-Z R.375
In consideration of the Licence Fee the [Licensor] grants to the [Licensee]
the sole and exclusive right to produce, manufacture, distribute and sell the
[Licensed Article] based on the [Character] throughout the Territory for the
duration of the Licence Period.

• Whereas in A-Z R.377 in Merchandising the consideration is shown to be the

licence fee and the royalties for the licence.

• The sole and exclusive licence covers not only the right to produce,
manufacture, distribute and sell but also to exploit the licensed article.

• This grant of rights is therefore wider by the use of the word exploit.

• You may also extend the licence period further by an option for an extension
or by having a sell-off period clause for the stock.

A-Z R.377
In consideration of the Licence Fee and the [Licensor’s] Royalties the
[Licensor] grants to the [Licensee] the sole and exclusive right to produce,
manufacture, distribute, sell and exploit the [Licensed Articles] based on
the [Character] throughout the Territory during the Licence Period.
• In A-Z R.373 in Merchandising a format is defined.

• There is reference to the fact that the format may be original despite the fact
that it is not protected under any legislation. Provided the parties are willing
to agree terms, there is no reason why they should not complete such a
licence provided it is not considered against the law under relevant
legislation.

• As with the character the aim is to describe the format in a great deal of depth
so that a full description is attached and forms part of the agreement. This
may include the rules, questions and answers, design of the set, use of props
and any other material.

A-Z R.373
‘The Format’ shall be the original concept and novel idea which is briefly
described as follows [–]. Full details are attached to and form part of this
Agreement.

• In A-Z R.396 in Merchandising the images rights are defined in a very wide
manner and cover more than just the name and image of a person.

• The image rights definition is very similar to a draft for a grant of rights
clause. The right is defined as exclusive, not non-exclusive.

• There is reference to the areas which are covered within the definition which
includes:

– the still and/or moving image and/or likeness

– mannerisms, gestures, body language

– catchphrases, imitation, voice likeness

– and/or other representations of the person

• There is a repetitive use of the words – and/or – so that you may use both or
either choice.

• The third part of this clause refers to the methods and means by which the
right granted may be exploited namely:
 – in all formats and in all media without limitation

– in all forms of animation and film, audio and sound recordings,

electronic digitisation and dissemination, telecommunication systems,
mobiles and telephones, two and three-dimensional reproductions, toys,
accessories, stationery, clothing, bags, calendars, advertisements,
promotions and marketing

• The countries or territory for which these rights are to be granted is then
specified and then finally the duration for which such rights may be
exercised which is for the length of the licence period.

• Despite the fact that the image rights are defined in this way we would advise
repeating a grant of rights in separate clause in the main part of the
agreement where the consideration would be stated.

• It is also possible to define the image rights in an alternative way without the
reference to the territory and the licence period which are also defined in the
front of the agreement. These would then be referred to in the grant of rights
clause.

A-Z R.396
‘The Image Rights’ shall mean the exclusive right to reproduce the still
and/or moving image and likeness, mannerisms, gestures, body language,
catch phrases, imitation, voice likeness and/or other representations of
[Name] in all formats and in all media without limitation to all forms of
animation and film, audio and sound recordings, electronic digitisation and
dissemination, telecommunication systems, mobiles and telephones, two
and three dimensional reproductions, toys, accessories, stationery, clothing,
bags, calendars, advertisements, promotions and marketing throughout the
[Territory/other] for the duration of the Term of this Agreement.

• The music publishing rights are defined in A-Z R.403 in Merchandising so

that it describes the scope of the type of use which is permitted under the
agreement.

• Here the focus is on the different forms of reproduction which are to be

permitted in the grant of licence or assignment clause.
• Note in this definition there is no reference to exclusive or non-exclusive or
the licence period or term of the agreement or the territory or countries.
Those definitions will be used in the grant of licence clause or the
assignment whichever it is the parties have agreed.

• The title and name of the work is set out there is reference to the fact that the
definitions refers to the words and music. It could be defined to only cover
one or the other but not both. This is then referred to as the work and that
concept follows through the sub-clauses 1.1 to 1.4.

A-Z R.403
‘The Music Publishing Rights’ shall mean the following rights in respect of
the title, words and music of the composition entitled [–] the [Work]:

1.1 To publish, print, sell and distribute the [Work] whether in the form of
ordinary sheet music edition or as part of a folio or album or in any
other printed form and to sub-license third parties to exercise such
rights.

1.2 To reproduce the [Work] by means of mechanical reproduction by way

of a record, disk, tape or other means of conveying sound and/or visual
images (excluding television, video and film) whether in existence now
or created in the future and the right to authorise others to do so.

1.3 The right to grant the Licences for the synchronisation of the [Work]
with any feature film, film for television, advertisement or other visual
moving images.

1.4 The right to make and publish translations of the lyric in the [Work] in
any languages.

• The DVD and video rights are defined in A-Z R.206 in DVD Video and
Discs. Here again there is no reference as to whether the rights are exclusive
or non-exclusive or whether they will be licensed or assigned. Similarly there
is no reference to a licence or assignment period or any countries or territory.

• This definition is limited to a practical description of the ways as to which

rights are covered based on a description of the method of exploitation.
• The right is defined in 1.1 to cover the right to transfer, manufacture,
reproduce, supply, distribute, rent and sell the film which has also be
defined.

• The method and form of use permitted is then described as – by means of

electronic reproduction in the form of any disk or magnetic tape which
consists of a sequence of visual images with or without sound capable of
being viewed as a moving picture by means of a playback device which is
either separate from but used in conjunction with or is in fact an integral part
of the television set, computer, or portable product, but the [Film] is
displayed on the screen.

• In 1.1 the explanation of the DVD and video rights granted is limited to
private home use only and not any other use.

• In 1.2 the right is extended to be allowed to authorise any third party to carry
out and do the things set out in 1.1.

• It may be necessary to add additional clauses as safeguards for the

authorisation to allow sub-licensing. This may include approval for their
appointment, consultation regarding the format and content of products or
services to be exploited and acceptance of liability and indemnities which
cover any failure of the sub-licensee.

A-Z R.206
‘The DVD and Video Rights’ shall mean:

1.1 The right to transfer, manufacture, reproduce, supply, distribute, rent

and sell the [Film] by means of electronic reproduction in the form of
any disk or magnetic tape which consists of a sequence of visual
images with or without sound capable of being viewed as a moving
picture by means of a playback device which is either separate from
but used in conjunction with or is in fact an integral part of the
television set, computer, or portable product, but the [Film] is
displayed on the screen for private home use only by the public and

1.2 The right to authorise any third party to carry out and do the things set
out in 1.1 provided that the party authorising the work is responsible
and liable for all their acts and omissions.
• The non-theatric rights are defined in A-Z R.210 in DVD Video and Discs.
These rights do not fall within the definition of DVD and video rights.

• The non-theatric rights means the right to exhibit the defined film in the
defined territory during the licence period to non-paying audiences which
fall within a certain category from 1.1 to 1.3 of :

– Educational institutions such as schools, universities and colleges

– Educational classes by companies or other non-educational bodies

– Educational, cultural, charitable and social clubs, libraries and societies

• An unusual addition to this definition which is wider than usual is in 1.4

which may in fact be more commercial such as closed circuit television an
enclosed wired system which is relayed to an audience in a confined area
such as hotels, oil rigs, ships, aeroplanes.

• A fee is paid for this type of use by the club, society or company but the
distinction is that the individual is not paying.

A-Z R.210
‘The Non-Theatric Rights’ shall mean the right to exhibit the [Film] in the
Territory during the Licence Period to non-theatric audiences who are not
making any specific payment to view or hear the film including, but not
limited to, the following categories of audiences:

1.1 Educational institutions such as schools, universities, colleges.

1.2 Educational classes and meetings held by companies or other non-

educational bodies.

1.3 Clubs or other organisations of an educational, cultural, charitable or

social nature including film libraries and societies.

1.4 Closed circuit television, an enclosed wired system which is relayed to

an audience in a confined area such as hotels, oil rigs, ships,
aeroplanes.
• The theatric rights in A-Z R.259 in Film and Television relate to an audience
which is charged for admission to view a film.

A-Z R.259
‘The Theatric Rights’ shall mean the right to exhibit the [Film] to
audiences where a charge for admission is made including, but not limited
to, public and private cinemas, concert and lecture halls and arenas.

• The clause in A-Z R.339 in General Business and Commercial provides a

general example of a grant of an exclusive licence.

• The consideration is the advance which you must note is non-returnable and
the licensors’ royalties. Both of these terms begin with capital letters and are
defined at the front of the agreement.

• In 1.1 the licensor A grants the licensee B a sole and exclusive licence in the
defined rights. The rights can be very narrow and wide dependent on how
they are defined.

• The licence is for the territory which is also defined at the front of the
agreement.

• When drafting which countries fall within the definition of territory you
should always be very specific and include the full names of the countries.
You may also include or exclude surrounding islands, and other land over
which they hold control or sovereignty. It may be useful to attach a map
which defines the area.

• This licence is granted for the duration of the licence period which is defined
at the front of the agreement.

• In this clause there is also the additional right granted to authorise third
parties to exercise the named defined rights.

• There is no automatic right to licence third parties where you yourself have
acquired an exclusive or non-exclusive licence.

• In 1.2 licensee B acknowledges the rights which are specifically not granted
in the agreement. This protects licensor A and puts them in a stronger
 position when the licensee tries to extend the scope of the licence.

A-Z R.339
1.1 In consideration of the Non-Returnable Advance and the Licensor’s
Royalties the [Licensor] grants to the [Licensee] the sole and exclusive
[specify rights granted] throughout the Territory for the duration of the
Licence Period and the right to authorise third parties to exercise such
[specify rights]

1.2 The [Licensee] acknowledges that all other rights including but not
limited to the [specify rights not given] are specifically excluded from
this Agreement.

• Here licensor A grants licensee B the Video DVD and Discs rights in A-Z
R.215 in DVD Video and Discs.

• The licence is exclusive for the Video, DVD and Disc rights in both the film
and any parts of the film.

• The licence could have been for the full film but not any extracts and parts.

• The licence is for throughout the defined territory and for the duration of the
licence period.

A-Z R.215
In consideration of the Advance and the [Licensor’s] Royalties, the
[Licensor] grants to the [Licensee] the sole and exclusive [Video, DVD and
Disc Rights] in the [Film] [and/or parts] throughout the Territory for the
duration of the Licence Period.

• In A-Z R.217 in DVD Video and Discs there is an assignment between the
assignor A and the assignee B.

• Assignee B is paying assignor A a defined consideration which is the

assignment fee. It is also possible to draft the clause to include royalties as
well.

• In consideration of the assignment fee assignor A assigns to assignee B:

 – all present and future copyright

– and any other rights in all media

– whether in existence now or created in the future

– including, but not limited to [specify rights]

– in the [Video/DVD/Film] and/or part(s)

– throughout the [Territory/world]

– for all the period of copyright

– and any extensions and renewals

• The assignment is for the full period of copyright and any extensions or
renewals. This may also be extended to state – and in perpetuity.

• Note in this clause there is no reference to other intellectual property rights

and other rights with a list. Here the words – and any other rights in all
media whether in existence now or created in the future are used instead.

A-Z R.217
In consideration of the Assignment Fee the [Assignor] assigns to the
[Assignee] all present and future copyright and any other rights in all
media whether in existence now or created in the future, including, but not
limited to, [specify rights] in the [Video/DVD/Film] and/or part(s)
throughout the [Territory/world] for all the period of copyright and any
extensions and renewals.

• In A-Z R.278 in Film and Television the assignor A assigns to the assignee B
all media rights in the series. Different rights are then listed by way of
example.

– all present and future copyright

– and any other rights in all media

– whether in existence now or created in the future

 – including, but not limited to, the Television Rights, the DVD, Video and
Disc Rights, the Theatric Rights and the Non-Theatric Rights

– in the [Series] and parts

• Note that even though the rights are referred to by way of example they are
still defined in the agreement for the purpose of describing the scope of the
rights which are being assigned.

• The assignment is only applicable to the defined countries of the territory. If

you wish to be assigned the rights for the world then you should also add – in
the world and throughout the universe.

• For any particular country you may need to consider whether you want to
extend the area to all territorial waters around that country or to aeroplanes,
oil rigs and other moving structures.

• It is possible to have the assignment for an assignment period which is fixed

and end after which all the rights revert back to the assignor A rather than for
the rights to be for the full period of copyright.

A-Z R.278
In consideration of the Approved Budget the [Assignor] assigns to the
[Assignee] all present and future copyright and any other rights in all
media whether in existence now or created in the future including, but not
limited to, the Television Rights, the DVD, Video and Disc Rights, the
Theatric Rights and the Non-Theatric Rights in the [Series] and parts
throughout the Territory for the full period of copyright and any extensions
and renewals.

• In this assignment clause in A-Z R.453 in Services the television presenter is

under a contract to the company but it is not an employment contract.

• In consideration of the presenter’s fee and the presenter’s royalties which are
defined in the agreement.

• The presenter assigns certain defined rights to the company.

• This clause does not contain the publication and merchandising rights but
 they could be added. These may instead be referred to in other clauses as the
terms may not be exactly the same for those rights for the presenter.

• The assignment covers the product of the services of the presenter and
includes any script and sound recordings.

• The assignment is for the defined territory and the full period of copyright
and any extensions or renewals.

• Note this clause has no reference to present and future copyright and makes
no reference to other intellectual property rights. It appears initially to be
quite wide but is in fact too limited for the potential forms of exploitation
that the company may require.

• Note there is no reference to marketing and no reference to the internet rights

or radio. This type of contract could be drafted with an extensive all media
rights buyout rather than this limited assignment.

A-Z R.453
In consideration of the [Presenter’s] Fee and the [Presenter’s] Royalties,
the [Presenter] assigns to the [Company] the [Television Rights, the Video
and DVD Rights, the Theatric Rights and the Non-Theatric Rights] in the
product of his/her services in the [Series] including the script and sound
recordings under this Agreement throughout the Territory for the full
period of the copyright and any extensions and renewals.

• In A-Z R.272 in Film and Television author A grants company B an

exclusive licence to exploit and exercise certain defined rights in a film and
parts of a film. All the rights and the film are each defined.

• The film is based on a book written by the author which is described and
defined and referred to as the author’s work.

• The consideration is the author’s defined royalties.

• The defined rights include Standard Television Rights, the Digital Television
Rights, the Cable Television Rights, the Satellite Television Rights, the
Video, DVD and Non-Theatric Rights and the Theatric Rights.
• Note the rights do not include the publication rights, the merchandising rights
or the internet rights in general although some may fall within the definition
of the digital television rights.

• The defined rights in the clause are linked to the film and the film is based on
the authors’ defined work.

• The assignment is only for the defined territory.

• The assignment is for the full period of copyright and any extensions or
renewals. This could be extended to add the words – and forever – or – and
in perpetuity.

A-Z R.272
In consideration of the [Author’s] Royalties the [Author] grants to the
[Company] the sole and exclusive right to exercise the [Standard
Television Rights, the Digital Television Rights, the Cable Television
Rights, the Satellite Television Rights, the Video, DVD and Non-Theatric
Rights and the Theatric Rights] in the [Film] and/or parts based on the
[Author’s Work] throughout the Territory for the full period of copyright
and any extensions and renewals.

• In A-Z R.344 in Internet and Websites the internet rights are defined in
relation to a specific work which is defined in the agreement. This may be
artwork or text or a photograph or a recording.

• The internet rights are not limited by the method of delivery or the gadget
through which it is delivered to be viewed.

• The aim of this definition is to have the choice to exploit the work in any
media and in other electronic formats.

• This clause is very general despite the fact that it is wide. Therefore in some
instances it may be better to make specific reference to a website or app
rather than take this wider approach.

A-Z R.344
‘The Internet Rights’ shall mean the right to transfer, distribute, supply,
sell, dispose of or otherwise exploit the [Work] in whole or in part whether
 for free, financial or other consideration electronically throughout the
world on any online services or networks irrespective of the nature of the
method of delivery or reception whether internet, intranet, worldwide web,
television, telephone or some other product whether in existence now or
created in the future. This shall include the right to exploit and use the
[Work] and any part in any media and in any format electronically
including, but not limited to, text, visual images, photographs, drawings,
plans, sketches, electronically generated material, sounds, sound effects,
music, background, banners, bookmarks, border, captions, characters, clip
art, cartoon, computer generated art, maps, links, footnotes, headings,
hypertext, film, video, DVD, CD-Rom, recordings and any other method of
conveying any material from that source.

• In A-Z R.346 in Internet and Websites the terms are very specific to the use
of the defined work on a specified website.

• In 1.1 the domain name of the website, and its location and address are stated.

• The website is held on behalf of company B which has a different registered

address and details are also given of any other trading name.

• Person A agrees that the defined work can be displayed on the specified
website for the agreed period of the licence in 1.2.

• Company B may extend the licence by the payment of a fee for each new
licence period. How person A may withdraw their consent and not extend the
licence after the end of a licence period by email to company B.

• The licence period is short and a fee is due for each three month period in
1.3.

• Person A agrees in 1.4 and 1.5 the extent to which the defined work may be
copied and reproduced once it is on the internet which is outside the control
of company B.

A-Z R.346
1.1 [Name] understands and accepts that the following [Work/other] is to
be displayed on the internet at the [Website] location and address [–]
under the Domain Name [–] which is held on behalf of the [Company]
 which is registered in [country] as [details] and which trades [–].

1.2 The duration of the licence is for [specify period] and may be renewed
thereafter for any further period by consent in writing and payment of
the fee specified. The consent may be withdrawn at any time at the end
of any period by notice in writing or email to the [Company].

1.3 The fee for the consent is [specify] which shall be due at the start of
each [three month] period.

1.4 [Name] agrees that the [Work] once on the worldwide web may be
copied, distributed, supplied and transmitted by others in different
forms over which the [Company] has no control. That the [Website] is
linked to other sites and the [Company] has no means of monitoring or
controlling the number of websites on which the [Work] may appear
nor to ensure that the [Names] moral rights are observed.

1.5 That even when the [Work] is no longer on the [Company’s] website
there will be other sources on the internet.

• A website may permit the public to download or access material for personal
and home use only as in A-Z R.347 in Internet and Websites.

• This is a limited permission for non-commercial purposes but does not extend
to making copies or reproducing the content without prior written consent.

• It is possible to draft much longer and detailed terms of access. For more on
this subject please look at the main clause headings in the A-Z of Access and
Downloading.

A-Z R.347
The use of the content, data and information on this [Website] is available
at no charge for non-commercial use only. You are permitted to download
any part of the [Website] and to retain a copy on your hard drive and/or on
a disc for your own personal non-commercial use, but not for any financial
gain. You may not make any further copies and/or reproduce the material
in any format in sound, text, images or otherwise and/or distribute, transfer,
transmit and/or exploit the [Website] without our prior written consent.
• The clause A-Z R.324 in General Business and Commercial is a confirmation
by a copyright owner or licensor or assignor of the rights and material which
they own and control.

• The copyright owner or company A:

– owns and controls all intellectual property rights and any other rights

– throughout the defined countries

– in the defined work, service or product

– and the material

– including but not limited to the long list of examples of forms of

exploitation

• The long list of forms of exploitation will also help you see how blocks of
rights can be allocated in different groups based on the facts.

• This list includes many areas which do not fall within copyright that is why
the clause refers in the first line to intellectual property rights and any other
rights.

• You could add the words – copyright – and then – intellectual property rights.

• 1.9 extends the list to trade marks, domain names, logos and words and the
right to register any interest.

• 1.10 covers areas such as goodwill, patents, inventions and know-how.

• 1.12 addresses the issue of the fact it does not matter whether it is under
subscription or free or subject to any other method of payment.

A-Z R.324
The [Copyright Owner] owns and controls all intellectual property rights
and any other rights throughout the [country/world/universe] in the
[Work/Service/Product/other] and the material including but not limited to:

1.1 Television: local, national, analogue, UHF, VHF, terrestrial, digital,

 cable, satellite television, teletext, interactive and via any computer
and/or gadget and/or telephone.

1.2 Radio; analogue, over the air, digital, interactive and in combination
via any television, computer, gadget and/or telephone.

1.3 Telecommunication systems and Telephones: mobile, cell phones,

landline, via the internet, services, interactive, clips, games,
screensavers, ringtones, sounds, noises, images, animations, mobile
comics.

1.4 Film, cartoons, animations, stage play, performance, sound recordings,

recordings, computer generated material, stills, photographs, visual
images, sound, voice, data, text, audio material.

1.5 Designs, design rights, future design rights, models, sculptures,

graphics, drawings, sketches, illustrations, artwork, two-and three-
dimensional representations, plans, tables, maps, colour, shape, noise
and smell.

1.6 Computer hardware, software, data, databases, material and

information; CDs, CD-Roms, discs and any other method of storage,
retrieval, supply and distribution. Internet and worldwide web,
telecommunication systems, electronic, digital, electromagnetic,
electrochemical and/or any other form of reproduction, supply and
distribution by any method and/or process.

1.7 All music, lyrics and adaptation and exploitation including performing
rights and mechanical reproduction, downloads from any website,
publishing and synchronization.

1.8 Merchandising; toys and games, interactive games for computers,

portable gadgets and consoles, licensing of characters, title, names,
plot, format, posters, calendars, kits, sports and out doors, clothing,
badges, household goods, stationary, magnets, bags, theme parks,
gambling, betting, lottery, festivals, competitions, sculptures and 3D
shows and costumes.

1.9 Brand, trade marks, service marks, logos, words, phrases, domain
names, business name and trading name and the right to register any
 interest.

1.10 Confidential information, moral rights, trade secrets, know-how,

goodwill, inventions, patents, modifications, improvements, formulae
and processes.

1.11 Publications; hardback, paperback, picture books, co-editions, large

print, foreign editions, magazines, periodicals, digests, comics,
colouring books, educational books, serialisation, newspapers,
quotations, anthologies.

1.12 Free or payment whether rental, subscription, licence, mail order,

entrance fee, pay per view, on demand, scrambled, encrypted, or other
charges.

1.13 The right to appoint a supplier, distributor, agent, or other third party;
to reproduce, supply, distribute, adapt, develop, translate, arrange a
sequel, and to exploit the rights and material any manner through third
parties.

1.14 Advertising, publicity, promotion, wrappings, containers, labels,

packaging, display materials, exhibitions, conferences, courses,
webinars and/or training, licensing of extracts, sponsorship,
endorsement, product placement and/or other form of sub-licensing
and/or use of any rights.

1.15 Any other combination, use, device, method, system, process,

transfer, supply whether in existence now or created at any time in the
future.

• In A-Z R.325 in General Business and Commercial all media rights are
defined in a different way. The whole definition relates to the defined work
or product and any parts.

• This definition would be used in an assignment clause. It is intended to be

descriptive so that the forms of exploitation are listed.

A-Z R.325
‘All Media Rights’ shall mean all intellectual property rights and any other
rights and interest of whatever nature in the [Work/Project/Product] and
any parts including without limitation all copyright, trade marks, service
marks, design rights, patents, computer software, digital and electronic
files, trade secrets, moral rights and confidential information, domain
names and the sole and exclusive right to adapt, use, copy, license,
authorise, print, transmit, disseminate, store, retrieve, display, process,
record, playback, rent, lend, supply or sale, promote or otherwise exploit
by any method, medium or process whether created in the future or in
existence now of any nature and any developments or variations or
adaptations whether text, visual images, photographs, drawings, plans,
sketches, electronically generated material, sounds, sound effects, music or
any combination, software and information, logos, background, banner,
bookmark, border, table, caption, character, clip art, cartoons, computer
generated artmap image, map link, common gateway interface, script, data,
domain names, footnotes, headings, hypertext, video or computer
generated graphics or any combination or interactive or digitised including
but not limited to:

1.1 All forms of television whether analogue or digital including

terrestrial, UHF, VHF, cable, satellite.

1.2 All forms of radio whether by direct reception, via television, personal
computer telephone or in digitised form.

1.3 All forms of telecommunication systems including telephones, mobile

telephones, pagers and other machinery and apparatus.

1.4 All forms of mechanical reproduction including videodiscs,

videocassettes, lasers, DVDs, CDs.

1.5 All forms of non-theatric audiences whether for business or

commercial use, educational, cultural, religious or social, schools,
museums, readings, plays, speeches, addresses or lectures.

1.6 All forms of theatric exploitation including cinemas.

1.7 All forms of publication and/or dissemination of information by any

electronic method and process.

1.8 All forms of computer software and interactive multi-media such as

 compact discs, CD-Roms, computer games including all circumstances
where there is an element of interactivity and/or there is any
combination of sound, text, vision, graphics, music or otherwise.

1.9 All forms of merchandising, toys, cloths, mugs, costumes, household

goods, stationery, games, product endorsement, sponsorship, product
placement and any two or three representation of any part of the
[Work].

1.10 Theatre, stage plays, festivals, theme parks and gambling.

1.11 Commercial advertisements, promotional items and giveaways,

format and character exploitation in any form.

1.12 All forms of exploitation in respect of the internet, websites, links,

apps, blogs, text, images, recordings in any form and/or other
medium.

• This clause A-Z R.401 in Merchandising does not use a definition of media
rights but listed the forms of exploitation in the clause itself.

• In consideration of the assignment fee assignor A assigns to assignee B:

– all present and future copyright

– and all other rights

– in all media

– in the work/format

– whether in existence now

– or created in the future

– throughout the territory

– for the full period of copyright

– and any extensions and renewals

 – including but not limited to

• The forms of exploitation are then listed as examples of those rights which
have been assigned by assignor A to assignee B.

• If the assignment fee is not paid then the assignment cannot take place.

A-Z R.401
In consideration of the Assignment Fee the [Assignor] assigns to the
[Assignee] all present and future copyright and all other rights in all media
in the [Work/Format] whether in existence now or created in the future
throughout the Territory for the full period of copyright and any extensions
and renewals including but not limited to:

1.1 All forms of television, terrestrial, digital, cable, satellite and archive
retrieval.

1.2 All forms of DVD, video, cassettes, discs, lasers, USBs and other
portable storage devices.

1.3 All forms of theatric, non-theatric, educational, charitable and

fundraising exploitation.

1.4 All forms of merchandising, sponsorship, endorsement and product

placement, festivals, sports and other outdoor events, lotteries, betting,
theme parks.

1.5 All forms of publication including hardback, paperback, newspapers,

magazines and comics.

1.6 All forms of electronic dissemination of information and mechanical

reproduction and any method of access, storage and retrieval.

• Television company B may grant a non-exclusive right to company A to have

a product appear in a film or programme as in A-Z R.316 in Film and
Television.

• The consideration is the payment of the placement fee.

• Television company B has agreed to use the product and the company’s logo
 in the programme.

• The number of appearances of the product and logo and other details of use
are set out in an attached schedule which forms part of the agreement.

• Note both the company’s product and logo are specifically defined in the
agreement and then used in this clause.

• The programme is also defined and used in this clause.

A-Z R.316
In consideration of the payment of the Placement Fee the [Television
Company] grants to the [Company] the non-exclusive right to have the
[Product] in the [Programme]. The [Television Company] agrees and
undertakes to incorporate the [Company’s] Product and the [Company’s]
Logo in the [Programme] in accordance with the summary set out in
Schedule [–] which is attached to and forms part of this Agreement.

• There are title rights and other forms of exploitation related to funding events
and festivals as in A-Z R.486 in Sponsorship.

• In return for the sponsorship the association A is granting the title rights to
sponsor B for the defined event for the length of the defined licence period.

• In 1.1 the title rights give the sponsor the exclusive rights to have the event
named after them for the purposes of commercial exploitation.

• These rights apply to the world in this clause although the countries covered
could be more limited.

• In 1.2 the sponsor only has the non-exclusive right for its defined logo to
appear on any promotional material. Other logos may therefore be used on
such material.

• In 1.3 there is an exclusive right granted so that the defined sponsors’ logo
appears on the clothing of competitors, staff and personnel in public.
Therefore no other logo except that of association A may appear.

• The location and detail of the logo is described and attached to form part of
 the agreement.

• In 1.4 there is a non-exclusive right to have the sponsors logo on banners,

scoreboards and fencing. There is a display schedule which sets out the detail
of the uses and location and size which are agreed and this forms part of the
agreement. As the right is non-exclusive, the logos of other companies may
be reproduced there.

• In 1.5 the sponsor has the exclusive right of representation to award the
trophy at the ceremony.

A-Z R.486
In consideration of the Sponsorship Fee the [Association] grants to the
[Sponsor] the following rights in respect of the [Event] for the duration of
the Licence Period throughout the world:

1.1 ‘The Title Rights’ which shall be the exclusive right to have the
[Event] referred to for all commercial and promotional purposes
including, but not limited to, any broadcast and/or transmission of the
[Event] on television in any form (whether by terrestrial, satellite,
cable, digital, BBC, Channel 3, Channel 5 or otherwise) as follows
[The [Sponsors] Event].

1.2 The non-exclusive right to have [Sponsor’s] Logo displayed on any

promotional material (flysheets, national and local events, press,
posters, tickets, stationery) and any publicity under control of the
[Association].

1.3 The exclusive right to have the [Sponsor’s] Logo displayed on each
competitors’ clothing during the course of the [Event] and on the
clothing of all stewards, staff and personnel employed by the
[Association] on public duty as follows [–].

1.4 The non-exclusive right to have the [Sponsor’s] Logo displayed on

banners, scoreboards, electronic display systems, fencing, advertising
boards within the venue in accordance with the display schedule which
is attached to and forms part of this Agreement.

1.5 The exclusive right of representation of the [Sponsor] to award the

championship trophy.
• In an employment contract in A-Z R.202 in Employment person A assigns all
copyright, intellectual property rights and all the other rights listed to
company B.

• In this clause there is mention of both types of rights and also types of
material which it is intended should be assigned.

A-Z R.202
[Name] agrees that in consideration of the fees by the [Company] that
he/she shall assign to the [Company] all copyright, intellectual property
rights, computer software rights, inventions, patents, trade marks, logos,
slogans, computer generated material, documents, data, emails, text
messages, recordings, films, photographs, images and any other material in
any medium and/or format which he/she creates, develops, sends, receives
and/or produces at any time during the course of his/her engagement and
work at the [Company] whether during normal office hours and/or
thereafter using equipment owned and/or controlled and/or supplied by the
[Company].

Reservation of rights or confirmation that no rights

• Rights may be reserved and retained or not licensed or assigned as in A-Z

R.336 in General Business and Commercial.

A-Z R.336
All rights not specifically and expressly granted to the [Licensee] by this
Agreement are reserved to the [Licensor].

• In this clause A-Z R.299 in Film and Television assignee B agrees that rights
which are not specifically assigned are retained by the assignee. There has
therefore been a partial assignment.

• Note here the merchandising and publication rights are retained by assignor
A.

• Those rights are not specifically defined in the agreement but they could be if
there is likely to be confusion as to the scope and some of the definitions of
 the rights which have been assigned have been wide.

A-Z R.299
The [Assignee] acknowledges and agrees that all other rights in the [Film]
not specifically assigned under this Agreement shall remain vested in the
Assignor including, but not limited to, any merchandising and publication
rights.

• An assignor may also confirm that they do not hold any further rights as in A-
Z R.332 in General Business and Commercial.

• This is useful even where there has been a buy-out of all media rights and
associated material.

• Note this confirmation relates to the defined work and the defined work
material.

• It is would be very hard for an assignor to later argue that they did not assign
some new form of exploitation where such a clause exists in an agreement.

A-Z R.332
The [Assignor] agrees that it shall not retain any rights in the [Work]
and/or the [Work Material].

• In this clause the executive confirms that he or she is not acquiring any rights
or material under the agreement in A-Z.R.197 in Employment.

A-Z R.197
The [Executive] acknowledges, agrees and undertakes that all intellectual
property rights including copyright, design rights, computer software
rights, inventions, patents, modifications and improvements, processes,
formulae, know-how, computer generated material, rights to data and
databases, trade marks, service marks, logo, domain names, character, title,
slogan, sound recordings, films, photographs, downloads, banners and any
other rights and material of any nature whether in existence now and/or
created in the future in the product of the services under this Agreement
shall remain the sole and exclusive property of the [Company]. This
Agreement does not purport to transfer, assign, licence or provide consent
 to the use and/or registration by the [Executive] of any rights and/or
material.

• This clause relates to a contributor to a blog in A-Z R.365 in Internet and

Websites.

• In 1.1 the aim is to ensure that the contributor agrees and understands that
they will not own any rights, copyright, intellectual property, domain name,
trade mark, title, image or logo. Even if the company created the blog
specifically for the contributor as part of their business.

• In 1.2 the contributor agrees that he or she shall only be due the writer’s fee
and no additional payment shall be due.

• 1.2 also permits the company to assign, transfer, remove or delete the blog at
any time or to terminate or cancel the agreement.

• In 1.3 the contributor assigns:

– all copyright and intellectual property rights

– in their written material for the blog

– for the full period of copyright and any extensions and/or renewals

– throughout the world

– in all media in any format

– which may exist now and/or be developed and/or come into existence at
a later date

A-Z R.365
1.1 The [Contributor] agrees that he/she shall not acquire any rights and/or
copyright and/or intellectual property and/or domain name and/or trade
marks rights in the content of the [Blog] and/or the title and/or any
image and/or logo whether or not the [Blog] was created by the
[Company] specifically for [Name] and his/her contributions or not.

1.2 That the [Contributor] agrees that he/she shall not be entitled to receive
 any payment for the [Blog] except a writer’s fee of [number/currency]
each week subject to delivery of the material for the [Blog]. That the
[Company] shall be entitled to assign, transfer, remove and/or delete
the [Blog] at any time and/or to terminate and/or cancel the
arrangement with [Name] for the supply of material.

1.3 The [Contributor] assigns all copyright and intellectual property rights
in the written material which he/she delivers for the [Blog] for the full
period of copyright and any extensions and/or renewals throughout the
world in all media in any format which may exist now and/or be
developed and/or come into existence at a later date.

• In a merchandising agreement in A-Z R.392 in Merchandising the licensee

agrees that it has not acquired any rights or interest in the defined character
or any associated words, image or logo except as stated in the licence for the
particular product.

• The licensee agrees not to attempt to register any rights or interest.

• This clause could drafted in a more draconian and wider manner.

A-Z R.392
The [Licensee] agrees that it shall not acquire any interest, goodwill or
right in the name of the [Character] or any associated slogan, words, image,
text or any trade mark, logo or otherwise under this Agreement except to
manufacture and distribute the [Licensed Article] and undertake not to
attempt to register any such rights or interest.

• In this clause in A-Z R.465 in Services agent A agrees that it is not acquiring
any rights or interest in the name of actor B or any trade mark, business
name or logo and that such rights remain the exclusive property of actor B.

A-Z R.465
The [Agent] acknowledges that the name of the [Actor] and any goodwill
and reputation created in respect of any trade mark, business name, logo or
otherwise shall remain the sole and exclusive property of the [Actor]
whether in existence now or created during the Term of this Agreement.
No part of this Agreement is intended to transfer any copyright or any other
 rights vested in the [Actor] to the [Agent].

• This clause A-Z R.490 in Sponsorship makes it clear that there is no option
or first right of refusal or other interest granted to the sponsor for the festival
or event.

• This may be necessary to avoid a claim to rights over a sequel to any project
or work.

A-Z R.490
The [Sponsor] shall not have any option, first right of refusal, and/or any
other interest in any subsequent [Programme/Event/Festival].
 ROYALTIES

• There are over one hundred clauses in the A-Z on Royalties from A-Z R.524
to A-Z R.653.

• This subject can be cross referenced with the main clause headings in the A-
Z of Accounting Provisions, Advance, Assignment, Assignment Period,
Budget, Collecting Societies, Commission, Copyright Clearance,
Inspection of Accounts and Records, Licence Fee, Licence Period,
Marketing, Material, Net Receipts, Option, Payment, Rates of
Exchange, Remainders, Rights, Sell-Off Period, Set-Off, Sub-Licence,
Territory, Term of the Agreement and Third Party Transfer.

The meaning and purpose of royalties

• A royalty is a percentage of a sum of money X made by another person or

company A from which a person or company B receives an agreed
percentage.

• There are therefore three significant parts to royalties.

– What is the royalty being paid for?

– Is it linked to a defined use or right?

– Or is it a percentage related to units of a product sold or exploited?

– Or is it linked to a percentage royalty of a profit?

– Or is it linked to sums received?

– Is it sums received after deductions of other costs?

• Therefore the royalty may be a percentage of any number of amounts of

 money all of which depend on how the royalty is drafted and which include:

– percentage of net receipts

– percentage of gross receipts

– percentage of sums received from exploitation of all copyright and

intellectual property rights in all media and formats

– percentage of sums received after deductions from exploitation of all

copyright and intellectual property rights in all media and formats

– percentage of sums received from exploitation of one or more defined

rights which are listed in categories

– percentage of sums received after deductions received from exploitation

of one or more defined rights which are listed in categories

– percentage of fixed unit price

– percentage of selling price

– percentage of recommended retail price

– percentage of dealer price

– percentage of published dealer price

– percentage of customer price

– percentage of list price

– percentage of wholesale price

• A royalty may also be a percentage which relates to a specific format or type

of material or other form of exploitation of certain copyright or intellectual
property rights or types of marketing or even types of offers or discounts.

• These examples will not all necessarily be included in an agreement with a

direct royalty.
• There a wide variety of ways of terms being set out from which a royalty is
received.

• Examples include a percentage of sales of:

– The hardback

– The paperback

– The mail order

– Premium offers

– Book clubs

– An abridgement or one shot digest

– Digest book condensation

– Educational editions

– Subscriptions

– Small reprints

– Anthology and quotations

– Translations

– Audiotapes and cassettes and taking books

– Straight non-dramatic readings for radio

– All forms of television

– All forms of radio

– Feature films and documentaries

– Theatre dramatisations and musicals

 – Animations, cartoons and adaptations in picture form in newspaper
versions

– DVD video and discs

– Computer software and CD rom

– First and second serialisation

– Reproduction, scanning, storage and retrieval, document delivery service,

photocopying and licensing for commercial use, business, educational,
universities and/or charities

– Certain rights may be administered with your consent by collecting

societies such as performing rights or mechanical reproduction rights or
you may request to be listed as excluded so that they do not use your
work

• There are also more recent forms of exploitation which should also be
considered that include:

– Electronic reproduction and distribution including the internet, websites,

apps, blogs

– Theme parks, festivals, events

– Merchandising

– Trade marks, characters and names and domain names

– Product placement

– Sponsorship and endorsement

– Lotteries, betting, gambling, bingo

– Premium rate phone lines and competitions

• The percentage royalty can therefore be in reference to a description of a

defined area of an industry or a defined format of exploitation which is used
or in respect of a defined right. For more on the subject of rights please look
 at the main clause heading Rights in the A-Z.

• Note this list is not definitive and there are many variations which can be
drafted. This is why it is necessary to be careful and to work through the
figures and the wording of the definitions.

• You cannot in an agreement just look at the percentages and royalties and just
assume it either covers all potential forms of exploitation or that no
deduction will be made.

• There have been many licensors, assignors and major companies as well as
individuals who have not received the royalties they expected as they did not
read the percentages in the context of the actual words drafted for the
definitions and the agreement as a whole.

• A high royalty percentage does not always means that you will receive any
money at all.

• The royalty or percentage is based on another figure which is derived from

the gross receipts, net receipts, sums received, retail price, published selling
price, wholesale price or some other sum. You must therefore look very
carefully how the larger sum is calculated and where that money comes from
before you even get to the royalty calculation.

• The percentage which is the royalty may be from a net figure which is after
the deduction of expenses, costs and distribution expenses.

• There may also be deductions allowed for reproduction costs and material,
copyright clearance and other consents, any other expenditure or budget,
payments due to collecting societies and marketing. There may be no limit to
the value of such sums which can be reclaimed before any royalty is due to
be paid.

• Please look at the main clause headings in the A-Z of Copyright Clearance,
Gross Receipts, Net Receipts, Payment, Budget, Costs, Expenses and
Distribution Expenses.

• Royalties are paid in many different industries which include publishing,

merchandising, music, television, film, radio and from the exploitation of
any type of material or services or copyright or intellectual property rights. It
 is relevant in any medium or format and in any country of the world.

• There is no precise rule as to how a royalty should be defined or used and the
percentage which any person or company receives is based entirely on the
drafting of the definitions and percentages which are set out in a licence or
agreement.

• There are also other aspects of the terms of the agreement which are relevant
as to whether any royalty gets paid to you or not.

• Where there is a list of forms of copyright or other definitions or uses linked

to fixed percentage royalty payments. A problem arises where there are new
forms of exploitation which come into existence or new technology which is
developed.

• As an assignee or licensee will rely on the argument that no royalty is due as

there is no percentage set out in the agreement for that form of exploitation.
There have been many actors and performers who have not received any
payments from exploitation of their work in a film or series as a result of this
type of reasoning.

• It is therefore important to state that a royalty will still be due where no

percentage is stated in the agreement is a new form of exploitation created or
developed at a later date which was not in existence at the time of the
agreement. Or where a new copyright or intellectual property right comes
into existence as a result of new technology or arising from new legislation
after the agreement has been signed.

• The parties can agree that either a new royalty will be negotiated or those
new rights or technology are not covered by the agreement and have not
been licensed or assigned and must therefore be the subject of a new
agreement.

• Examples of forms of exploitation and areas which have caused problems in

the past include a television series being reproduced in DVD or accessed via
a subscription or free service. As well as methods of accessing and
downloading music and films and exploiting characters and storylines as
theme parks and on gambling sites.

• The agreement may or may not allow the appointment of a distributor or sub-
 licensee or other third party which may require payment of agency fees,
commission, other costs and expenses for production, delivery and
marketing. For more on these subjects please look at the main clause
headings Third Party Transfer and Sub-Licence in the A-Z.

• In any event you need to find out how your product or project is to be
exploited and by whom and who is to pay for any costs and expenses
incurred. Failure to make it clear in an agreement that such costs cannot be
recovered prior to the payment of any royalty can have very significant
consequences as to whether you receive a payment or not.

• If you are the licensee or assignee then you want to be able to deduct the
costs and expenses of as many factors as possible before any payment of
royalties is due. This may include for instance:

– Agents, sub-licensees and distributors commission, fees, expenses and

costs

– Bank transfer charges and costs for currency exchanges

– Marketing costs

– Cost of reproduction and delivery of any material

– Administration charges

– Payments due for moral rights, copyright, intellectual property, music,

collecting societies and contract clearances arising from any agreement

– Custom and excise duties

– Product liability costs

– Health and safety assessment and testing costs

– Legal costs and payments for any damages and losses

– Delivery charges and expenses

• The issue of the differences in drafting a gross receipt definition as opposed

 to net receipt definition from which a royalty is calculated in covered
elsewhere in this book under those subject headings gross receipts and net
receipts.

• For more clauses please look at the main headings in the A-Z of Gross
Receipts, Net Receipts and Royalties.

• A smaller percentage of the retail recommended price if the price is known

and fixed may be a better percentage than a higher percentage of net receipts
or sums received after deductions.

• It is a common and fundamental error to think simplistically that the higher

the percentage of the royalty the greater the revenue that will be paid.

• An agreement for a lower percentage of gross receipts may be far more

lucrative one than for a higher percentage of net receipts.

• Online internet retailers often offer a net price which is based on the final
selling price less a high percentage commission and less payment costs
before any sum is paid to an individual.

• Where material is downloaded or accessed from the internet these

arrangements tend to be based on a fixed payment price rather than a
percentage which is difficult to calculate. The payments are often small but
based on the expectation of large volumes.

• There are agreements for access to downloads of music and books based on
an agreed selling price of which one party gets a commission and the other
party who owns the copyright receives the larger share.

• There may still be deductions for currency conversion, payment charges and
other matters which are set out in a separate clause. Even though it appears at
first glance each company or person pays for their own costs and expenses.

• If it is agreed that there shall be no deductions then it is best that this term is
stated in the agreement.

• If it is agreed that each party is to pay their own costs and expenses and is not
entitled to recoup any charges or costs or commission charged or incurred by
a third party. This is a key fact which should be stated in a clause as a term
 of the agreement upon which you can rely at a later date.

• Failure to do so allows the possibility that someone will argue that the
agreement merely failed to mention the fact. That it was agreed and expected
that certain costs and expenses could be deducted as that is the industry
practice or how the company usually trades.

• If you want to be entitled to deduct and recoup a long list of expected and
unexpected costs and expenses it is necessary to include a clause which
refers to both direct and indirect costs and expenses and lists some of the
types of areas covered as examples. Do not limit yourself to the listed
examples and so use the words – including but not limited to – in the drafting
before the list.

• If you do not want any limit set on the costs and expenses which can be
deducted or recouped. Or you do not want those costs and expenses to be
limited to the period of the term of the agreement. You must ensure that the
clause does not impose a limited duration and therefore use the words –
incurred at any time.

• You may wish to extend the deduction not just to one company but to any
parent or subsidiary or any third party engaged to work on the project.

• It is possible to negotiate different rates of royalty percentages linked to

achievement of sales or downloads. So that the percentage royalty is linked
to success of the project.

• We are not providing commercial advice in this book on the royalty rates to
negotiate as every contract depends on the facts, the method and form of
exploitation and the past and current industry practices. There are now more
choices as to how to create, develop and exploit copyright and intellectual
property rights and material. The technology allows more people to make the
choice to create a start-up and to be an entrepreneur or to deliver their own
material direct to the public in different medium.

• Many of the contracts and forms of distributing content have dramatically

changed and so are the agreements which are drafted to meet the modern
business model.

• Royalties are associated with long term payments to contributors and authors
 whether the agreement is a licence or an assignment. The other main clause
headings in the A-Z which are relevant are therefore Rights, Exclusivity,
Licence Period, Term of the Agreement, Assignment Period and
Territory.

• The other alternative that should always be considered is whether you would
be better to buy someone out and to obtain an assignment of all the rights in
all media. For more on this subject please look at the main clause headings in
the A-Z of Assignment and Buy-Out.

• The question to ask yourself when licensing any rights is whether the other
party is even going to exploit them.

• There is no point in licensing rights and agreeing a royalty for rights that you
would be better off retaining and holding onto for another agreement.
Otherwise all you have done is transfer archived assets to another company
with no expectation of any payment.

• So you may decide to licence certain rights, work, services or material but
retain everything else. If a toy manufacturer wants to produce and sell a toy.
There is no reason to licence anything except that limited type of toy. You
should not be licensing all merchandising rights to them.

• If a publisher is going to produce a hardback and paperback book under

licence. There is no logical reason to licence the film rights as well or to
authorise them to be entitled to exploit the merchandising.

• There has to be commercial value attached to each part of the agreement.

Each royalty payment must be justifiable so there is a potential payment and
a plan for each method and medium of exploitation.

• The acquisition of as many forms of copyright and intellectual property

rights, domain names, trade marks and other rights and material under an
agreement is not unusual. The whole aim is to acquire as much as possible
for the least payment possible.

• Company B may intend to effectively act as an agent and appoint a range of

third parties C to exploit the different formats which can be exploited. This
would mean that any copyright owner A would often only receive a
percentage royalty of the sums received by company B. Third parties C
 would deduct their commission and other costs before any sums are paid to
company B.

• Company B would then deduct a percentage royalty payment to copyright

owner A and retain all the other money. As you can see from this chain of
events there are two agreements which have an impact on the money actually
paid to copyright owner A, not just one.

• You may hear the expressions royalty inclusive and royalty exclusive. A
royalty inclusive agreement is a percentage of the sums received after
deductions of costs, expenses and commission. Whereas the royalty
exclusive agreement is where the licensor or copyright owner receives all the
money which is received by the licensee or distributor from third parties and
the only deduction is commission by the distributor or licensee.

• The advance and the royalty rates are connected. The agreement may state
that the advance may be recouped against any future royalties for that work
or product or project.

• Alternatively, the agreement may state that the advance may be recouped
against not only the present agreement but also any other future or past
agreements which the parties have agreed.

• The parties to an agreement may also agree that the advance cannot be
recouped at any time. For more clauses on this subject please look at the
main clause heading Advance and Payment in the A-Z.

• It needs to be made clear whether any royalties will continue to be due and
paid after an agreement has expired or terminated. Quite often payments
from third parties may be received after an agreement has ended.

• An agreement should state to whom the payments will be made quite

specifically. If payment is made to an agent or manager A rather than a
person B directly. You would expect to include a clause in which that person
B agrees that payment to the agent or manager A is agreed and is a full and
final payment. So that if the agent or manager A does not pay the person B.
The person B would have no claim against the company or distributor for the
failure.

• There have been a number of examples where an agent or manager has either
 gone bankrupt or into administration or acted dishonestly. In both cases the
clients have suffered and lost their money.

• As regard the failure of any sub-licensee or distributor to make a payment to

a company and then the company to fail to pay any royalties as they did not
receive the funds.

• This type of problem can be dealt with in the agreement. The company either
agrees to be responsible and agrees to pay the sums if a sub-licensee or third
party fails to pay. So that the royalties are paid in any event.

• Or alternatively the liability to pay for sums owed by third parties is

specifically excluded. The parties then agree that where sums are not
received or paid by a third party. Then no royalty is due or owed.

• Although we are not setting rates and percentages for royalties in this book. It
is possible to list some of the arguments which can be raised for higher or
lower rates.

• To put a case for lower rates the arguments are as follows:

– Low expected sales based on previous sales of that genre of work

– Low expected sales based on no reputation of author in the market

– Low expected sales

– High selling price

– Low expected sales based on limited sales market and niche

– Low expected sales as out of fashion

– Low expected sales as not sold out last version

– High production and distribution costs and expenses

– Established industry rate

– Low rate as percentage of gross receipt and no deductions

 – Low rate as percentage of net receipts and low level of deductions. which
are not quantified

– Low rate as not format or rights for main target market

– Low rate as expected to be sub-licensed and acting as agent

– Unknown market

– Unknown author with no track record

– Limited budget

– Not an expert

– Limited overseas sales

– No appeal to major retailers and supermarkets

• To put a case for higher rates:

– Established industry rate

– Rate paid in previous agreement

– Projected sales high

– Following on blog, Instagram and online

– Established reputation and media interest

– Expert in the field

– Success of previous works and projects

– Sold out previous edition or version

– Fashionable and topical subject

– Appeal to major retailers and supermarkets

 – Reasonable price acceptable to market

– Strong potential sales in home market and overseas

– Potential for serialisation

– Potential for film and television

– Potential for merchandising

– Established track record and career

– Strong media appeal

• Purely on an administrative note it is worthwhile to put any percentage in an

agreement in both numbers and words.

• There may also be clauses in an agreement which cover the circumstances in

which no royalty will be paid. Examples may include copies which are in a
factory, in transit, at a warehouse or at other premises which may be
specified as follows:

– Destroyed in production

– Lost, stolen, destroyed, damaged due to fire, water, flood, chemicals or

otherwise

– Any reason beyond reasonable control due to force majeure

– Sold or disposed of at a cost price

– Stolen or otherwise not in a good condition and not offered for sale

– Supplied free of charge to the author

– Sold at a discount to the author

– Deposited at a library or university as part of a legal deposit scheme

which is a legal requirement

– Stock disposed of without charge as donations to educational or

 community projects

– Recalled as faulty or defective due to a legal problem

– No sums are received from any sub-licensee, agent and/or distributor

– Supplied for free for display and exhibitions

– Distributed to the trade or media for reviews, promotions, marketing and

advertising purposes

– Remaindered and sold off at the end of the agreement at below cost price

– Adaptation for Braille, recordings for those who are blind or partially
sighted and other versions for charitable purposes

• Note that not all of the above examples are always excluded from payment of
a royalty in any agreement. Some may be excluded and others may not and
so a royalty will be paid – this may be despite the fact that no money has
been received. This will of course depend on how the clause has been
drafted.

• These exclusions are important as the presumption is that the payment of a

royalty is due on each copy unless it is excluded.

• A company may also withhold a certain percentage of the sums due to an

author or creator in any accounting period. So that if a number of items or
products are returned and therefore no royalty would then be due. That there
is not a payment made which must then be recouped.

• This is very common in the publishing industry as an accounting practice but

it is only permitted if the agreement states that a reserve may be retained.

• Some companies also have a policy of not making any royalty payments if
the sum due is very low and this sum is then carried over to the next
accounting period. There must be a clause in the agreement which supports
this policy otherwise the sum should be paid however small.

• A contract may require the royalty payments to be made in a specific

currency. The agreement should make it clear as to which party should pay
 and currency conversion or bank transfer charges which may be incurred for
any payment. For more on these subjects please look at the main clause
headings Rates of Exchange and Payment in the A-Z.

• Consideration should be given to the inclusion of clauses relating to

accounting provisions and inspection of records and accounts as well as
other third party agreements. For more on these subjects please look at the
main clause heading Accounting Provisions and Inspection of Accounts
and Records in the A-Z.

Drafting clauses relating to royalties

• In A-Z R.529 in DVD Video and Discs the licensor is due to receive royalties
under the agreement which are defined as the licensors’ royalties. The
licensors’ royalties are directly linked to the net receipts.

• The licensors’ royalties shall be the percentage of the net receipts which
constitutes the sum which is arrived at after deduction of the licensees’
commission.

• The gross receipts may or may not be defined in the agreement. The gross
receipts may be defined or described in such a way that they are in fact
already a net figure.

A-Z R.529
‘The [Licensor’s] Royalties’ shall be the Net Receipts after the deduction
of the [Licensee’s] Commission.

• In contrast the royalty to be paid in A-Z R.530 in DVD Video and Discs is
linked to the forms of exploitation and the rights.

• The assignee B has agreed that the assignor A shall receive a royalty payment
referred to as the assignors royalty. In the agreement the percentage to be
paid will be set out in numbers and words.

• The royalty to be paid to the assignor A is linked to money from the

exploitation of the Video, DVD and non-theatric rights which are defined in
the agreement.
• No payment of a royalty is due where there are promotional and advertising
displays in trade exhibitions, in stores or at conferences.

A-Z R.530
The [Assignee] agrees that the [Assignor] shall have the right to be paid the
[Assignor’s] Royalties in respect of the exploitation of the
[Video/DVD/Disc/Non-Theatric] Rights. There shall be no royalty due
where the [Assignee] uses and/or permits the use of copies of
[Videos/DVDs/Disc] of the [Film] for exhibition, display or transmission
for the purpose of trade exhibitions, in-store demonstrations or conferences
where the sole purpose is promotion and advertising to achieve sales.

• This clause in A-Z R.541 in Film and Television shows how the author’s
royalties may be defined.

• The author’s royalties are a specific percentage of the gross receipts.

• The gross receipts are defined separately.

A-Z R.541
‘The Author’s Royalties’ shall be the following percentage of the Gross
Receipts [number] per cent.

• An assignor’s royalties in A-Z R.543 in Film and Television is defined in

relation to net receipts not gross receipts.

• The assignor’s royalties are a fixed percentage of the defined net receipts.

A-Z R.543
‘The Assignor’s Royalties’ shall be the following percentage of the Net
Receipts [number per cent] [number] %.

• A different method is to define each part separately but to define the revenue
and percentage in one clause as in A-Z R.534 in DVD Video and Discs.

• The licensor’s royalties are a fixed percentage of certain sums.

• The certain sums from which the percentage is derived are drafted to include:
 – the sums actually received by and/or credited to the distributor

– from the sale, supply, distribution, sub-licence and exploitation

– of the defined sound recordings

– and/or the defined discs

– in any part of the world

• The revenue is also to include any sums received from collecting societies or
other organisations for the transmission, broadcast, reproduction and/or other
exploitation of the defined discs and/or sound recordings.

• The collecting societies may receive payments from third parties for
mechanical reproduction, reproduction and playing on radio and broadcast
and transmission on television. As well as use on websites and other forms of
use.

• This clause is based on sums received. So commission, agent’s fees and other
costs will already have deducted before there is any calculation of a royalty
if that is what the licensee agrees with any third party.

A-Z R.534
‘The Licensors Royalties’ shall be [number] per cent of the sums actually
received by [and/or credited] to the [Distributor] from the sale, supply,
distribution, sub-licence and exploitation of the [Sound Recordings] and/or
[Discs] in any part of the world. Together with all sums received from any
collecting societies and/or other organisations for the transmission,
broadcast, reproduction and/or other exploitation of the [Discs] and/or
[Sound Recordings] in any part of the world.

• In contrast in A-Z R.566 in Merchandising the licensor’s royalty is an agreed

percentage of the recommended retail selling price for a licensed article.

• Note no actual price is mentioned and it may fluctuate. A recommended retail

price is not the same as the actual selling price.

• This method is a disadvantage to the licensee as opposed to the licensor.

• The licensee may also not exploit the licensed articles in some countries
where large discounts would be required to secure a distribution agreement.
As the payment of royalties based on a recommended retail price may lead to
only a very marginal profit or even a loss for the licensee.

A-Z R.566
The [Licensor’s] Royalties shall be the following percentage of the
recommended retail selling price for each [Licensed Articles] [number] %.

• A royalty payment may also be linked to the wholesale selling price as in A-

Z R.614 in Purchase and Supply of Products.

• The royalty set out in the clause as a percentage which relates to the
wholesale selling price of each product which is sold in the defined countries
listed in the territory.

• Note the money relates to any member of the company’s group not just one
part which makes the sale and also any sub-licensee.

• The wholesale selling price is defined and allows for the deduction of value
added tax, sales taxes, duties, transport and insurance charges, allowances,
discounts, rebates and returns.

• Another clause which defines wholesale selling price may be drafted

completely differently and include or exclude these deductions.

• In order to avoid disputes as to what constitutes sold. This is also defined and
three alternative choices are proposed and the item is sold if any of them
happen first.

• Although relevant here the use of the word sold is very limited. A wider
clause often uses the words – arising from the sale, hire, supply, distribution
and exploitation. The aim would be in other clauses not to limit any royalty
to just the sale of the product but any form of exploitation and any money
received.

A-Z R.614
The [Licensee] shall pay to the [Licensor] [number] per cent of the
[Wholesale Selling Price] in respect of each Product sold in the Territory
 by the [Licensee], any member of the [Licensee’s] Group and/or any sub-
licensee. The [Wholesale Selling Price] shall be defined as the price
invoiced to the [Customer] for the product less value added tax, sales taxes,
duties, transport and insurance charges, allowances, discounts, rebates and
returns.
A consignment of the Product shall be deemed sold on the first to occur of
the following:

1.1 The date of actual delivery of that consignment to the [Customer].

1.2 The date of the invoice to the [Customer] in respect of that

consignment.

1.3 The date that the consignment is mixed by the relevant company with
another ingredient or product.

• In A-Z R.565 in Merchandising the percentage royalty to be paid to licensor

A by licensee B is based on any revenue from the exploitation of the
merchandising of a specific defined character. It is not limited to one type of
product or format.

• The problem with this clause is that the royalty is limited by the definition of
the territory and the definition of the licence period.

• There is no right under the agreement to receive payment of a royalty for any
countries outside the defined territory.

• There is no right under the agreement to receive payment of a royalty for any
format or right which does not fall within merchandising.

• The words revenue and merchandising are open to dispute as they could be
defined widely or very narrowly.

• There is no right under the agreement to receive a royalty payment after the
end of the defined licence period.

A-Z R.565
The [Licensee] agrees to pay the [Licensor] [number] % of the Net
Receipts of the [Licensee] with respect to any revenue generated through
 the merchandising of the [Character] throughout the Territory for the
duration of the Licence Period.

• A company may agree to pay a fixed amount for each unit as in A-Z R.560 in
Internet and Websites.

• In this clause the payment of the fixed fee is only due if the transaction has
cleared.

• The fixed fee only relates to the download of all the defined material and not
parts.

• The payment and a brief statement is provided regularly to a specified person.

A-Z R.560
The [Company shall pay [Name] a fixed unit payment of [figure/currency]
for each completed transaction where funds are received and cleared in
respect of any authorised completed download of your [Material] from the
[Website]. Payment and a statement shall be made every [three/six months]
to [Name] or a nominated representative.

• There may also be a fixed payment rather than a percentage in relation to

products as in A-Z R.615 in Purchase and Supply of Products.

• The fixed fee per unit payment will be made if any defined product is sold
anywhere worldwide.

• The forms of outlets for the sales are listed as examples to cover wholesale
outlets, the internet, shopping channels and mail order.

• The use of the words – and/or otherwise – allow other methods to be used.

• The fixed fee per unit is only due where the money is actually received by or
credited to the licensee.

• Note no deductions are allowed by the licensee for any costs and expenses,
taxes, duties, freight, insurance charges, advertising or any other sums.

A-Z R.615
 The [Licensee] shall pay to the [Licensor] [figure/currency] per unit in
respect of each Product [reproduced, supplied, distributed and] sold
anywhere in the world by any means through retail and wholesale outlets,
over the internet, shopping television channels, mail order and/or otherwise
where the sums are received and/or credited to the [Licensee]. No
deduction shall be made by the [Licensee] for any costs and expenses,
taxes, duties, freight, insurance charges, advertising and/or other sums
incurred.

• The clause in A-Z R.557 in General Business and Commercial addresses the
issue where there is money received or due to be paid but no relevant royalty
stated in the agreement for that form of exploitation.

• If there is no royalty listed as either the rights or the form of exploitation did
not exist at the time of the conclusion of the agreement. This clause makes it
clear that the rights or form of exploitation shall still belong to licensor A
and not licensee B.

• The clause accepts that licensee B may have first right of refusal but that if
the parties cannot agree terms that licensor A may enter into an agreement
with a third party.

A-Z R.557
Where no royalty rate is stated in the Agreement and/or the rights and/or
method of exploitation did not exist at the time of the conclusion of this
Agreement. Then it is agreed that the rights and/or method of exploitation
shall still belong to the [Licensor]. The [Licensee] shall have the first right
of refusal, but in the event that the parties cannot agree terms within
[number] months then the [Licensor] shall be entitled to exploit the rights
and/or method of exploitation with a third party.

• In A-Z R.544 in Film and Television the advance paid under an agreement
can be recouped against royalties before any money is paid.

• Note however that the advance is non-returnable even though it can be

recouped. If it is not recovered from the royalties the company cannot seek
repayment directly from the author.
 A-Z R.544
The [Author] agrees that the non-returnable Advance shall be offset against
the [Author’s] Royalties.

• In contrast in A-Z R.567 in Merchandising the licence which has been paid
to licensor A cannot be offset against the royalties which may be due.

A-Z R.567
The [Licensee] agrees that the Licence Fee is not returnable and is not to be
offset against the [Licensor’s] Royalties and is not contingent upon the
sales of the [Licensed Articles].

• In A-Z R.535 in DVD Video and Discs the distributor has agreed that it will
not be entitled to deduct any costs of production, manufacture, distribution,
sales, marketing, advertising or promotion under the agreement.

A-Z R.535
[Distributor] shall not be entitled to deduct any costs of production,
manufacture, distribution, sales, marketing, advertising and/or promotion
from the sums actually received prior to the payment of the Licensors
Royalties.

• A company may need to state that a person has been paid for their work and
that no additional royalties are due as in A-Z R.559 in Internet and Websites.

• This contributor will probably have assigned the rights in the form of an
assignment and buy-out.

A-Z R.559
No royalties, fees, expenses, costs and/or other sums shall be paid to you
by the [Company] for your contribution and work. The [Company] and
others who use the [Website] shall be able to reproduce the material for
their own personal use and/or for other purposes provided that they provide
a credit and/or copyright notice as appropriate.

• There may be circumstances in which a royalty may not be due as in A-Z

R.648 in University, Library and Educational.
• The institute or company can rely on this clause as the reason for the failure
to make a payment as the liability to pay a royalty has been excluded.

• The list of exclusions from royalty payments can be very short or long. It
does not have to include all the areas covered in this clause.

A-Z R.648
No royalty payments shall be made to the [Contributor] in respect of any
copies of the [Work] in any form which are:

1.1 Distributed to the trade, media or otherwise for the purpose of

reviewing, promoting and publicising the [Work] provided that no
payment is received by the [Institute].

1.2 Destroyed and/or damaged by fire, water, chemicals and/or otherwise

whilst in transit or in the warehouse or the premises of the [Institute].

1.3 Sold or disposed of at a cost under Clause [–].

1.4 Stolen and/or otherwise not in a good condition suitable for sale and
not offered for sale.

1.5 Provided free of charge to the [Contributor].

1.6 Sold at a discount to the [Contributor] under Clause [–].

1.7 Deposited at a library, university and/or institute as part of the legal

scheme in the [United Kingdom] and [country/worldwide].
 SET-OFF

• There are 16 clauses relating to Set-Off in the A-Z from A-Z S.050 to A-Z
S.066 under the sub-heading of General Business and Commercial.

• This section should be read in conjunction with the main clause headings in
the A-Z of Accounting Provisions, Costs, Damages, Distribution
Expenses, Error, Expenses, Legal Proceedings, Liability, Payment,
Rates of Exchange, Rejection, Royalties and Settlement.

What is the meaning and purpose of a set-off?

• In the absence of a clear contractual right of set-off, the legal right to

withhold a payment can be called into question. In the United Kingdom a
right of set-off exists both in equity and in some circumstances under
legislation.

• The whole aim is to avoid any legal debate and argument and litigation.

• As a general rule a party may set off one debt against another provided there
is a connection between the debts, sometimes expressed as an inseparable
connection to the extent that it would unjust not to adjust one claim by
reference to another.

• Against that background it should be obvious as to why a right of set-off

should be stated clearly in a contract. One party would only need to dispute
the fact that there is any connection between the sum owed and the sum
claimed as a set-off and either or both parties may consider legal
proceedings. Any party against whom another seeks to set off a sum owed
can argue based on the facts that there is insufficient connection between the
agreements or the sums or that to apply the set-off would be unfair and create
financial difficulties.

• A set-off clause in an agreement creates a legal term which has been agreed
 by the parties. The clause may create the right to set-off and recoup money
against other sums that are owed by another party under an agreement.

• The set-off may be drafted wider so that party A has a right of set-off of all
debts owed by party B against all sums which would have been paid by party
A. The other party B may owe the money either under the same agreement or
other agreements which may or may not cover the same subject matter.

• A set-off clause may be limited to apply only to the existing contract between
the parties or may be wider to apply to all contracts that the parties enter into
at any time.

• The set-off clause could also include contracts to be signed in the future not
just those agreements which are known at the time of the existing agreement.

• Therefore set-off clauses are included in an agreement to allow a company

flexibility to recoup sums that are owed from another business or person.
These clauses ensure that there will be no argument about one party
deducting sums owed to them from the other party as they have a legal
contractual right to do so which the other party has accepted.

• For example in the publishing industry an author may have a number of

contracts relating to a series of books with a publisher. Each book may be
governed by a different contract with different advances and royalties.

• If one of the series of books is successful and another creates a loss for the
publisher. The publisher may be entitled to withhold royalties due to the
author under one agreement because there is a loss in the sense of an
unearned advance from another book.

• Many publishers therefore include a set-off clause in their contracts where

payments received in relation to an author can be used to set off and recoup
other outstanding sums such as advances which have not been recouped in
other agreements. That may be the case whether the book or subject matter is
part of a sequence of books or not. It will apply to any agreement between
the author and the publisher.

• These clauses are therefore a form of cross collateralisation to protect the

publishers. If there was no set-off clause then the publisher would find it
more difficult to justify the failure to account in full to the author and to set-
 off sums. The set-off clause therefore allows the publisher to have another
revenue resource to recoup advances where money in received from third
parties for an author.

• The point is that the set-off clause in the contract allows the publisher to
avoid any argument with the author as to whether this is fair and whether
there is any connection between the agreements.

• It is possible for an author to ask for a clause which limits the amount of
money that can be recouped and set off in any accounting period. So that not
all the revenue is used to recoup sums due under all the agreements in each
accounting period.

• Set-off is commonly used in financial arrangements – a bank for instance

often has the right to set off sums in one account against an unauthorised
overdraft or default on repayment in another.

• However there is no doubt that a contractually expressed right of set-off can

be very useful to the party which had the foresight to include a provision in a
written contract whether the other party has realised its potential or not.

• The set-off may also be limited to only those sums for which a company has
provided accounts so that a person may challenge the figures which have
been set off.

• A set-off may also only relate to a fixed limit of expenses and costs which the
parties have agreed can be recouped and set off before any sums are paid.

• In the same way that an agreement can allow a set-off there can also be a
clause that no form of set-off is permitted at any time either under that
agreement or in relation to any others which may be concluded at a later
date. The principle is therefore established as an agreed term for the future.

Drafting set-off clauses

• A clause in an agreement with a bank or credit card company may allow them
to use funds from one account to set off against money owed by way of
guarantee as in A-Z S.050.

A-Z S.050
 The [Creditor] may at any time, apply any of the monies referred to in
Clause [–] in or towards satisfaction of any of the monies, obligations and
liabilities which are the subject of this Guarantee as the [Creditor] in its
sole discretion may from time to time decide.

• In many commercial arrangements where there is a licence between a

licensor and licensee. It is common for the initial advance to be recouped
against future royalties. An advance payment by a publisher to an author is
invariably set off against future royalties due under the publishing contract.

• This is in effect a typical form of set-off as expressed by the intentionally

very brief A-Z S.052 which could be used in many types of licence
agreements. Here the licence fee is being set off from the revenue received
by licensee B before any royalties are paid to licensor A. If the revenue never
exceeds the total of the licence fee then no royalties will ever be paid to
licensor A.

• For more clauses relating to Advances and Royalties please look at those
main clause headings in the A-Z.

A-Z S.052
The [Licensor] acknowledges that the Licence Fee shall be set-off against
the [Licensor’s] Royalties.

• It is possible to use different terminology which has the same result for the
set-off as in A-Z S.054. However in this clause the company accepts that the
advance will not be repaid if the sum is not recouped through the set-off.

• It is therefore important to be clear whether or not an advance or licence fee

or other sum will have to be repaid if it is not recovered through the process
of set-off from the sums received.

A-Z S.054
The [Company] acknowledges that the non-returnable Advance is to be set-
off against the [Licensor’s] Royalties but that it is not returnable nor
contingent on sales figures of the [Licensed Articles].

• If there is no clause which sets out that there is agreement between the parties
 against which accounts or agreements money may be set off and recouped by
one party as opposed to another. You are left having to argue the issue of a
connection between the debts, the sums withheld or the agreements or
contracts.

• To avoid the argument as to whether there is sufficient connection between

the sum owed and the sum withheld. The wording of a clause should make
clear that the right of set off applies against any contract and with respect to
any sums due such as in A-Z S.063.

• This clause is very wide and allows the company to recoup, recover, set off
or deduct any sum which it is owed by the licensee against any contract
which it has with the licensee.

A-Z S.063
The [Company] shall have the right to recoup, recover, set-off and/or
deduct any sums which it is owed by the [Licensee] against any sums the
[Company] may owe the [Licensee] against any contract, agreement,
licence and/or other business dealing of any nature.

• In contrast clause A-Z S.057 is concerned not with licensor A but with
licensee B. This clause allows licensee B to set off sums owed by licensor A
to licensee B against those sums owed licensee B to licensor A.

A-Z S.057
The [Licensee] shall be entitled to set-off any and all monies owed by the
[Licensee] to the [Licensor] against any and all monies owed by the
[Licensor] to the [Licensee].

• There may be agreement between the parties that there may be a set-off but it
is in a very limited form and fixed as to the amount and the financial period
in which it can be recouped.

• For example in A-Z S.062 licensee B has the right to set-off for example
£5,000 per year for costs and expenses. The set-off is against any income
before any money is distributed. Licensee B cannot deduct or set off any
other sums from the income before payment is made to licensor A.
 A-Z S.062
The [Licensee] shall be entitled to set-off the sum of [figure/currency] per
annum against any income prior to the distribution of the receipts which
shall be considered remuneration as a fixed cost for expenses and costs. No
other sums of any nature may be deducted prior to payment to the
[Licensor].

No set-off

• If you do wish any set-off to be permitted then the agreement should state
that fact and not leave the issue unresolved. Otherwise the other party may
try to argue that there is a practice or history of set-off.

• Where there is to be no set-off as in A-Z S.056 the clause can be used to

apply to both parties.

• This clause applies not only to the existing agreement but future agreements
between the parties. It basically sets a benchmark that set-off is not allowed.

A-Z S.056
Neither the [Licensee] nor the [Licensor] shall be entitled to set-off any
sums in any manner from payments due or sums received in respect of any
claim under this Agreement or any other agreement at any time.

• A set-off clause may also be considered an aspect of the accounting process

from one party to another. So in A-Z S.061 the focus is on the fact that all
sums due must be paid in full and no set-off or deductions can take place.

A-Z S.061
Each party shall pay to the other in full and without set-off or deduction all
sums payable in respect of each accounting period.

• It should therefore be clear that to avoid ambiguities and arguments over set-
off and recoupment of sums due. The parties should agree first and foremost
whether in principle a process of set-off is to be agreed – expressly or not.
The way in which the set-off clause is then drafted may be narrow or wide
and apply to one or both parties.
• The issue of set-off also needs to be considered in connection with
responsibility for costs and expenses. For more on these subjects please look
at the main clause headings Costs and Expenses in the A-Z.

• In A-Z S.053 the designer agrees that they must pay all the costs and
expenses of packaging and marketing the licensed articles. The designer
accepts that these costs and expenses cannot be set off in any manner in the
calculation of the net receipts.

A-Z S.053
The [Designer] agrees to be responsible for all packaging, containers,
labels, advertising, promotions and sales of the [Licensed Articles] and
confirms that such costs shall be at his/her sole cost and expense and shall
not be offset in any manner in the calculation of the Net Receipts.

• A company may agree to a set-off clause where it has a trading history with
another person or business but does not want the set-off clause to apply to
any third party. Therefore in A-Z S.065 if the company transfers or assigns
the agreement to a third party the set-off clause will end.

A-Z S.065
Where at any time the [Company] assigns and/or transfers this Agreement
to a third party then the rights of set-off in clause [–] shall cease and the
[Company] agrees that no sums due by [Name] to the [Company] shall be
transferred to the assignee and/or purchaser of the Agreement.
 SETTLEMENT

• There are 13 clauses in the A-Z relating to Settlement from A-Z S.067 to A-
Z S.079 under the sub-heading of General Business and Commercial.

• This section should be read in conjunction with the main clause headings in
the A-Z of Cancellation, Confidentiality, Defamation, Indemnity, Legal
Proceedings, Liability, Mediation, Novation, Rejection, Set-Off,
Termination and Novation.

What is a settlement?

• There can be a clause within an original agreement which covers the issue of
any future settlements that the parties may make. For instance there may be a
claim against a company in respect of a product from a supplier. There may
be terms in the agreement between the company and supplier which make it
clear whether either or both have the right to settle potential legal actions
without consulting with the other. Please therefore look at the main clause
headings in the A-Z of Liability, Product Liability and Legal Proceedings.

• A settlement is as much about the future as it is about the past

• The intention in all such circumstances is the same – to draw a line under the
past and create agreed terms for the future between the parties which can be
set out in a new agreement.

• This is a crucial point that in any settlement the intention is usually to bring
pre-existing obligations between the parties to an end.

• A settlement agreement can create very specific new future obligations on

one or more parties.

• Two or more parties can create a settlement document based on any subject
matter however the circumstances may have arisen.
• There does not have to be any legal proceedings or litigation involved to
reach a settlement. Although the underlying current is that if a settlement is
not reached then legal action is an option.

• The purpose of a settlement is to finalise and resolve issues which are

disputed between the parties so that neither party will take any legal action.
The aim is therefore to achieve a full and final settlement which is binding
upon all the parties to the agreement.

• However not all settlements are finalised by formal documents and an

exchange of emails with agreed terms is a route which is often taken for
small disputes. This exchange may then be followed by a formal letter
confirming the agreement from one party. The other party may then send an
email confirming they have received the document and accepted its terms or
signed a copy of the original letter as accepted and sent it back.

• There may be a short form settlement when the dispute is over a specific
amount or clearly identifiable issues which can be dealt with in one page.

• It is not unknown for some disputes to be resolved following an e-mail

exchange which states no more than – OK, all agreed, £10K settlement fee
within seven days, non-disclosure of terms, fee in full and final settlement.
We are not recommending this approach as a reliable course of action.

• In such circumstances the advantage of putting into place a very detailed

settlement agreement is outweighed – at that point in time – by the risk of
creating a whole new set of challenges for the parties to overcome in the
settlement document itself.

• In our view the aim is to create a settlement document which is clear,

succinct and binding and which is signed by all parties.

• The settlement document can serve the purpose of making it clear that the
previous agreement between the parties has ended and that none of the terms
apply or exist any longer except for those set out in the settlement document.

• It is important to refer to the exact documents and preferably attach them to

the settlement agreement.

• Where certain clauses are to survive the end of an agreement and be part of
 the settlement then it is better to repeat those clauses in the settlement itself
rather than to rely on the original documents being available years later.

• At that point the drafting is also about creating a complete archive to look
back upon at a later date.

• Particular care should be taken as to clauses which were in the previous

agreement that still have significance and whether these should be added to
the settlement document.

• A settlement may arise because an author has a dispute with a publisher and
does not wish to have their book transferred and assigned to a third party in
the sell-off of a list of books.

• A novation is a form of settlement where one party A agrees that the original
other party B may be released from their obligations and those obligations
assumed by a new party C. For more clauses please look at the main clause
heading Novation in the A-Z.

• A settlement may occur between parties after an agreement has been

cancelled or terminated and there are still outstanding claims by one party
against another. So the parties reach agreement and terms for a final
conclusion of the dispute.

• An employee who has sued their employer for personal injury or for being
dismissed may reach an agreement with the company and a settlement
document will be drafted which will be binding on both parties and so avoid
any expensive legal action.

• A settlement may be reached without any contractual relationship between

the parties being in existence.

• Different terminology may be used to describe a settlement agreement

depending on the circumstances. However the title of the contract is really a
matter of style.

• An employment termination agreement was previously referred to as a

compromise agreement in the United Kingdom. Since 2013 the formal
reference is to refer to a settlement agreement.
• The substantial issue is whether the legal conditions have been met to ensure
that the settlement agreement is enforceable for its intended purpose of the
employee irrevocably waiving their legal rights in respect of unfair and
unlawful dismissal.

• In The Media and Business Contracts Handbook 5th edition, Contract 42

by the authors contains a pro-forma Compromise Agreement which can be
renamed as a Settlement Agreement if required. This document sets out the
detailed conditions required for the agreement to be valid and binding
between the parties for its intended purpose.

• The term settlement appears in agreements usually by reference to the sum of

money to be paid as consideration for the party seeking to settle as - the
settlement fee.

• In a termination agreement you might find a reference to a settlement fee and

by contrast in a settlement agreement a reference to a termination fee. The
use of these different terms is really a matter of style in the drafting.

• A termination agreement, as opposed to a settlement agreement, is more often

used when there is no real dispute between the parties. Where one party has
served notice to terminate on the other party under the terms of the main
agreement. The parties may have agreed to create a formal document which
may cover any issues such as payment, title and ownership of copyright and
other intellectual property rights and material. As well as the obligation to
return property, keys and security passes and also to cover the payment of
additional sums that may be due.

• There is an example on The Media and Business Contracts Handbook 5th

edition, Contract 21 of a pro-forma Termination Agreement which addresses
those issues which tend to arise in circumstances where both parties wish to
bring an agreement or contractual arrangements to an end.

Drafting clauses relating to settlement

• Drafting clauses relating to a settlement is not the same as drafting a

complete settlement agreement.

• In A-Z S.077 the parties have agreed:

 – Exactly which existing agreements have been terminated

– The clauses which have survived the termination and are to still be
binding

– The settlement document sets out a cut-off date when the clauses which
have survived no longer apply

A-Z S.077
The parties agree that the following agreements between the parties
[date/title/summary] are summarily terminated. The parties agree that the
following Clauses shall survive the termination and be binding on the
parties until the end date set out below in each case [Specify
clause/agreement/end date].

• It is not that usual for clauses to have an end date where the clause will no
longer apply, but it is a good technique to use to limit responsibility.

• Common clauses and issues which survive after a termination or cancellation

are dealt with in the main clause headings Cancellation and Termination in
the A-Z. Other relevant main clause headings include Assignment,
Indemnity, Privacy, Sub-Licence and Title.

• The parties may decide that any settlement should be private and confidential
as in A-Z S.074 which relates to the terms of the settlement agreement itself.
Any permitted disclosure is very limited. Note there is no mention of family,
agents or other persons which the named person may use as advisors.

A-Z S.074
Both [Name] and the [Company] agree to keep the terms of this Agreement
private and confidential. Disclosure shall not be a breach of this Agreement
where disclosure is made to a court of law, under a court order, to a
government department and/or to accountancy, legal and other professional
financial advisors.

• There may be a clause which requires one or both parties to undertake not to
make derogatory or defamatory remarks about the other party following the
settlement. For more clauses please look at the main clause headings
 Confidentiality, Defamation in the A-Z.

• This provision usually arises if the settlement has been difficult to reach
against the background of an acrimonious and perhaps personalised dispute.

• A company and an ex-employee may agree, as part of their settlement, the

exact wording of any future reference that the company will provide for the
employee as in A-Z S.076.

• It would be a mistake to settle a claim without dealing with this issue as the
company can then write whatever it wants regarding the ex-employee and
create a false impression to a third party and damage the employment
prospects of an individual.

• In this clause the reference is attached to and forms part of the settlement
agreement.

A-Z S.076
The [Company] agrees and undertakes to provide the following reference
in response to any future request for a reference by a third party. A copy of
the wording of the reference is set out in Schedule [–] and is attached to
and forms part of this Agreement.

• Equally it may be that the employer is not willing to provide any reference
but merely to state the start and end date of employment and the position
held by the person. If the matter is not dealt with in the settlement then it
may result in another dispute at a later date.

• It is crucial to establish in a settlement agreement not only what is covered

but also what is not covered and is excluded.

• The parties need to be clear what is and what is not being settled. So that any
obligations by one or both parties in the future arising from the settlement
are unequivocal.

• This is a crucial element of a settlement agreement which understandably is

sometimes left silent because raising the issue can result in one or both
parties becoming further estranged and even less likely to reach a final
settlement.
• However there are occasions when certain issues cannot be ignored as in A-Z
S.078. For instance where an ex-employee may wish to expressly reserve the
right to bring a legal action against the company where an officer or director
has damaged his or her reputation or made allegations or statements which
are untrue or provided an incorrect account of the settlement.

A-Z S.078
This settlement shall not prevent [Name] from making a claim against the
[Company] at a later date for defamation and/or any other legal action
where an officer and/or director of the [Company] has made reference to
[Name] and impugned and/or damaged his/her reputation and made
allegations and/or statements which are untrue and/or an incorrect account
of the terms of this settlement.

• Where there is a settlement which relates to a legal claim for unfair and
unlawful dismissal or some other ground. The final settlement should not
exclude an ex-employee’s right to claim a pension or to make a claim for
personal injury.

• Therefore a clause such A-Z S.071 should always appear in a termination or

settlement agreement between a company and an ex-employee.

A-Z S.071
However nothing in this Agreement shall prohibit and/or undermine the
[Names’] residual legal rights against the [Company] relating to pension
entitlement and/or claims with respect to personal injury.

• A-Z S.070 is an example of an acceptance by a person that the payment of

the settlement sum set out is in full and final settlement against the company
for the specified subject matter. Note the clause does not cover all subjects,
just those listed as covered by the settlement.

• The clause could be amended to cover all claims by the aggrieved party with
reference to the emails.

A-Z S.070
[Name] agrees to accept the sum of [figure/currency] [words] in full and
final settlement of any and all claims, actions, and/or allegations against the
[Company] and in particular to the [specify subject].
 SOFTWARE

• There are 11 clauses in the A-Z relating to Software from A-Z S.117 to A-Z
S.127. All the clauses fall under the sub-heading General Business and
Commercial.

• Software should also be cross referenced with Audio Files, Computer-

Generated, Copyright Notice, Credits, Indemnity, Liability, Material,
Rights and Title in the A-Z.

• Also note that most main clause headings in the A-Z contain the subheading
Internet and Websites.

The significance of software

• There was time when software was used for processing and accounting and
everyday functional aspects of a business. Now the technology and devices
and processes are so advanced that it is changing on a daily basis to
encapsulate many lifestyle choices.

• There are very few projects where software is not used in one form or another
whether to create a website or app, to store data and records or to promote
and market a product. Even the means by which many gadgets today
function incorporates elements of software.

• Computer software has now been recognised in many countries as forming a

right in itself which can be registered and owned by one party or more and
which should be protected from use by third parties without authority under a
licence to do so. The registration of stages of computer software functions
are often registered as individual patents in the United States.

• Many consumers are routinely issued with software licence agreements with
their laptops or when they download a programme for their use at home.
Software can also be acquired for a number of agreed multiple uses on
 different equipment.

• In all agreements that you negotiate and conclude it is worth considering the
use of software which is owned and controlled by a third party.

• Secondly to consider whether any completely new software is being

developed and created as a result of the instructions you are issuing to a third
party to create a software programme which suits your business. If there is a
new means of using the software or a new programme developed which
serves a new function then it should be clear which party owns the rights.
The issue of who owns and controls the rights should be negotiated and
agreed not just in respect of the software but also for any material which is
generated as a result of the software programme.

• If the third party software which is to be used for a project is known or

marketed by a specific name and company it is best to incorporate that
terminology into the agreement. It would need to be confirmed which party
is to ensure that there are no clearance problems with using that third party
software and also who is to pay any additional costs for any fees or royalties
that may be charged for its use. The licence would need to cover both the
development stages of the project as well as any forms of exploitation which
are intended to be used.

• It would be very unwise to proceed with the use of third party software for a
project without making sure at the start that the proposed use was acceptable
by the company that owns the rights. Software companies are very pro-active
in taking steps to protect their very lucrative revenue streams.

• Many of the major players in the digital market who create extremely
sophisticated software will use specific names for their software programmes
primarily for marketing purposes. Each software programme will be
accompanied by a software licence which sets out the terms of use for that
software. There should be no presumption made that, once software in on the
commercial market, it can be used and adapted for any project.

• Software or a computer programme is created in many different forms – there

is the data and instructions and algorithms behind the on screen information
which allows the on screen presence to be viewed. There are the different
functions which a software programme is able to carry out – these may be
 due to separate computer software programmes and functions that interact
with and are part of the main programme.

• A software programme may have a source code which is the key which
unlocks access to the original underlying material which would allow
someone to add or change its content.

• The law in the United Kingdom distinguishes between databases as opposed

to computer software but recognises copyright specifically in the former.

• The point to bear in mind is that the same generic concerns should be
addressed with software as with any other type of intangible property and
right. These include the contractual issues which are covered in the main
clause headings in the A-Z of Costs, Exclusivity, Expenses, Indemnity,
Liability, Payment, Rights, Term of the Agreement, Termination,
Territory and Title.

• Quite often companies fall into the trap of commissioning and paying a
developer large sums upfront as they are persuaded that it requires this
investment to commence the work. This is a mistake and payments should be
linked to real targets of completion of work to the satisfaction of the
commissioning company.

• The government has commissioned many agreements for the development of

software programmes to deal with the storage of data which have been an
unmitigated disaster and failed to fulfil the functionality and capacity
required at the start of the contracts.

• In addition the agreements were then allowed to continue and incurred very
large additional costs for the same project exceeding the original budgets.
The developers simply increased the costs for the lack of functionality. There
were no clauses which set out in detail the expectations of the
commissioning party as to the use and functionality which was expected
which were linked to whether a development company would be paid or not.

• These types of agreements were merely adapted outsourced commissioning

agreements which were not sufficiently amended to foresee that development
problems could impact on the costs. The wrong type of agreement being
used relating to software can result in a company paying for a project which
has in reality no useful and working function at all.
• Many companies which enter into agreements which involve computer
software such as when commissioning a website or app or other software
system. Often place undue reliance on both the technical ability of the other
party and their commitment to completing the work on time within budget.
There need to be safeguards within the agreement which protect the
commissioning company from a developer which does not produce the
desired material, or fails to create a website that functions properly or treats
the budget as a starting point for payment and aims to add additional costs
every time a change is requested.

• The real test in any contract is for the terms to be clearly understood by the
party who will actually use the final product and to make any payments in a
structured manner relating to the clear implementation and functionality of
the product.

• There are two agreements relating to app development in The Media and
Business Contracts Handbook 5th edition by the authors. Contract 1 – an
App Development Agreement and Contract 2 - an App Purchase Agreement
with Profit Share.

Drafting clauses which cover software

• Software which is used by a developer who is commissioned to carry out a

project is most likely owned by a third party rather than the development
company. This fact will affect how the agreement is drafted.

• When drafting clauses which cover software issues the approach should be to
create clarity as to:

– Which software you are referring to

– Who owns the software now – at the time of the agreement

– What you intend to do with the software and how it will be used

– Who is paying the cost of the supply and use of the software

– Who is arranging for any new licence that may be needed for the
software from a third party
 – Whose name will be on the new software licence

– Who will own the new material which may be developed as a result of
the software licence

– Who will own any new software that may be created as a result of the
project

– Who will be entitled to any revenue for the exploitation of the new
software and new material

• It is not advisable to impose a scientific analysis of the software in a contract

or even to try to fit the concept within the constraints of a strictly legal
heading.

• Dependent on which country in the world you have as the jurisdiction you
may or may not be able to register computer software rights in itself. The
avenues for protecting the rights may also vary enormously.

• The answer is to keep the clause simple and clear without complicating the
issue with unnecessary technical jargon which is not easily interpreted at a
later date.

• The agreement may define the scope of the software as in A-Z S.118 where it
names the programme and also adds that it includes the source code.

A-Z S.118
‘The Software’ shall mean the source code of the computer and the binary
code the machine readable coded programme [excluding the server] known
as [specify name].

• Where one party has very little knowledge of software and its functions and
another is engaged or commissioned to create a website, app or software
programme for the storage and use of data and other functions.

• Then the aim is to build in mechanisms in the agreement which allow the
party with no knowledge to put the proposed new website to the test or to use
and access the software at an early stage to ensure that the requested purpose
will be achieved.
• Often development company B will base their work for a project on a series
of discussions between the parties. The aims of party A with no knowledge
of software development may never be described in any detail, in the
agreement except that they want a website or app made – which means that,
when the functions are not attained by developer B, party A has no specific
grounds for complaint as the detail was never set out in the agreement.

• Therefore always have a very specific and detailed description attached as a

schedule to the agreement explaining what you want the website or app to do
and how you want it to appear or function.

• You may also set the developer B performance targets which must be
completed by a certain date. In addition that where at each stage the website
or app is tested and assessed by party A to see whether any progress has been
made.

• Here also payments for any agreement should not be made upfront but should
be staggered and linked to actual real progress with a final payment when the
project is complete and accepted.

• You will also find that with most software projects the budget is quite
substantial and so the budget should be broken down and itemised.

• The budget should allow for the developer to carry out some work that is not
anticipated without any additional costs being incurred. Please look at the
main clause heading Budget in the A-Z for other clauses on this subject.

• Payment for the completion of a project involving software may be delayed if

after testing there are still problems as in A-Z S.125. The challenge for any
company or person commissioning the development of a website, app or
system is to actually test the material and not allow the developer to make
technical excuses for a lack of functions.

• In A-Z S.125 the supplier has agreed that the company may test the computer
software capacity and functions before the last payment is due. The supplier
has agreed that if the system does not function as expected that payment can
be delayed until the company has approved all the work.

A-Z S.125:
The [Supplier] agrees that the [Company] must be able to test and approve
 the capacity and functionality of the computer software prior to the
payment of the instalment due on completion of the [Project]. That in the
event that the system does not function as expected and there are
unresolved problems. Then the final payment must be delayed until the
[Company] has approved all the work.

• A software or development company or supplier may also want to exclude

liability for any errors, defects, omissions failures, losses, damages whether
direct or indirect for the use or installation of the software programme by a
third party as in A-Z S.122. This may be applicable to the loading of a DVD
or CD.

• This clause is a combination of an exclusion of liability and a disclaimer

except for death and personal injury. The company wishes to transfer the risk
to the licensee. It could also be extended to the third party. For other clauses
on these topics please look at Disclaimer, Liability and Risk in the A-Z.

A-Z S.122
The [Company] does not accept any responsibility for any errors, defects,
omissions, failures, losses, damages and/or other liability arising directly
and/or indirectly from the installation, use and/or any modifications,
additions, amendments, adjustments and/or error corrections supplied by
the [Company] at any time and/or any other matters of any nature arising
from the [Software]. The [Licensee] must install and use the [Software]
and any other material entirely at its own risk and cost and the [Company]
shall be liable for any costs of any nature that may arise unless personal
injury and/or death directly caused by the negligence of the [Company].

• It is important to understand that the use of a software programme under a

licence is not the same by any means as acquiring any rights or title to the
software.

• This distinction is made in A-Z S.123 where the licensee agrees that it has
not acquired any rights in any copyright, intellectual property rights or
computer programme rights or database rights or in any data or source code.

• The licensee has also agreed not to erase or delete any copyright notices or
warnings.
 A-Z S.123
The [Licensee] agrees that it shall not acquire any rights in any copyright,
intellectual property rights and/or computer programme rights and/or
database rights in the [Software] and/or any data and/or the source code
and/or the title. The [Licensee] agrees not to erase, delete and/or alter any
copyright notices and/or warnings on any part of the [Software] and any
additional material at any time.

• The licence to acquire the right from a licensor to use some software will
rarely be exclusive and is most likely to be non-exclusive as in A-Z S.120.
The licensor has also made it clear that the licensee cannot transfer the
licence to a third party.

• For more clause on transfer to third parties please look at the main clauses
heading Third Party Transfer in the A-Z.

• Note here this clause also has an end date to the licence. There is no mention
in this clause regarding the scope of the license or the stated purpose for
which the software may be used.

A-Z S.120
The [Licensee] is granted a non-exclusive non-transferable licence by the
[Company] to use the [Software] [and data] for the purpose which it is
intended [indefinitely/until date].

• A clause relating to software may also confirm which rights are not being
granted under the agreement as in A-Z S.121. In this clause the licensee is
acknowledging what rights are not granted and what it is not permitted to do.

A-Z S.121
The [Licensee] agrees that no right is granted by the [Company] to the
[Licensee]:

1.1 To make additional copies [except for one back up copy].

1.2 To reproduce, exploit, adapt, license, translate, develop the [Software]

and/or any content for any reason.

1.3 To sub-license, permit, authorise, assign and/or transfer any rights of

 any nature in the [Software] to any third party.

1.4 To make any digital and/or electronic files of the [Software] available
over the internet and/or to sell, supply, distribute, upload and/or make
availablew the [Software] and/or any part to any other persons and/or
websites.

• The maintenance and upgrade of any website, app or system may be set out
in the agreement as an additional cost which is not covered under the
agreement as in A-Z S.126.

A-Z S.126
The [Supplier] confirms that maintenance and later upgrades are not part of
this Agreement and required additional payments and agreements to be
concluded.

• In A-Z S.127 the supplier or developer has ensured that the commissioning
company understands that, where it requests new features, functions or
software to be used for a project. Those additional costs and expenses are not
part of the original specification completed and agreed between the parties.
Consequently the supplier or developer will be entitled to charge additional
sums in these circumstances. In this type of case the final specification can
be attached to, and form part of, the agreement.

• There are also many instances where a failure by a company to identify its
aims and purposes at an early stage of the project results in numerous
changes in the development of a project which were not originally discussed
or anticipated.

A-Z S.127
Where the [Company] wishes to add features, functions, tools and/or
development to the computer software and system which were not part of
the original specification agreed at the start. Then the [Supplier] shall be
entitled to charge and be paid additional sums for any extra work.
 SUB-LICENCE

• The section on Sub-Licence in the A-Z is from A-Z S. 154to A-Z S.206.

• This subject can also be read in conjunction with the main clause headings in
the A-Z of Accounting Provisions, Adaptation, Assignment, Credits,
Copyright Notice, Distribution Expenses, Exclusivity, Format,
Indemnity, Liability, Licence Period, Material, Moral Rights, Novation,
Product, Quality Control, Rights, Royalties, Term of the Agreement,
Termination, Territory, Third Party Transfer, Waiver and Work.

Meaning and purpose of a sub-licence

• Where company or distributor B have acquired copyright, intellectual

property rights or material or services as a result of an assignment from
assignor A. Company or distributor B may then decide to appoint third party
C to exploit the work or material through a sub-licence.

• Where there has been an assignment it is unlikely that the approval and
consent of the assignor is required before a sub-licensee is appointed.

• If the assignment is for all media and for the full period of copyright then it is
unlikely that assignor A has retained any rights.

• The assignment itself may not have made it clear that assignee B can appoint
a sub-licensee but it is presumed it is covered as they own the rights.

• The more common use of the sub-licence is where company or distributor B

has acquired copyright, intellectual property rights or material or services as
a result of a licence from licensor A.

• The original licence may in fact prohibit any appointment of a sub-licensee,

agent or other third party distributor. So before entering into any agreement
for a sub-licensee you need to look at the terms in the original licence.
• A non-exclusive licence is unlikely to permit the appointment of a sub-
licensee. However the agreement may not even mention sub-licensees or
third parties. In which case it is much better that you check with the licensor
whether it is permitted.

• An exclusive licence is more likely to cover the issue of appointment of third

parties and sub-licensees either in the licence of rights or in a third party
transfer clause.

• Company or distributor B may then appoint a number of third parties to assist

in the production, distribution and exploitation such as manufacturers,
agents, sub-licensees and distributors in different countries.

• Company or distributor B may therefore sub-licence the exploitation of

certain copyright and material and services to third party C or more than one
such party.

• Any third party C cannot be granted in the sub-licence anything more than
the company or distributor B has acquired under the original licence.

• If you are the original licensee and have acquired a ten-year licence period
you are not entitled to grant a sub-licence which is longer than the original
licence. This is a common mistake.

• In practice the sub-licence document should not contain any terms which are
greater than or contrary to the terms of the original licence in any way that
includes:

– The copyright, intellectual property rights, material and services which

have been granted

– The duration or licence period of the original agreement

– The territory covered by the original agreement

– The formats which have been agreed can be exploited

– The credits copyright notices and moral rights

– The accounting provisions

• For more on these subjects please look at the main clause headings in the A-
Z of Accounting Provisions, Exclusivity, Format, Licence Period,
Material, Product, Term of the Agreement, Territory and Work.

• It is important that the use of third parties to fulfil an agreement is raised

during the negotiations and dealt with specifically in the agreement.

• There are many instances where third parties are appointed to manufacture
products, create marketing material, distribute content and material or to
deliver products.

• The first question is whether or not the licensee or company has any right to
sub-licence.

• The right to sub-licence cannot be presumed and should be given as a specific

right to a licensee.

• If there is a right to sub-licence then the question arises as to the scope of the
permission which has been granted.

• The right to sub-licence may be limited by format, rights, duration or

countries or by some other reason.

• There may be conditions attached to the right to sub-licence such as

approvals and consents which must be provided. These may apply to the
appointment of the third party or the materials and products to be created or
both.

• A sub-licence may be exclusive or non-exclusive and follows the same basic

principles as any licence.

• An owner of original copyright in a work or material or services may grant

many licences for different formats and countries.

• Alternatively there may be a simple merchandising agreement between

licensor A and licensee B for all the material associated with a film, book or
other work. This agreement would then allow the appointment of sub-
licensees to exploit the rights in order to maximise the potential revenue.

• Different companies may be appointed to exploit the clothes that are sub-
 licensed as opposed to the toys and household products.

• There may be a main sub-licence to one manufacturer and distributor or a

large number of sub-licences.

• When you are the licensor A issuing a sub-licence to company B. When you
are drafting a sub-licence you therefore only need to licence the copyright
and intellectual property rights and material in a way which means that you
grant as little as possible to the other party.

• You would follow the motto to grant narrowly and acquire widely.

• In order to grant a sub-licence on a narrow basis you would grant a non-

exclusive licence rather than an exclusive licence.

• The licensor would only grant the right to exploit a specific product and not a
genre or category of products. So the licence would refer to the name of the
product and the design rather than a general reference of toys. This limits the
licence to the one product and does not allow the licensee to create and
exploit others during the licence period. You would also get the sub-licensee
to acknowledge that fact.

• To keep the sub-licence narrow you would also limit the duration of the
licence period to a fixed period. You would not want to grant any sub-licence
for the full period of copyright and it should be for one to five years, no
more.

• If the sub-licence has a short licence period then you can negotiate a new
advance and royalties with a new sub-licensee.

• It is best to understand where the sub-licensee actually sells products and to

only grant a sub-licence to those limited countries. Otherwise if you grant
countries which you could have retained it is not cost effective.

• In order to keep the licence period short you would also not allow any
additional sell-off period to the sub-licensee after the sub-licence has expired
or been terminated. The sub-licensee would have to sell off stock within the
licence period which is better.

• In any sub-licence you would seek to retain and reserve all other copyright,
 intellectual property rights and any other rights. You would also want a
clause which ensures that any new copyright or other rights created in the
future by the sub-licensee in respect of the development or adaptation of the
original copyright, work or product and any name, title, logo or trade mark
were assigned to you the licensor.

• As with any licence you would want grounds to terminate the sub-licence.
The licensee may wish to terminate the sub-licence with the sub-licensee due
to the failure to keep records, report accounts and make the payments due or
because of the poor quality of the product. For more on these subjects please
look at the main clause headings in the A-Z of Accounting Provisions and
Termination.

• It is fundamental that a licensee cannot grant a sub-licensee more than they

have acquired under the original licence.

• It is also the case that collecting societies cannot grant rights to third parties
which they have not acquired from the licensor.

• However it is a frequent problem that both licensees and collecting societies

presume without any evidence that they have the right to sub-licence rights.
You cannot sub-licence any rights which you do not own. You cannot
acquire rights which belong to a person or company without their consent.

• It should not be forgotten that in the United Kingdom it is a legal requirement

that both an exclusive licence or an assignment must be in writing. Both
these documents require the signature of the licensor or the assignor.

• The sub-licence should be consistent with the original licence from which the
licensee has acquired the rights and material to exploit.

• It is wrong to grant sub-licences in countries outside the territory which you

have acquired as licensee.

• You cannot grant a licence period of ten years to a sub-licensee if the original
licence expires after five years.

• You cannot grant an option for a film to a distributor for a book when you
have only acquired the publishing rights in hardback and paperback.
• A contract can be drafted to make it quite clear exactly what rights are being
acquired and precisely what rights may be sub-licensed.

• Often an agreement will specify all the detailed rights which licensee B may
exploit through sub-licensee C in a schedule. This is a detailed document
which is attached to, and forms part of, the agreement and which sets out the
royalties to be paid to the licensee from the sub-licensee.

• This document may also specify the name of each sub-licensee in relation to
each right or format.

• A publishing contract for example will contain separate sub-licence rights or

subsidiary rights. For an example please look at Contract 27 – a Publishing
Agreement between Publisher and Author – in The Media and Business
Contracts Handbook 5th Edition by the authors.

• For more on subsidiary rights please look at the main clause heading Rights
in the A-Z.

• As with any licence there is the issue of responsibility and liability from
licensee B to sub-licensee C. As well as from sub-licensee C to licensee B.

• The question is what is the liability of licensee B to licensor A if sub-licensee

C defaults or does not make the payment or fulfil the sub-licence.

• The parties may agree that licensee B is liable to licensor A for all the
defaults, errors and omissions and breaches by sub-licensee C.

• The parties may also agree the complete opposite – that there is no liability
for any breach or payments due from sub-licensee C by licensee B to
licensor A.

• If payments due from licensee B to licensor A are contingent upon payments

being received from sub-licensee C to licensee B. There is a need for
accounting provisions and the right to inspection the records of the sub-
licensee to verify the sums paid in the sub-licence.

• It is possible for licensor A to ensure that there is a clause in the original

agreement that the licensee must seek the written approval of licensor A
before any sub-licensee is appointed. This right of approval may also cover
 approval of the terms of the agreement in advance.

• You may also wish to consider any additional indemnity which licensee B
may provide to licensor A to cover any loss, damage, expense and cost
relating to the sub-licensees. Please refer to the main clause heading
Indemnity in the A-Z.

• If there is no wish to allow a licensee to appoint a sub-licensee or any third

party then this should be stated in the agreement.

Drafting clauses relating to sub-licence

• Both parties may agree that they have the right to sub-licence as in A-Z S.159
in General Business and Commercial.

• This clause makes it clear that both parties remain bound by the terms of the
original agreement and cannot rely on a sub-license as a reason not to
perform or fulfil the terms.

A-Z S.159
Both parties to this Agreement shall be entitled to sub-license or
subcontract any of the terms or conditions of this Agreement. Provided that
they shall each remain bound by all its terms and conditions and shall
ensure that they are fulfilled in the event that the sub-licensee or sub-
contractor should not perform, breach or default in any circumstances.

• This is wide clause in A-Z S.157 in General Business and Commercial which
allows a company to delegate an obligation or liability. It is only on
condition that the company fulfils the terms of the agreement.

A-Z S.157
Where in this Agreement the [Company] acquires any rights or licence or
undertakes any liability or obligation, the [Company] shall be entitled to
grant such right or licence or to delegate such liability or obligation to [any
third party/any associates] provided that the [Company] shall continue to
ensure fulfilment of the terms of this Agreement to the [Licensor].

• In A-Z S.190 in Merchandising the clause is more specific as to the

 conditions required regarding the appointment of any sub-licence by the
distributor.

• The distributor can sub-license all or part of the work or rights to a third party
provided the sub-licensee is approved by the company in 1.1.

• Any licence must not adversely affect the obligations of the distributor to the
company in 1.2.

• In 1.3 the distributor must agree to be liable for the acts, omissions, errors
and default of any sub-licensee.

• In 1.4 the distributor must provide an indemnity to the company against any
loss, damage, claim or allegation caused directly or indirectly by any sub-
licensee.

A-Z S.190
The [Company] agrees that the [Distributor] shall be entitled to sub-license
the [Work] in whole and/or in part to reputable sub-licensees provided that
they have been in business for at least [three] years and the [Distributor]
undertakes:

1.1 That any such sub-licence shall be subject to the prior written approval
of the [Company].

1.2 That any such sub-licence shall not adversely affect the obligations of
the [Distributor] to the [Company] and

1.3 The [Distributor] undertakes to be liable to the [Company] for the acts,
omissions, errors and default of any sub-licensee.

1.4 That the [Distributor] shall indemnify the [Company] against any loss,
damage and/or claim and/or allegation caused directly and/or indirectly
by any sub-licensee.

• The agreement to the sub-licence may be limited to the appointment of a

wholly owned subsidiary of the licensee as in A-Z S.186 in Merchandising.

• There is no right to sub-license to another third party.

• The right to sub-license is subject to the agreement of the company that it will
remain responsible for all acts and omissions of the sub-licensee.

A-Z S.186
The [Company] may sub-license or sub-contract the manufacture of the
[Product] to a wholly owned subsidiary of the [Company] (as long as it
remains so) provided that the [Company] shall remain responsible for all
acts or omissions of such sub-licensees or subcontractors as though they
were by the [Company].

• A company may wish to have a wide clause as in A-Z S.154 in General

Business and Commercial.

• Company B reserves the right to assign, sub-licence, sub-contract and to

appoint a related company or third party to fulfil any obligations in 1.1

• Company B is not required to give any notice to person A.

• 1.2 can be drafted in two different ways. The first is that the company shall
be entirely released from any obligations to person A which are assumed by
any subsequent agreement. The second choice is that company B will only
be allowed to have no obligations if person A agrees.

A-Z S.154
1.1 The [Company] reserves the right and shall be entitled to assign, sub-
license, sub-contract, transfer and/or appoint any subsidiary, affiliate,
associate, and/or parent company and/or third party to fulfil the terms,
condition, rights and/or obligations to [Name] without notice at any
time.

1.2 In the event of 1.1 [and the subsequent agreement by [Name] the
[Company] shall be under no further obligation to [Name] and shall be
relieved of its rights or obligations under this Agreement. Nor shall the
[Company] be responsible and/or liable for any acts, omissions and
failures of any party in 1.1.

• Licensor A may grant licensee B the right to sub-license as in A-Z S.177 in

Internet and Websites.
• The licensor has granted a licence for the reproduction of a musical work
which is to be reproduced in the sound recordings which is to be exploited by
the licensee B.

• The sub-licence allows the licensee to sub-license the sound recordings to

third parties to use in conjunction with advertisements, promotions,
sponsorship events and merchandising purposes.

• Note there is no duration in this clause for the sub-licence, but the sub-licence
should not exceed the duration of the licence.

• There is no limit of the type of medium in which the sound recordings could
be used except the general description. However the licensee cannot exploit
more rights in the sub-licence than it has acquired in the original licence.

• This clause does not address the issue of copyright ownership and title of the
new sound recordings which will be developed.

A-Z S.177
In consideration of the Fee the [Licensor] grants the [Licensee] the right to
sub-license the [Work] reproduced in the [Disc/Sound Recording] to third
parties to advertise, promote, display, package, distribute and/or reproduce
the [Work] reproduced in the [Disc/Sound Recording] in association with
any sponsorship, merchandising, marketing and/or promotion by such third
party.

• There are often sub-licence clauses in merchandising agreements as in A-Z

S.183 in Merchandising.

• The licensor has agreed that the company may appoint any sub-agent, sub-
licensees, distributor and any third party.

• This clause is wide and also covers the manufacturer to be used, marketing
and any form of exploitation of the product which has been licensed to the
company.

• The company must seek the approval of the licensor when it is seeking to use
any third party for any part of the production, reproduction, distribution and
exploitation.
• This approval process allows the licensor to control the actions of the
company and allows the licensor to research the quality of material produced
and well as the financial stability of a third party.

A-Z S.183
The [Company] agrees that the [Licensor] shall be entitled to approve the
appointment of any sub-agent, sub-licensee, distributor and any other third
party in respect of the development, production, manufacture, distribution,
marketing and exploitation of the [Licensed Articles] under this
Agreement.

• Any sub-licence or sub-contract of the work associated with a project may be

subject to the prior written approval of the licensor A as in A-Z S.172 in
General Business and Commercial.

• This clause seeks to cover the appointment of the manufacture, supply,

distribution, advertising and marketing of a product or service.

A-Z S.172
The [Company] may not grant any sub-licence under this Agreement nor
may the [Company] sub-contract the work of developing, manufacturing,
supplying and/or distributing and/or advertising and/or marketing the
[Product/Service] without the prior written consent of the [Licensor].

• Instead of approval a licensee may be required to notify a licensor as in A-Z

S.155 in General Business and Commercial.

• Company B has agreed to notify person A if company B appoints any third

party to assist in the performance of the agreement.

• Where the cost of the third party agreement is to be claimed or deducted as an

expense under the agreement by company B. Then a copy must be supplied
to person A where the value exceeds a fixed amount.

A-Z S.155
The [Company] shall notify [Name] of the appointment of any third party
who have been engaged to provide [Services/Work/Goods] in order to
assist the [Company] in the fulfilment in the terms of this Agreement. The
 [Company] shall only be required to provide a copy of the sub-licence or
other document to [Name] where the payment is in excess of
[figure/currency] per annum and it is intended to claim this sum as part of
the Expenses.

• The appointment of any sub-licensee may be subject to the approval of the

licensor and other conditions also imposed as in A-Z S.173 in General
Business and Commercial.

• This clause means that licensee B must obtain the approval of the licensor to
appoint a sub-licensee.

• 1.1 makes the new agreement subject to the same specific clauses as are set
out in the main agreement. The licensee will impose the same obligations on
a sub-licensee that it must comply with to the licensor.

• The sub-licence could in fact be much stricter and narrower than the main
agreement.

• In 1.1 licensor A has made it a condition that any new sub-licence must be
drafted to end on the same date as the main agreement with the licensee.

• The duration of the sub-licence cannot exceed the main licence.

• In 1.2 it is also a condition that the company is responsible for any sub-
licensee and third party both for the performance of the agreement and the
liabilities.

• The company is not permitted to absolve itself from liability to licensor A by

the appointment of a sub-licensee or third party for the exploitation of any
rights or the performance of any service or the liability which may arise due
to the non-payment of any sums.

A-Z S.173
If the [Licensor] consents to any third party being appointed as a sub-
licensee or otherwise the [Company] undertakes it shall be a condition of
such consent that:

1.1 Such appointment shall be by a written sub-licence subject to the same

 undertakings as set out in Clauses [–] and shall be brought to an end
either by termination or expiry on the same date as this Agreement.

1.2 The [Company] shall ensure and be responsible to the [Licensor] for
the performance, observance and liabilities of the sub-licensee or any
other third party so appointed.

• In a publishing agreement in A-Z S.196 in Publishing. The publisher A has

agreed to consult with the author B regarding the appointment of any third
party to exploit the work.

• Whilst the author does not have any right of approval. The right to consult
means that the publisher will communicate with the author before the final
decision is made to appoint a third party.

• This clause does not entitle the author to be made aware of any commercial
details of a third party agreement, but the clause could be amended to include
such disclosure.

A-Z S.196
The [Publisher] shall consult in good faith with the [Author] in respect of
the appointment of any third party to exploit the [Work].

• A clause in relation to a sub-licence may just cover the issue of liability as in

A-Z S.181 in merchandising. In relation to this topic please also look at the
main clause headings of Liability, Product Liability and Indemnity in the
A-Z.

• Licensee B is liable to licensor A for all the acts, omissions and failure to pay
of any sums by any sub-licensee, sub-agent or sub-distributor.

• There is no limit set on this liability. This clause does not apply to all third
parties.

A-Z S.181
The [Licensee] shall be fully liable for all the acts, omissions and failures
to pay of any sub-distributor, sub-agent and sub-licensee.
• A licensee may also agree that any sub-agents and sub-licensees shall keep
proper accounting records as in A-Z S.182 in Merchandising.

• Licensee B must ensure that any sub-agent or sub-licensee will keep accurate
accounting records, contracts and payments.

• Any sub-licensee or sub-agent must allow access to licensor A to carry out

inspections of the accounts and records and contracts and stock.

A-Z S.182
The [Licensee] shall ensure that its sub-agents and sub-licensees shall keep
full and accurate accounting records, contract and payment systems to
which the [Licensor] shall be granted regular access for inspection,
accounting and stock purposes.

No right to sub-license

• Where licensor A does not want a distributor B to have the right to sub-
license the exploitation of the rights granted under an agreement.

• Then the licensor A would insist on the inclusion of a clause similar to A-Z
S.205 in Purchase and Supply of Products.

• The licensor has granted copyright and other intellectual property rights in
the work to be used to create and develop the product.

• Distributor B is not allowed to sub-licence any reproduction and/or

exploitation to any third party.

• Distributor B may also not sub-licence any copyright and/or intellectual

property rights which it has been granted.

A-Z S. 205
The [Distributor] shall not be entitled to sub-license any copyright and/or
other intellectual property rights in the [Work] reproduced in the [Product]
and/or to authorise any reproduction and/or exploitation by a third party.

• In a completely different situation the concern is that the licensor A may

license another third party as in A-Z S.180 in Merchandising. Whilst this is
 not a sub-licence it is a relevant clause.

• The licensor A agrees that it shall not license or permit any third party to
produce, manufacture, supply and/or distribute the final game and/or the
prototype version.

• Note the undertaking is limited to the licensed countries defined in Territory.

• The undertaking is only for the duration of the defined Licence Period.

A-Z S.180
The [Licensor] undertakes that it shall not license nor permit any third
party to produce, manufacture, supply and/or distribute the [Game] and/or
the Prototype including any developments or variations throughout the
Territory for the duration of the Licence Period.

• An agreement may be based strictly on the basis of the appointment of a

particular company, agent, distributor or institute as in A-Z S.187.

• In this clause the licensee agrees that it may not:

– Assign in whole or part any of the rights relating to the defined property.

– Sub-license in whole or part any of the rights relating to the defined

property.

• The property could be any work, film, sound recording, website, app, service
or product.

• There is an exception in 1.2 where the licensee seeks the prior written consent
of the licensor and this exception only relates to the manufacture of the
licensed articles which are derived from the property.

• The manufacturer must then sign a formal document not to reproduce and
supply the licensed articles to any other third party.

• In 1.3 the licensee is not allowed to place any charge over the agreement as a
lien. In other words to use the existence of the agreement to raise money for
a loan.
A-Z S.187

1.1 It is hereby acknowledged that the rights of the [Licensee] hereunder

are strictly personal to the [Licensee] who shall not wholly or partially
assign the licence nor grant any sub-licence relating to the [Property]
or any part to any other person, firm or company.

1.2 However the [Licensee] may arrange for a third party to manufacture
for the [Licensee’s] own benefit and purpose alone the [Licensed
Articles] subject to the prior written consent of the [Licensor] and upon
condition that the third party signs a written agreement not to supply
the [Licensed Articles] to any person or company other than the
[Licensee].

1.3 The [Licensee] agrees that he shall not charge nor grant any rights
under the licence or in the [Property] or any part nor in any way part
with the control of the licence or its rights hereunder.
 TERMINATION

• There are 165 clauses on Termination in the A-Z from A-Z T.092 to A-Z
T.257.

• This subject can be read in conjunction with the main clause headings in the
A-Z of Absence, Arbitration, Break Clauses, Cancellation, Compliance,
Death, Default, Delivery, Discharge, Disclaimer, Disputes, Force
Majeure, Gardening Leave, Insolvency, Legal Proceedings, Liability,
Material, Mediation, Notices, Payment, Rejection, Rights, Sell-Off
Period and Suspension.

The meaning and significance of termination

• If a contract is for a defined fixed period of time then at the end of such
period the contract ends. This is not termination as the agreement has
reached its natural end.

• If an agreement had a licence period of three years from the date of signature
but after only six months one party wished to end the agreement. The
company which wanted to terminate the agreement would look for
reasonable grounds to do so.

• The termination clauses are important and they are often looked at when there
is a problem with a contract. It is at that stage you will try to see if there are
grounds or clauses upon which you can rely to show that the other party has
breached the agreement. If that is the case then you may be able to terminate
the agreement before it has expired.

• There may also be consequences which are set out in the termination clause
which allow you to be reimbursed or to claim back material or products that
you have delivered.

• The actual wording of the termination clause can have a very significant
 impact on the immediate steps which you can take against another person or
company based on the contract as opposed to a legal action.

• All the parties to an agreement do not have to have the same termination
clauses and the clause may vary dependent on the facts.

• It is a common mistake that there is one generic termination clause rather

than one adapted to the actual service or work that the person or company is
providing under an agreement.

• In an agreement which involves copyright and intellectual property rights the

termination clause may allow for the rights granted or assigned to be
returned to the original licensor or assignor. This can only be the case if the
clause has been drafted so that the parties have agreed this as a condition.

• Termination is a major contract heading and understanding the detail and

dynamics of termination from a contract perspective is critical to avoiding
disputes.

• Every agreement should include termination provisions. Termination is

different from cancellation. In cancellation the aim is to put the parties in the
same position as they would have been before the contract was entered into.
Whereas that is not the case in termination – there is no such aim by either
party. For more on the topic please look at the main clause heading
Cancellation in the A-Z.

• The termination clause which company A will require in an agreement when

it has engaged the services of person B should not be the same as those
which it will require against major distributor C.

• The termination clause should relate in some respects to areas of the

agreement which are seen as having the potential to go wrong and to
anticipate how they may be resolved to the advantage of the person or
company which has served notice of termination.

• There will also often be a separate clause heading for Notices in the
agreement. You will have to adhere to the terms of the service of notice
clause when sending grounds for the termination of the agreement to the
other party.
• Failure to do so may mean that you have not terminated the agreement as
notice was not served in accordance with the notice clause. For more on the
subject please look at the main clause heading of Notices in the A-Z.

• There may also be a force majeure clause in the agreement which in itself
provides grounds for termination. For more on the subject please look at the
main clause heading Force Majeure in the A-Z.

• Often agreements do not have very extensive termination clauses and the
grounds of termination are very limited. This means that when a person or
company wishes to terminate the agreement they are often attempting to fit
their grounds for termination within a clause which does not fit the facts.

• Therefore any additional grounds of termination in a clause provide you with

additional opportunities to terminate an agreement.

• When drafting any agreement you must draft clauses which look at both the
best-case and worst-case scenarios. You must then consider how potential
scenarios would be dealt with under the agreement.

• However that does not mean to say that you must add a list of grounds of
termination which forces a situation where the agreement would not even get
signed and concluded.

• There are three distinct aspects of termination to consider which are all
important:

– The grounds for termination

– The procedures and method of termination

– The rights, obligations and payments after termination

• Most written contracts, once negotiated and signed are archived and merely
processed through the relevant departments and accounts and finance.

• The may be many reasons to review an original agreement and all the
accompanying documents:

– To establish copyright ownership and ownership of other intellectual

 property rights and other rights and interests

– To deal with a dispute about performance of the agreement

– To assess the royalty or payments due and paid

– To make a claim under the indemnity

– To find grounds to serve notice and end the agreement

– To receive repayment of money after termination

– To make a claim for costs, expenses and legal costs under the indemnity

– To ensure that the copyright and other intellectual property rights and
other rights granted or assigned revert back to the original licensor or
assignor after termination as set out in the agreement

– An unexpected circumstance has arisen which falls within force majeure

and has not been remedied

• Where one company A believes that another distributor B has failed to supply
the quality of products required under the agreement or failed to deliver the
service which was agreed.

• Then company A may seek to rely on the termination clause of the agreement
to serve notice to end the agreement and also to claim back all the sums paid.

• There is also sometimes confusion as to when an agreement ends, especially

where it has continued for many years without sufficient paperwork. A
company would in those circumstances review the term of the agreement
clause as well as the termination clause.

• In some agreements the notice of termination must be given before the

agreement expires otherwise the agreement continues for a further fixed
period.

• Once you have established your grounds of termination on which you wish to
rely under the agreement. You must then comply with any requirements as to
how notice is to be served and on whom.
• You must serve your notice your grounds of termination by the method set
out in the agreement. It is not a matter of personal choice which you can
change as you wish.

• That does not mean however that you cannot service notice by other methods
as well. You can serve notice by more than one method provided that you
have served notice in the manner required under the agreement.

• In the context of employment contracts notice might simply be given by

employer company A to employee person B to terminate the contract.
However care must be taken to ensure that the notice given to employee
person B is backed by a valid legal argument.

• In practice the distinction between serving notice as opposed to the reason for
serving notice is often overlooked.

• When an agreement is terminated there may be a dispute as to:

– The copyright and intellectual property rights and ownership and title

– The payments and accounts

– The termination of any sub-licenses

– Whether there are any liabilities and obligations in existence after

termination

– Whether there is a right of sell-off after the date of termination or not or

whether this only applies after the expiry of the agreement

• An agreement may make reference to whether all or some of the clauses will
continue in existence and survive the termination or expiry of the agreement.

• There is an important distinction between the grounds of termination and the

procedure required to terminate an agreement. As opposed to the
consequences post-termination.

• The most common ground for seeking to end an agreement is because one
party has committed a material breach of the clauses of the agreement.
• Some contracts will seek to define what is meant by a material breach but
most will not do so.

• A material breach tends to be some matter of significance which has an

impact on the performance of the agreement or the quality of the service
provided. It is not a breach which is minor and which has no relevant effect
on the agreement.

• The agreement may allow an opportunity for a breach of an agreement to be

resolved within either a reasonable period of time or within a fixed period.

• There is no automatic obligation to allow another company or person the

opportunity to remedy a problem. It must be included as a contractual term
agreed between the parties that one or both parties are to be allowed to have
such a period to try to resolve any matter.

• When company A serves notice on another distributor or supplier B it would

be expected that in the notice of termination company A would state the
reason for the termination. Company A may also make reference to the
specific clauses which it is alleged have been breached.

• It is equally possible to serve notice of termination and not to give any

grounds and reasons but to follow the procedure set out in the agreement.

• The grounds of termination may be related not specifically to the fulfilment

or completion of the agreement but concern regarding the financial stability
and reliability of one of the companies.

• It is also possible to serve notice on one ground for termination but to reserve
the right to raise others which have not been mentioned at that point.

• It should be appreciated that the service of the notice is quite a formal

procedure and should be done with the knowledge that at some later date that
document may be produced in court as evidence.

• The notice of termination would also include the precise date on which the
agreement would be ended by the notice of termination.

• Do not forget however that there may be other clauses in the agreement
which relate to the resolution of disputes such as arbitration, mediation and
 alternative dispute resolution. You therefore need to check what these
clauses state if they are in the agreement.

• For more on these subjects please look at the main clause headings
Arbitration, Disputes, Mediation and Legal Proceedings in the A-Z.

• It is important to appreciate the sequence of events regarding termination of

an agreement. The contract does not automatically end because there has
been a breach. Notice is required to be served of the breach in order for the
agreement to be terminated.

• There is no specific requirement that grounds of termination should be

reasonable except where you are involved with employment contracts where
you are subject to the current legislation in force.

• Two companies or an individual and a sponsor may agree whatever grounds

of termination they think fit.

• The aim in the drafting of the grounds of termination is to cover areas which
may cause problems if they arise which would lead to the company to want
to terminate the agreement.

• Two companies or an individual and a company may also agree that there is
no obligation to use a person’s work or to take a service and that the
agreement may be terminated at any time. In this sort of case the parties may
agree that, provided the full payment for the fixed period is paid, the
agreement can be terminated relatively easily.

• In the context of employment contracts the period of notice which is agreed is

crucial. If there is a six-month or year’s notice period before an agreement
can be terminated. This notice period will be used in calculating the potential
financial liability of the employer for the termination of the contract of
employment.

• Many employment contracts have relatively short notice periods of one to

three months and this poses a risk to an employee. There are financial
benefits to an employee to have a longer period of notice.

• Where a company has decided that they wish to reach a settlement with an
employee so that the employee leaves immediately and therefore does not
 work out their notice period.

• The notice period in a contract of employment for an employee is the starting

point in assessing the sum to be paid and in all likelihood will be the largest
sum of the settlement figure.

• When a company considers terminating an agreement for any reason. The

first consideration is whether there are any costs or savings which will be
made by terminating the agreement.

• A contract of employment is subject to extensive legislation to protect the

employee from unfair dismissal and unlawful dismissal. It is sometimes
overlooked that service of the notice period or payment in lieu is not the
same as the reason or grounds for the dismissal.

• Therefore a company which is an employer must be clear that the grounds for
dismissal are legal and substantive.

• It is very important to distinguish between obligations under an agreement as

opposed to legal requirements and remedies under legislation.

• There is a minimum statutory notice period required under legislation in the

United Kingdom dependent on the length of service of an employee.

• However there are circumstances where a company may wish to dispense

with an employee without any long notice period. This is most common
where the length of service of the employee does not meet the statutory
requirement to benefit from the notice period under the legislation.
Temporary and casual employees will have very short notice periods, if any.

• The notice and termination clauses must be carried out as detailed by the
company in the agreement in order to effect a valid termination of the
agreement.

• The most common ground for the termination of an agreement is where one
party commits a material breach due to the failure to make payments as and
when they are due.

• If there is a requirement that the other party be allowed the opportunity to

remedy the breach. Then notice must be served which complies with that
 obligation. Failure to do so will be itself a breach of the agreement.

• If the breach has not been remedied then notice is served to terminate the
agreement.

• You could serve the two notices at once but you would need to make sure
that the second notice was only effective if there was no remedy.

• The absence of clearly drafted termination clauses in an agreement is quite

common and in itself creates additional problems for a company or person
who wants to terminate an agreement.

• Even where it is apparent that a problem cannot be remedied you must still
follow the procedure and provide the opportunity as stated in the agreement
to the other party.

• Contracts tend to be looked at closely on two specific occasions: the first is

before they are signed and before the parties commit themselves to a written
agreement; and the second is when one party wishes to extricate themselves
from the agreement and needs to assess the potential consequences.

• When notice has been served of termination there may still be matters which
are unresolved after the termination date. These may include:

– Return of stock

– Ownership of stock and material

– Unpaid royalties, advances, fees, freight costs and other payments

– Copyright ownership and title not only of work originally supplied under
an agreement but new material created and developed

– Ownership of artwork and logos and domain names

– Return of equipment including cars, mobiles, laptops

– Termination of agreements relating to sub-agents, sub-licences and other

third parties
 – The reversion of copyright and other intellectual property rights and
other rights and interests

• Where there are sub-licences this may create real problems especially where
a licensee has granted sub-licenses which exceed the rights they acquired.

• The area of merchandising causes particular problems because although

companies may acquire quite narrow licences over a period of years other
items are added which were not covered by the original agreement.

• In order to exert control over any future sub-licensees it is therefore important

that the main agreement addresses this issue.

Drafting clauses relating to termination

• A licensor may be entitled to terminate an agreement with a notice which has

immediate effect as in A-Z T.110.

• However in order to serve notice to terminate with immediate effect on

distributor B. Licensor A must first serve notice of the failure to perform the
material obligation on distributor B.

• The notice will be the start of a 60-day period in which distributor B has the
chance to remedy the matter.

• If the matter is not remedied by distributor B after 60 days from the date of
the notice has ended. Licensor A may serve notice to terminate the
agreement with immediate effect. There will be no additional notice period.

• Note this clause only applies from the licensor to the distributor.

A-Z T.110
The [Licensor] may in addition to all its other rights and remedies at law
and at its option upon giving written notice to the [Distributor] to terminate
this Agreement forthwith:

If the [Distributor] shall fail to make payments hereunder or shall fail to

perform any other material obligation required of it hereunder and the
[Distributor] shall not have cured or remedied such failure within [sixty
days] of notification thereof to the satisfaction of the [Licensor] and in
 accordance with this Agreement.

• A termination clause may be drafted to apply to both parties as in A-Z T.129

in Film and Television.

• In 1.1 both company A and company B shall have the right to terminate the
agreement if the other has not remedied a material breach of which they have
received a notice.

• There is a period of 30 days after the notice to remedy any alleged breach.

• If the matter is not remedied then the parties have agreed to either agree a
sum in compensation or to refer the matter to an arbitrator.

• 1.2 and 1.3 relate to the financial stability of a company. If company A or

company B go into voluntary or compulsory liquidation or are insolvent or
unable to pay their debts or a receiver is appointed.

• Then the other company may serve notice of termination. Note the
opportunity to remedy the breach does not apply to 1.2 and 1.3.

A-Z T.129
Either party may by giving written notice to the other party to terminate
this Agreement and the licence granted as follows:

1.1 If the other party has committed any material breach of this Agreement
and fails to remedy the defect within [30 days] of receiving written
notice from the non-defaulting party or if such breach is incapable of
remedy has failed to pay compensation of such amount as shall be
agreed between the parties or if they cannot agree such sum as shall be
decided by an arbitrator; or

1.2 If the other party goes in voluntary or compulsory liquidation or is

insolvent or is unable to pay its debts as they fall due; or

1.3 If a receiver is appointed over the whole or any part of the assets or
undertaking or business of the other party.

• A termination clause may seek to set out more detailed and wider grounds for
 termination as in A-Z T.133 in Film and Television.

• Note this clause is specifically stated to be in addition to any other rights and
remedies which either party may have under law.

• The clause applies to both parties and sets out the grounds upon which they
may serve written notice to terminate the agreement.

• 1.1 relates to the failure to account or make payments. This may involve the
failure to send royalty statements as required or to provide verified costs and
expenses for the budget.

• The failure to pay may relate to the non-payment of an advance or the failure
to pay all the instalments of the budget for a project as agreed.

• 1.2 allows either party to terminate the agreement where there has been a
serious breach as opposed to a material one. In this case the other party must
be served notice of the breach and given an agreed period to try to provide a
remedy.

• Only after the chance for the remedy has taken place and failed may the other
party then serve notice to terminate.

• 1.3 and 1.4 again relate to financial stability. If the other party goes into
voluntary or involuntary liquidation or is declared insolvent or goes into
administration the other party may serve notice to terminate.

• The final ground of termination in this clause 1.5 relates to the failure by a
company to either market or distribute or sell a product or work for a fixed
period of months. The problem with this clause as drafted is that it would not
apply if one copy was sold or one flyer sent out. You could therefore add
figures and details which must be achieved.

• However where there has been no activity then 1.5 could be relied upon as a
valid ground to terminate the agreement.

A-Z T.133
In addition to any other rights and remedies at law either party may by
giving written notice to the other party terminate this Agreement on the
grounds that:
 1.1 The other party has failed to account or make payments as required
under this Agreement;

1.2 The other party has committed a serious breach of is obligations and
has not rectified the position within [period];

1.3 The other party has gone into voluntary or involuntary liquidation;

1.4 The other party has been declared insolvent and/or gone into
administration;

1.5 The other party has not distributed and/or marketed and/or sold any
copies of the [Work] for more than [number] months.

• In a contract for services the focus tends to be on the mental health of the
person, their behaviour and conduct as in A-Z T.236 in Services.

• This clause goes much further than most termination clauses in a contract for
services as it seeks to protect the reputation and brand of the company.

• Note this clause relates to the grounds of termination which the company A
may have against the person B.

• The company may terminate the agreement without any prior notice and with
immediate effect if it relies on 1.1 to 1.6.

• These grounds are in addition to any other claim or remedy available to

company A against person B.

• In 1.1 if person B is in material breach of his or her obligations then the

company may terminate the agreement. Such material breach may include
for instance failure to attend rehearsals, learn the script or constantly arriving
late. In order to rely on these matters it would have had to have been made
clear when setting out the work required by person B exactly what was
expected.

• In 1.2 where person B has mental health issues which result in treatment in a
psychiatric ward for more than one month during the term of the agreement.
Company A would be entitled to terminate the agreement. This clause would
not apply to receiving psychological or other therapy for mental health
 issues.

• 1.3 is intentionally broad and applies to person B committing a criminal

offence or other serious act of misconduct or neglect whether or not they
related to his or her services.

• It also applies to anything which may bring either him or herself or company
A into disrepute or significantly affect the performance of the agreement.

• Many companies do not want to be associated with political campaigns and

controversy and so 1.4 is relevant. It is an additional ground for termination
where person B becomes involved in any matter of public, political or social
controversy which in itself exposes company A to unfavourable publicity
because of its association with person B.

• 1.5 is a wide ground which applies to any act or neglect by the person B
which again brings the company A into disrepute.

• In 1.6 where person B has admitted in an interview in any form of the media
newspaper, radio, television or on the internet that person B has committed
an act which is illegal in the nominated country or territory. The company
may decide that there is a breach of 1.6 and grounds for termination of the
agreement.

A-Z T.236
The [Company] may terminate this Agreement without prior notice and
with immediate effect and without prejudice to any other claim or remedy
by the [Company] if the [Actor] shall:

1.1 Be in breach of his/her material obligations under this Agreement.

1.2 Become a mental patient or voluntarily enter a psychiatric ward for

treatment for more than one month.

1.3 Be convicted of a serious criminal offence or any other serious act of

misconduct or neglect whether or not in connection with the provision
of his/her services which might bring or have brought him/herself
and/or the [Company] into disrepute or materially affect the
performance of his/her services under the Agreement.
 1.4 Become involved in any matter of public, political or social
controversy in a manner which exposes the [Company] to
unfavourable publicity by association.

1.5 Commit any act or neglect to anything which brings the [Company]
into disrepute.

1.6 Make an admission in an interview in the media and/or on any social

media that he/she has committed an act which is illegal in [country].

• There is a much shorter and more general clause is A-Z T.211 in Purchase
and Supply of Products.

• This clause applies to both company A and company B. This clause is

unusual as both parties agree that either may terminate on any grounds
before a fixed date.

• After the agreed date then one party may serve written notice to terminate to
the other party if:

– the other party cannot fulfil its obligations or

– commits a material breach or

– their conduct or activities are seriously detrimental, derogatory or

offensive

A-Z T.211
Either party may terminate this Agreement before [date] on any grounds.
After that date either party shall have the right to terminate this Agreement
by notice in writing if the other is unable to fulfil its obligations or commits
a material breach or whose conduct or activities are considered seriously
detrimental, derogatory of or offensive to the other party.

• In a sponsorship agreement in A-Z T.252 in Sponsorship the termination of

the agreement is linked to a minimum payment.

• Sponsor A has agreed that if it terminates the agreement for any reason that it
shall still be bound to pay company B the minimum sum agreed.
 A-Z T.252
The [Sponsor] agrees that if for any reason it serves notice to terminate the
Agreement it shall still be bound to pay the [Company] the minimum sum
of [number/currency] in total under this Agreement.

• In an employment agreement the company may be concerned about personal

behaviour both at work and at home as in A-Z T.094 in Employment.

• All these clause are quite specific but all would require supporting evidence
to show that there was a genuine ground and not a rumour or belief without
any facts.

• The clause makes reference to formal warnings and a disciplinary hearing in

1.4 and relates to failure to carry out duties and serious and repeated
breaches despite warnings.

• Most employment termination clauses are not so wide. The whole focus of
this clause is to provide additional grounds for the company to be able to
terminate the agreement if the person does not fulfil the agreement.

• Note the fact that the termination clause is without prejudice to the rights of
the company against the person.

A-Z T.094
The [Company] shall not terminate this Agreement without any period of
notice and/or payment unless the [Employee] has:

1.1 Committed a serious act of misconduct which could form the basis for
a criminal charge and/or a civil prosecution in respect of his/her
employment and/or personal life.

1.2 Disclosed confidential information and/or data to a journalist,

newspaper and/or media which has resulted in adverse publicity which
has seriously detrimentally affected the interests of the [Company].

1.3 Been diagnosed as mentally ill, with psychiatric problems, or is

aggressive, threatening, or violent at work or tested positive for illegal
drugs in a medical by the [Company].
 1.4 Failed to carry out the duties required and/or is in serious and repeated
breach under this Agreement. That despite formal warnings, and/or
being the subject of a disciplinary hearing the problem has not been
remedied and the breach or non-observance of this Agreement has
continued.

Such termination shall be without prejudice to any other rights of the

[Company] against the [Employee].

• In a licence agreement between licensor A and distributor B as in A-Z T.110

in DVD Video and Discs.

• This clause provides the licensor with additional grounds for termination as
well as preserving its rights and remedies at law.

• In 1.1 licensor A may give written notice to terminate the agreement if

distributor B:

– fails to make payments or

– fails to perform any material obligation or

– after receiving notice to remedy has not done so within 60 days

• In 1.2 the licensor A may give written notice to terminate to distributor B

based on 1.2 if the distributor:

– makes any assignment for the benefit of its creditors or

– makes any composition with its creditors or

– has bankruptcy or insolvency proceedings against it which are not

dismissed or

– effects a voluntary or compulsory liquidation but not a restructuring if

prior notice has been given

A-Z T.110
The [Licensor] may in addition to all its other rights and remedies at law
and at its option upon giving written notice to the [Distributor] to terminate
 this Agreement forthwith:

1.1 If the [Distributor] shall fail to make payments hereunder or shall fail
to perform any other material obligation required of it hereunder and
the [Distributor] shall not have cured or remedied such failure within
[sixty days] of notification thereof to the satisfaction of the [Licensor]
and in accordance with this Agreement.

1.2 If the [Distributor] shall make any assignment for the benefit of its
creditors or make any composition with its creditors or if any actions
or proceedings under any bankruptcy or insolvency law is taken
against the [Distributor] and is not dismissed or if the [Distributor]
shall effect a voluntary or compulsory liquidation of assets (other than
for the purposes of reconstruction or amalgamation of which prior
notice shall have been given to the [Licensor]).

• There is a different approach in an agreement between company A and

producer B in A-Z T.132 in Film and Television.

• This termination clause applies to both parties.

• The parties have agreed that if a substantial breach occurs and cannot be
corrected in 1.1 that the other party may serve written notice to terminate the
agreement.

• If either party commits a substantial breach which can potentially be

corrected in 1.2. Then notice of the breach must be served and a request
made to remedy the matter. A period of 14 days is permitted to resolve the
matter. If after that period it is not resolved then the party who is not at fault
may serve written notice of termination.

• In 1.3 if either party shall go into liquidation or become insolvent or have an

administrator or receiver appointed or fail to pay any sums due from a trial
judgment within seven days. The party which is not in breach of the
agreement may serve written notice of the termination.

• If it is company A which serves notice for termination then producer B must

return all sums which have not been spent from the budget if demanded.
 A-Z T.132
The [Company] and the [Producer] agree that:

1.1 If either party shall commit a substantial breach of the Agreement

which cannot be corrected; or

1.2 If either party shall commit a substantial breach of the Agreement

which cannot be remedied within [14 days] of written notice notifying
the breach and requesting that it be rectified; or

1.3 If either party shall go into liquidation (other than for amalgamation or
reconstruction purposes) or become insolvent or have an administrator
or receiver appointed over any of its assets or fail to satisfy any trial
judgment within [7 days].

Then the other party shall be entitled without prejudice to its other
remedies to terminate the Agreement by notice in writing to the party in
breach. In the event of breach by the [Producer] the whole amount of all
sums paid by the [Company] which have not been spent on items set out in
the Budget shall immediately become repayable and the [Producer] shall
pay such sums upon demand.

• A clause may include not only repayment of money but also return of stock
as in A-Z T.112 in DVD Video and Discs.

• This clause deals with the situation after termination of the agreement.

• When the agreement has expired or been terminated. The distributor has
agreed to return all the stock held or controlled by the distributor at the
distributors cost.

• The licensor must serve notice and provide a delivery address.

• If you were drafting this in favour of the distributor you would want to limit
the delivery charges to a specific country.

A-Z T.112
Upon the expiry or termination of the Term of this Agreement stocks of the
[Videos/DVDs/Discs] in the possession and/or under the control of the
 [Distributor] hereunder and in good condition shall be sent to such address
as specified in the written notification by the [Licensor] at the
[Distributor’s] cost.

• In A-Z T.113 in DVD Video and Discs there is an alternative arrangement

which would allow the distributor the right to sell off stock after the
agreement has expired or terminated. Provided that the distributor accounts
to the licensor and it is for a fixed period.

A-Z T.113
Upon the expiry or termination of the Term of this Agreement the
[Distributor] shall be entitled to sell off existing stocks for a period of [six
months] after the date of expiry or termination’.

• In a merchandising or publishing agreement there may be many sub-licences.

The aim then is to ensure that all the sub-licences must end at the same time
as the main agreement as in A-Z T.184 in Merchandising.

• This is a very practical clause which requires licensee B to ensure that other
third parties are notified and that material is stored and collected. In the event
that the agreement is terminated.

• In 1.1 both licensor A and licensee B have the right to notify sub-licensees,
sub-agents and distributors that:

– the rights have been revoked and

– they must cease exploiting the rights and

– the rights have revoked to the licensor and

– any outstanding payments must be made direct to licensor A

• In 1.3 licensee B accepts that:

– no further sums will be collected by them

– no rights can be exploited at any time

• In 1.2 there is an obligation on the licensee after termination to ensure that:

– all master material

– contracts, copyright clearance documents

– photographs, artwork

– recordings, films

– and any other material should not be destroyed but returned to the
licensor. It is agreed which party will pay the cost of the freight and
shipping

A-Z T.184
In the event of termination of the Agreement the following shall apply:

1.1 All sub-licensees, sub-agent and/or distributors shall immediately be

notified by the [Licensee] and/or the [Licensor] that the rights have
been revoked and that they must immediately cease exploiting the
rights and that the rights have reverted to the [Licensor] and any
outstanding payments must be made direct to the [Licensor].

1.2 The [Licensee] shall ensure that all master material and any other
contracts, copyright clearances, documents, photographs, artwork,
recordings, films or other material of any nature and/or format in the
possession and/or under the control of the [Licensee] and/or any sub-
licensees, sub-agent and/or distributors shall not be destroyed but
returned at the [Licensors/Licensees] cost to the [Licensor].

1.3 No further sums shall be collected by the [Licensee] and/or rights

exploited by the [Licensee] at any time.
 TERRITORY

• There are 58 clauses in the A-Z relating to Territory from A-Z T.258 to A-Z
T.316 which are all under the sub-heading General Business and
Commercial.

• This section can be cross referenced to the main clause headings in the A-Z
of Access, Adaptation, Assignment, Copyright Clearance, Downloading,
Exclusivity, Facility Access, Hotel, Indemnity, Insurance, Liability,
Licence Area, Licence Period, Location Access, Multiple Occupation,
Option, Premises, Residential Subscriber, Rights, Sub-Licence, Term of
the Agreement and Venue.

The significance of the definition of territory

• The same principle applies to the definition of a territory as for rights.

Namely that you should grant narrowly and acquire widely.

• Most agreements make reference in the licence or assignment or sponsorship

or employment agreement or other contract to the location or countries in
which:

– A service will be provided by a company

– A person will work for a company

– An event will take place

– A product will be distributed

– A person will appear in a programme

– A book will be published and distributed

 – A work or product or service may be exploited

– Copyright and other intellectual property rights may be exploited

• An international agreement may involve two parties trading in different

countries, with head offices registered in another country for tax reasons.
The agreement which is being completed may involve production and
manufacture in a third country for distribution to a very wide market.

• The main focus of this section is how to define the territory where a party is
allowed to sell and distribute products or where they are allowed to provide a
service or where they may sell and exploit rights that they have acquired.

• It should be easy to establish from an agreement in which countries a licensee

has been granted copyright and other intellectual property rights under an
agreement with a licensor.

• Similarly the territory should be defined under an assignments in such a

manner that an assignee knows exactly which countries are covered by the
assignment of copyright and intellectual property rights by the assignor.

• An assignment does not always mean the rights have been assigned for the
world. They could be limited to a specific country or area.

• There have been many disputes either because no reference has been made to
the countries covered by an agreement or because which countries are not
covered has not been specified.

• Note there may be a clause which sets out the territory, countries or location
which are included.

• There may also be a clause which sets out which are excluded.

• An agreement may have more than one place where a country or location is
relevant.

• Territory can be defined at the front of the agreement and then used in the
assignment or grant of rights clause. This is normally the case where the
definition includes a lot of countries or there is quite a lot of detail.
• Alternatively it may not be set out as a separate definition or clause at the
front. The countries or location are then spelt out in full in the assignment or
grant of rights clause itself. This second approach is more common where
the assignment or grant of rights is for the world.

• The word and definition territory usually refers to the countries and land
covered in the assignment or grant of rights clause in the agreement.

• However the definition can be drafted in any manner and may include or
exclude a variety of matters.

• Some agreements use the official long form name of a country and some just
use an abbreviated version. The question is in either case is whether the
words may be confusing or contrived to have a limited meaning.

• Territory can also be defined to include or exclude:

– The sea

– The territorial waters of any country

– The sub-terrain of the country

– The air space above the country

– Islands and isles owned by a country whether inhabited or not

– Islands or countries controlled by a country

– Man-made islands

– Moveable structures in the sea and air such as oil rigs, aeroplanes and
satellites

• The territory may be defined to include not just the world but also outer
space.

• The territory may be defined to be the planet earth and throughout the
universe.

• Where there is an assignment agreement to acquire copyright or intellectual

 property rights in a work and material for exploitation. The agreement should
be drafted so that the defined territory covers the universe as well as the
world.

• Encrypted data, images, text and material are transmitted and conveyed by
satellites in geo-stationary orbits around the Earth which would fall outside
the definition of either a specific country or the usual definition of the world.

• In contrast the territory may be defined very narrowly to be a specific address

and location, a village, university campus site or a county or a state or a
borough.

• Where the intention is to define the territory narrowly then the perimeters and
extent of the boundary should be clear.

• When drafting and defining a country then you may need to consider
surrounding islands and isles which are owned and controlled by that country
and fall within their sovereignty.

• Even then which parts of a definition are included or excluded may depend
on the value to you of including that extra land and area.

• The United Kingdom for instance is usually drafted to include England,

Scotland, Wales, Northern Ireland, the Channel Islands and the Isle of Man.

• However there are agreements which define the territory as the United
Kingdom of Great Britain and Northern Island, the Channel Islands and the
Isle of Man. Republic of Ireland may be added or excluded from this
definition.

• It is best to avoid general references to Europe, EFTA and EEA and the EU
in an agreement. These sort of general references with no detail lead to
problems at a later date. As it may be disputed as to whether a country was a
member at the time of the agreement or not.

• There may be a conflict as a whether country may fall within one list of an
organisation’s members and not another dependent on whether they are a full
or associate member.

• Members of the European Union - the EU - may apply to become members

 of the European Economic Agreement - the EEA.

• The EEA however also includes members of the European Free Trade
Association (EFTA).

• The EFTA is an intergovernmental organisation set up for the promotion of

free trade and economic integration to the benefit of its four member states,
Iceland, Liechtenstein, Norway and Switzerland.

• EFTA members are not members of the EU in a legal sense.

• Therefore, although Iceland, Liechtenstein, Norway and Switzerland are in a

geographical sense part of Europe; they are members of the EEA and EFTA
but not part of the EU.

• To avoid misunderstandings and having to check whether for example which

particular countries at any point in time are or are not members of the EU
there is a definite advantage to stating in the agreement which countries are
covered by the definition of territory.

• The challenge therefore is to be specific.

• You can define the territory by listing full members of the EU, but not
associate members or pending members.

• You can also exclude countries which are not intended to form part of the
agreement

• It is much better that the parties to an agreement do not use generic wording
such as Europe and the Commonwealth if they are not going to actually
name the countries directly in a definition clause.

• Confusion may also arise because organisations which hold matches or

competitions may allow other countries which are not technically in Europe
to take part.

• The invitation to a country to take part in a football or singing competition is

not the same as confirming that they fall within a definition in a contract of a
geographical area.
• If the heading of the definition is – Territory – as opposed to – Europe – or –
the Commonwealth the parties can list whatever countries and islands and
structures and seas they wish and the heading will not be misleading.

• The reference to the United Kingdom and the Commonwealth has been
mostly used in older style publishing agreements.

• The technology and telecommunication developments have meant that any

acquisition of rights should extend normally beyond the world and cover the
universe or outer space in an agreement.

• The Outer Space Act 1986, as amended in the United Kingdom, defined outer
space to include – the moon and other celestial bodies.

• The area outside the earth may be defined in any number of ways in relation
to the planets and moons and even the black holes which exist.

• In some agreements the focus may be on defining those countries which

speak predominantly a certain language. So the territory is defined by the
spoken language.

• Reference may also be made in an agreement as to whether the country or

territory is based on an exclusive or non-exclusive agreement. For more on
this topic please look at the main clause heading Exclusivity in the A-Z.

• The definition of the country and territory may be restricted or expanded by

reference to sub-terrain, sea, airspace and isles and islands which fall within
its sovereignty.

• There may also be oil rigs, ships, planes, man-made islands and other
structures which belong to the sovereign of the country.

• In relation to the sea, a country may be defined as having territorial waters

around the country.

• In the United Kingdom there is legislation which defines a continental shelf.

You do not have to be limited in your definition of the territory by this
legislation, but you have the option to use it if you wish.

• Where the area is very limited then please also look at the words used in the
 main clause headings in the A-Z of Licence Area, Location Access and
Venue.

• It may also be the case that you will wish to make clear in an agreement
which countries are not covered by an agreement. You can either list all the
countries. Or, as an alternative, state that all rights and countries are reserved
except as stated in the definition and also in the grant of rights clause.

• You should review which rights and countries must be granted and acquired
under an agreement as a practical exercise during negotiations so that you
have a clear vision of the countries to be listed. This process then makes it
much easier to draft the relevant territory clause.

• You would draft the territory clause widely if you wish to acquire copyright
and intellectual property rights.

• You would draft the territory clause narrowly if you are granting rights in an
original work, film, book or product or service.

• In many areas of the world there are groups of countries which form natural
market areas for a business. This is also a factor in some agreements as to the
countries to be covered.

• You need to ensure that you include enough countries in an agreement so that
you do not sell and exploit material outside your authorised zone defined by
the territory.

• The same applies to where the technology will convey, transmit and deliver
content. If a footprint of a satellite covers a large area then you need the
licence to cover more than the footprint. The content may be picked up by
cable and delivered to households or it may be conveyed via an online
business which means that it could be accessed worldwide.

Drafting clauses relating to territory

• In A-Z T.305 the territory covers the United Kingdom of Great Britain,
Northern Ireland, the Republic of Ireland, the Channel Islands and the Isle of
Man.

A-Z T.305
 ‘The Territory’ shall mean the United Kingdom of Great Britain and
Northern Ireland, the Republic of Ireland, the Channel Islands and the Isle
of Man.

• Whereas the Republic of Ireland is not mentioned in A-Z T.306 but the
definition extends to other countries listed.

A-Z T.306
‘The Territory’ shall mean the United Kingdom, Northern Ireland, the
Channel Islands and the Isle of Man and the following countries [–].’

• Instead of a general reference to Europe in A-Z T.299 the definition lists

those countries which are full members at a fixed date. The territory does not
include those who become members at a later date or which are associate or
pending members.

A-Z T.299
‘The Territory’ shall mean all the following countries which are full
members states of the European Union as at [date] their land and territorial
waters: Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Germany,
Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania,
Luxembourg, Hungary, Malta, Netherlands, Austria, Poland, Portugal,
Romania, Slovenia, Slovakia, Finland, Sweden, United Kingdom.

• Again in A-Z T.298 the definition of territory is a list of countries which are
full members of the European Union or EU.

• There is no date set out in the clause for membership but other full members
can be added to the definition.

• However any pending members are specifically excluded from the definition.

A-Z T.298
‘The Territory’ shall be the following full member states of the European
Union: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic,
Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland,
Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland,
Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom
 the [–] full members and Iceland, Montenegro, Serbia and Turkey the [–]
candidate countries Albania, Bosnia and Herzegovina and Kosovo are
specifically not included.

• In A-Z T.290 there is a list of the Commonwealth countries which are set out
in the definition. Here the defined heading is ‘The Commonwealth’ rather
than Territory.

• The definition broadly covers the areas of the world Africa, Asia, Europe and
Pacific.

• Note the list under Europe in this clause under the Commonwealth bears no
resemblance to the European Union list of member states.

A-Z T.290
‘The Commonwealth’ shall mean the following countries by region:

Africa: Botswana, Cameroon, Ghana, Kenya, Lesotho, Malawi, Mauritius,

Mozambique, Namibia, Nigeria, Rwanda, Seychelles, Sierra Leone, South
Africa, Swaziland, Uganda, United Republic of Tanzania, Zambia.

Asia: Bangladesh, Brunei, Darussalan, India, Malaysia, Maldives,

Pakistan, Singapore, Sri Lanka

Caribbean and Americas: Antigua and Bermuda, The Bahamas, Barbados,

Belize, Canada, Dominica, Grenada, Guyana, Jamaica, St Kitts and Nevis,
St Lucia, St Vincent and the Grenadines, Trinidad and Tobago.

Europe: Cyprus, Malta and the United Kingdom.

Pacific: Australia, Fiji, Karibati, Nauru, New Zealand, Papua New Guinea,
Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu.

• The Commonwealth may also be defined as in A-Z T.291.

• Here there are listed the independent countries at a specific fixed date.

A-Z T.291
‘The Commonwealth’ shall mean the independent countries of the
 Commonwealth as at [date] as follows:

Antigua & Bermuda, Australia, The Bahamas, Bangladesh, Barbados,

Belize, Botswana, Brunei, Canada, Cyprus, Dominica, Darussalam, Fiji
Islands, The Gambia, Ghana, Grenada, Guyana, India, Jamaica, Kenya,
Kiribati, Lesotho, Malawi, Malaysia, Maldives, Malta, Mauritius,
Mozambique, Namibia, Nauru, New Zealand, Nigeria, Pakistan, Papua
New Guinea, St Kitts and Nevis, St Lucia, St Vincent, Samoa, Seychelles,
Sierra Leone, Singapore, Solomon Islands, South Africa, Sri Lanka,
Swaziland, Tanzania, Tonga, Trinidad and Tobago, Tuvalu, Uganda,
United Kingdom, Vanuatu, Zambia, but shall not include Eire or Northern
Ireland.

• For examples of reference to the use of the expression ‘throughout the world
and universe and forever’. Please look at the main clause headings in the A-
Z for Assignment and Exclusivity .

• In the assignment and the licence clauses in both sections there are references
to the definitions territory and also world.

• Some agreements define the territory by whether a country speaks a certain

language or not, such as English speaking or Spanish speaking countries as
in A-Z T.272.

• If you are the person or company acquiring the rights you may think it allows
you to acquire rights in more countries by this method. It is in fact likely to
lead to more disputes unless there is an agreed list of countries included.

A-Z T.272
‘The Territory’ shall mean the following specific
[English/French/Spanish/German/other] speaking countries [–].

• There may be countries in which some rights are granted exclusively and
others which are non-exclusive as in A-Z T.276.

A-Z T.276
Set out below are the countries in which the [Work] may be exclusively
published by the [Company] [–].
 The countries in which the [Work] may be non-exclusively published by
the [Company] [–].

The countries in which the [Work] may not be published by the [Company]
[–].’

• An area of the world or country may be defined by a map or chart which is

attached to and forms part of the agreement as in A-Z T.310.

• Here the territory is being defined only in relation to the land which is
marked on the map. The map should be to scale and clearly marked so that
the boundary can be identified.

• Note here the sub-terrain and airspace are excluded. Structures on the land
are not.

A-Z T.310
‘The Territory’ shall be limited to the land known as [address] as specified
on the [map/chart/plan] a copy of which is attached and forms part of the
Agreement. No rights are specified in relation to the sub-terrain and/or the
air space above except in relation to the actual dimensions of the buildings
and structures on the land.’

• The territory may be defined deliberately widely and intended to also cover
methods of transport within the sovereignty, islands, military bases and oil
rigs as in A-Z T.277.

• This definition includes the world, the universe and outer space.

A-Z T.277
‘Territory’ shall mean all countries, islands, sub-terrain, sea, airspace,
bases, locations, sites and structures whether stationary, stable and/or
moving including aeroplanes, ships, rigs, space vessels, throughout the
world, outer space and the universe.’

• The same approach may be adopted in relation to a single country as in A-Z

T.275.
• Here the reference is to military installations not bases, ships, aircraft and oil
rigs.

• There is no reference to territorial waters, the sea or sea beds, or air space.

• There is no map or chart attached to the agreement.

• There is no mention of any other land which falls within sovereignty and
which is owned or controlled by the country.

A-Z T.275
‘The Territory’ means the [country] and all oil rigs, military installations
ships and aircraft wherever located of that country.

• In the United Kingdom the territory could be an area called a borough in

London in England as in A-Z T.304.

• It is not unknown for boundaries of local areas to be changed over the years.
So without a defined map the interpretation will be based on historic
evidence at a later date.

A-Z T.304
‘‘The Territory’ shall mean the borough of [–] in the county of [–] in
England.’

• It is equally possible to define Europe not by any legal definition related to

membership but by a map as in A-Z T.297.

• The territory is defined as the shaded areas of sea and land on the attached
map.

• It also includes a defined area below the sea and above in the air.

A-Z T.297
‘The Territory’ shall be Europe and shall be defined by the shaded areas of
land, sea as set out in the attached map in Schedule [–] and cover a space
below the sea of [distance] and above the land and sea of [distance]. The
licensed area is defined by area rather than by the names of the countries
which may change and it is not defined by reference to the European Union
 memberships.

• The territory may also be defined to be the world but with certain countries
listed as excluded as in A-Z T.265.

A-Z T.265
‘The Territory’ shall be all countries, areas, ships, aeroplanes, oil rigs,
bases and any other locations throughout the world excluding [–].

• In A-Z T.266 the definition is very simple and lists countries by name. It
makes no reference to land or sea and the presumption is that it covers those
areas named in the list only. It does not necessarily extend to all areas over
which the country has sovereignty.

A-Z T.266
‘The Territory’ shall be the following specified countries [–].

• There are market areas worldwide where countries have a tradition of being
grouped together. That does not mean that you have to follow the same
definition of countries for each territorial market. You need to adapt the list
to suit your own purpose.

• Do not include countries where there will be either no exploitation or there is

unlikely to be any revenue from the format.

• A-Z T.283 is a very wide definition of territory which covers a large number
of countries. You may wish to edit and adapt this list to be shorter if you are
granting rights. This list is clearly not based on a single language for the
countries.

A-Z T.283
‘The Territory’ shall be defined as Algeria, Angola, Benin, Botswana,
Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic,
Chad, Comoros, Congo (Brazzaville), Congo (Kinshasa), Ivory Coast,
Djibouti, Egypt, Equatorial Guinea, Eritrea, Ethiopia, Gabon, Gambia,
Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia, Libya,
Madagascar, Mali, Mauritania, Mauritius, Morocco, Mozambique,
Namibia, Niger, Nigeria, Rwanda, Sao Tome and Principe, Senegal,
 Seychelles, Sierra Leone, Somalia, South Africa, South Sudan, Sudan,
Swaziland, Tanzania, Togo, Uganda, Zambia, Zimbabwe.

• This is another example of a group of countries which are grouped together in

A-Z T.287.

• The territory is very wide and covers many languages.

• The physical geographical locations of the countries are not particularly

close.

• The cultural differences in the markets are factors which need to be

considered in relation to the production and marketing.

A-Z T.287
‘The Territory’ shall mean:

1.1 Australia, Fiji, Guam, New Zealand, Maldives, Pacific Islands,

Solomon Islands, Samoa, Sri Lanka, Tonga, Vanuatu, South Africa,
Africa.

1.2 Bangladesh, India, Pakistan.

1.3 Burma, Cambodia, China, Hong Kong, Indonesia, Laos, Macau,

Malaysia, Myanmar, Nepal, Papua, New Guinea, Philippines,
Singapore, Taiwan, Thailand, Vietnam.

1.4 Japan, Korea.

• The United States of America is often grouped with Canada and Mexico as a
market as in A-Z T.311.

• There is no obligation to grant rights in this manner and if you were acquiring
rights you would want to do so much wider.

A-Z T.311
‘The Territory’ shall be the United States of America and Canada, Hawaii,
Puerto Rico, Mexico, Alaska, Guam and the North Mariana Islands.
• The territory defined in A-Z T.312 covers Central America and the
Caribbean. The areas of land covered by this definition are listed.

A-Z T.312
‘The Territory’ shall be Central America and the Caribbean which shall
mean Antigua and Bermuda, Bahamas, Barbados, Belize, Costa Rica,
Cuba, Dominica, Dominican Republic, El Salvador, Grenada, Guatemala,
Guyana, Haiti, Honduras, Jamaica, Nicaragua, Panama, Saint-Kitts and
Nevis, Saint-Lucia, Saint-Vincent, Suriname, Trinidad and Tobago.
 THIRD PARTY TRANSFER

• There are 74 clauses in the A-Z relating to Third Party Transfer from A-Z
T.317 to A-Z T.390.

• The other main clause headings in the A-Z which are also relevant to this
subject are Assignment, Compliance, Copyright Clearance, Indemnity,
Liability, Marketing, Material, Moral Rights, Novation, Rights and Sub-
Licence.

The meaning and purpose of third party transfer

• A third party transfer means the transfer or assignment of all or some part of
an agreement to a third party.

• The transfer or assignment may be by either party A or party B to an

agreement provided that the agreement allows it to happen. If there is a no
third party transfer clauses then there can be no third party transfer.

• A third party transfer is not a sub-licence. For examples of sub-licence

clauses refer to the main clause heading Sub-Licence in the A-Z.

• The difference is that in a third party transfer the copyright and intellectual
property rights and ownership of any material may be assigned by company
B to company C. Company C was not a contracting party to the agreement.

• Unless there is a defined assignment period then the ownership and title of
the copyright and intellectual property rights and material will remain with
assignee C.

• Whereas in a sub-licence the copyright and intellectual property rights and

ownership of any material may be licensed by company B to company C.

• In a licence company C does not become the owner and hold the title to the
 copyright and intellectual property rights and material. Company C is only
an exclusive or non-exclusive licensee and the licence will end at the expiry
or termination of the licence period.

• A third party transfer therefore involves the assignment or transfer of the

rights or material or services held by one company B under an agreement
with distributor A. Company B assigns and transfers those rights to third
party C who wishes to take the benefits of the agreement.

• The question is always whether distributor A will agree that company B can
walk away from the agreement after assigning the agreement to third party
C. So that company B has no further obligations, indemnity or liability.

• There is no requirement that distributor A agree that company B be allowed

to assign or transfer the agreement unless there was some provision or clause
in the original contract.

• Some agreements add words after the name of the company in the section
where the names and addresses of the parties are given on the first page of
the agreement.

• Therefore the right to transfer and assign the agreement may be established
not by a third party transfer clause in the actual agreement but by the use of
the words at the front of the document:

– shall include such successors in business or title and any assigns

• This phrase can also be expanded to:

– shall include such successors in title and/or business in whole and/or part
and any assignees, subsidiaries, parent company and/or such third parties
as may be assigned the benefits and obligations of all and/or part of this
agreement

• Some agreements only use the words:

– and assigns

which may come after the name of the party and before the address in an
agreement.
• It is not a very strong argument in this type of case that the consent of
licensor or assignor A is not needed based on those two words which are not
in the text of the agreement.

• The use of the word ‘assigns’ is not the same as the more formal word
‘assignee’. There is no direct express consent, just an arguable implication.

• It seems rather unnecessary to use this method and it is much better that there
are clauses dealing with third party transfers, assignments and novations in
the main agreement.

• The use of the words:

– including permitted assigns

is more persuasive and it indicates permission.

• The issue of third party transfer arises in relation to the subjects of

Assignment, Buy-Out, Copyright Clearance, Sub-Licence and Novation
which are all main headings in the A-Z.

• We are not covering the detailed legislation in the United Kingdom and
Europe in relation to the transfer of staff and employees when a company is
sold and assets are transferred in this book.

• Although an agreement may prohibit an assignment or third party transfer. It

is more often the case that, although it is not permitted under the agreement,
a third party transfer may be requested and considered.

• At that stage it is a question of the scope of the terms upon which a request
for a third party transfer is being considered.

• A clause in an agreement may state that there is no right to a third party

transfer or assignment, but that one may be requested. If there is such a
request from company B to company A – who owns and controls the right.
The clause may state that such consent shall not be unreasonably withheld or
delayed.

• At that point it is a matter of company B being able to prove to company A

that the new third party C is reputable and stable and capable of fulfilling the
 terms of the agreement which are being transferred or assigned.

• Company A may not wish company B to be allowed to be relieved of all its

obligations, liability and indemnities under the original agreement.

• In which case company A will agree to the assignment or transfer but require
that company B is still responsible and liable to and obliged to provide an
indemnity to company A.

• So that in any circumstance where the new third party C fails to perform,
fulfil or make any payment to company A as required under the original
agreement. Company B must pay any such sums, costs, expenses and
royalties. Please look at the main clauses headings Liability, Indemnity and
Royalties in the A-Z for more on these topics.

• The aim of a commercial company in any agreement would be to have the

choice to assign or transfer any copyright, intellectual property rights or
material to a third party which would not require consent from any other
party. That may include being able to assign a list of books or film to a new
distributor.

• Where there is no such right to assign an agreement to a third party then the
consent of person A would be required and a new document may be needed
which is a complete novation. The new third party C then assumes
completely the new obligations and liabilities to person A

• By accepting the new novation agreement person A must also agree that
company B is no longer liable to person A or obliged to provide any
indemnity. The original agreement ends and the new novation agreement
takes it place between the new parties. For more on the subject please look at
the main clause heading Novation in the A-Z.

• An novation fee payment is sometimes offered in order to speed up the

process of the novation and to persuade a party to consent.

• A new novation agreement and the consent and signature of the original
originator or creator or author A may be needed where it is felt that the
contract records are incomplete or the original agreements are ambiguous. It
then becomes a matter of policy to complete a series of novations rather than
assignments of the original agreements by company B.
• If you have only acquired rights under an exclusive licence then you cannot
assign the original copyright and intellectual property rights which are being
licensed to a third party. You cannot assign what you do not own.

• However if the exclusive licence involves the creation of a new product or

service then it may be transferred to a third party where the role of licensee B
is taken by third party C. However it is likely to be subject to the prior
consent of original licensor A. Unless licensor A agrees to the transfer to
third party C it cannot take place.

• If the original agreement was a buy-out then it is likely that the document will
include a clause which agrees that the purchaser who is the assignee may
transfer, assign and exploit the copyright and material and any other rights.
For more on the topic please look at the main clause headings in the A-Z on
Assignment and Buy-Out.

• A company may set a policy to create an archive of assets by ensuring that it

acquires copyright and intellectual property rights through assignments
rather than through exclusive licences.

• A business that has a policy of owning rights is in a far better position to sell
at a premium than a business which can only sell rights which it has acquired
on a limited basis.

• Many transfers of assets have failed at the due diligence stage when original
documents are inspected and reviewed. There may be a failure to prove that
the copyright and intellectual property rights and other rights are held by a
company or that they are capable of being transferred or assigned.

• Therefore the acquisition of the rights and a buy-out so that you own them is
not feasible. Then the next choice is to ensure that the agreement allows you
to transfer or assign the whole of the agreement or any parts to any third
party.

• This sort of blanket agreement to an assignment or transfer is not one to

which many parties wish to agree. It is often the case that a person has
chosen a publisher or distributor for a reason and does not wish to be sold off
to an unknown third party without notice.

• The sale of a whole business is not the same as the transfer of rights in
 relation to one agreement. Often a subsidiary company or a collection of
works or a brand is sold which forms one part of the large company.

• There is a difference between a company being bought out and taken over as
opposed to the assignment or transfer of one agreement or a series of
agreement in relation to a range of products, books, films, apps, services or
an archive.

• There is no right to assign or transfer all or any part of an agreement by

assignment or third party transfer to a third party. The agreement may even
clearly state that no consent is provided and that it is prohibited.

• Despite this fact the licensee B can seek the written consent or approval of
licensor A for the transfer or assignment to third party C.

• It is a different matter where a company is being disposed of by the sale of

shares as opposed to the assignment and transfer of assets from within the
company.

• It is possible that an agreement may make reference to the change of

shareholders beyond a certain percentage or even a change of control of the
management.

• Many older contracts have no third party transfer clause and remain silent on
the issue. The original documents and exchange of letters or emails may not
even exist any longer.

• If the contract is silent or lost then the only presumption that can be reached
is that no consent for a transfer or assignment has been granted and the
consent of the original licensor or assignor must be obtained.

• It is unlikely that you could imply consent from the original document
especially where only the two original parties are mentioned.

• It is not correct to assume that you can do as you wish and hope that when the
new agreement is completed and that the other party will not find out or not
object.

Drafting third party transfer clauses

• A company may agree that an agreement may be performed by a parent
company, subsidiary or associated company as in A-Z T.369 in Purchase and
Supply of Products.

• The procurement or assignment to the parent company, subsidiary or

associated company does not allow the company to be able to let go of any
of its duties, responsibilities, liabilities and indemnities in the agreement.

A-Z T.369
The [Company] may procure that this Agreement shall be performed by
any parent, subsidiary or associated company of the [Company] or any
third party, but no such procurement or assignment shall relieve the
[Company] of any of its obligations to the [Buyer/Hirer].

• In this agreement between an institute and a company in A-Z T.387 in

University Library and Educational.

• Institute A shall be entitled to:

– assign or transfer the benefit of this agreement

– to other third parties

– and successors in business

– and to grant sub-licences for the work

• However this is subject to the fact that institute A shall:

– give written notice of such assignment, transfer or grant to company B

• In addition the institute A shall ensure that person or company C which

receives the assignment, transfer or grant shall agree to the benefit and
burden of the original agreement.

• Therefore the clauses in the original agreement will be reflected in the

content of the assignment, transfer or new licence agreement. New party C
will have obligations to company B.

• The final condition is that institute A will be bound to fulfil, and/or pay for,
 any obligations which are not carried out by new party C.

• This liability may therefore potentially include fees, royalties, costs,

expenses, legal costs, damages. As well as other matters such as failure to
reproduce copyright notices, moral rights, product liability and withdrawal of
products from the market.

A-Z T.387
The [Institute] shall be entitled to assign or transfer the benefit of this
Agreement to other third parties and successors in business and to grant
sub-licences for the [Work]. Provided that the [Institute] shall give written
notice of such assignment, transfer or grant to the [Company] and that the
person or company receiving the transfer, or assignment agrees to be bound
by the benefit and burden of this Agreement. The [Institute] shall be bound
to fulfil and/or bear the cost of any obligations not carried out by the
person or company.

• The clause in A-Z T.326 in General Business and Commercial is very short
and only permits an assignment to a specified third party under the
agreement.

• That does not mean that parties A and B could not assign the agreement to
another person or company, but it is not covered in the agreement. This
would mean that there would have to be agreement in order to proceed and
any such consent to an assignment would have to be in writing.

A-Z T.326
This Agreement cannot be assigned by either party hereto except by
[Name] to [specify person].

• The clause in A-Z T.337 in General Business and Commercial applies to

both parties to the agreement – licensor A and licensee B.

• Both licensor A and licensee B may:

– assign this agreement or any rights, licences or interest

• The consent to the assignment is expressly on the basis that neither party can,
by making the assignment to a third party, make their obligations and
 liabilities under the original agreement cease.

• That where licensor A assigns the agreement to third party C and licensee B
assigns the agreement to third party D.

• Despite this fact both licensor A and licensee B continue to have

responsibilities, liabilities and indemnities to each other.

• Licensor A will continue to be liable for the breaches, failures, omissions and
liabilities of third party C. Licensee B will continue to be liable for the
breaches, failures, omissions and liabilities of third party B.

• Therefore if party C does not fulfil its obligations to party D under the
agreements. Then licensor A will be liable for all such costs, expenses, sums
and indemnities that may arise. Conversely if party D does not fulfil its
obligations to party C under the agreements. Then licensee B will be liable
for all costs, expenses, sums and indemnities that may arise.

A-Z T.337
The [Licensor] and the [Licensee] may assign this Agreement or any of
their respective rights, licences or interest hereunder to any person, firm,
corporation or other entity. Provided that no such assignment shall relieve
the [Licensor] or the [Licensee] of its obligations hereunder and they shall
be responsible and bear the cost of all acts, omissions, breaches, failures
and/or damages and losses arising from any assignee for which they are
responsible. In no event shall the [Licensee] be obligated to make
payments hereunder to more than one person or entity at any one time.

• In a publishing agreement instead of the use of the words – of the successors

in title – at the head of the parties of the agreement.

• There is a clause in the main text of the agreement which makes it clear that
any reference to the company includes other certain third parties in A-Z
T.358 in Publishing.

• These thirds parties are therefore agreed nominated assignors and assignees
of the title and ownership of the subject matter of the agreement which is
acquired by the company.
• The term company is deemed to include:

– Person or persons carrying on the business under the registered name as

the company

– Examples given are heirs, executors, personal representatives,

administrators or assignees

• Note in this clause only applies to one party to the agreement the company.

A-Z T.358
The term ‘[Publisher/Company]’ in this Agreement shall be deemed to
include the person or persons or company for the time being carrying on
the business under the same registered name as the [Publisher/Company],
whether they be heirs, executors, personal representatives, administrators
or assignees.

• A different version is in A-Z T.359 in Publishing which applies to both

parties to the agreement.

• It is agreed between the parties that the agreement shall be binding to the
benefit of all the parties and any subsequent personal representatives,
assigns, licensees or successors in title.

• This clause is not so clear on the issue of responsibilities, liabilities and

indemnities which pass from one party to its successor in title which are
owed to the other party. It is a presumption that the agreement passes as a
complete document with the new party substituted in the role of the older
one.

A-Z T.359
This Agreement shall bind and ensure to the benefit of the parties and their
respective personal representatives, assigns, licensees or other successors
in title.

• The clause in A-Z T.360 in Publishing addresses the issue of a publishing or

media company that wants to be able to assign or transfer rights and the
benefits of an agreement to a parent company, subsidiary or affiliate.
• Publisher A may:

– assign or grant the benefit of the agreement

– or any of its rights and benefits in whole or in parts

– to any subsidiary or affiliate to the publisher

• New third party C would be entitled to the rights and benefits as if it were the
publisher under the agreement.

• New third party C would assume the undertakings and terms which bound the
publisher.

A-Z T.360
The [Publishers] may assign or grant the benefit of this Agreement or any
of its rights or benefits in whole or in parts to any person, firm or company
that is a subsidiary of or affiliated to the [Publishers] and such assignee or
licensee shall be entitled to the same rights and benefits as stated in respect
of the [Publisher] in this Agreement. The assignee or licensees shall
assume the same undertakings and terms as the [Publisher] in respect of
such rights as have been assigned or granted.

• There is a wider clause for the benefit of both parties to an agreement in A-Z
T.367 in Purchase and Supply of Products.

• Parties A and B both have the right to assign, transfer, licence and charge the
benefit of the agreement to any third party.

• Therefore either party could create a lien over the agreement as they are
allowed to create a charge.

• However the right to assign, transfer, licence and charge is subject to two
conditions in 1.1 and 1.2.

• In 1.1 seller A remains bound by all the responsibilities and obligations under
the agreement. If the third party fails or breaches the agreement and does not
pay any sums then they must be paid by seller A.

• In 1.2 third party C must make an undertaking to the other party that the
 original agreement will not be adversely affected by the new third party
agreement.

• In addition in 1.2 third party C must provide an additional indemnity between

third party C and the other party to the original agreement.

A-Z T.367
Both parties shall have the right to assign, transfer, license and charge the
benefit of this Agreement to any third party provided:

1.1 That it shall not relieve the [Seller] of any of the obligations under this
Agreement. In the event of a breach by the company or person
receiving any type of benefit which is not remedied then the [Seller]
shall be liable as if it were a breach by the [Seller].

1.2 The third party receiving the benefit must undertake that the rights of
the other party under this Agreement shall not be adversely affected by
the [assignment/transfer/licence/charge] and must agree to indemnify
the other party against any loss, damage or claim arising in
consequence of such agreement with the third party.

• In an agreement for the supply of services as in A-Z T.379 in Services. A

third party transfer clause may allow the services of a television presenter to
be made available by a company to a sponsor, subsidiary company, or other
third party.

• In this clause company A is entitled to assign the benefit of the agreement or

make the services of presenter B available to:

– Any associated company, affiliate, subsidiary, parent company, joint

venture partner, advertiser, sponsor or supplier

– And any third party which is approved by a named person

A-Z T.379
The [Company] shall be entitled to assign the benefit of this Agreement or
to make available the services of the [Presenter]:

1.1 To any associated company, affiliate, subsidiary, parent company, joint

 venture partner and/or any other related business, advertiser, sponsor
and/or supplier and

1.2 To any third party pursuant to or in connection with any direction or

recommendation or permission of the [–].

Prior consent or approval required

• A third party transfer clause may also cover the right to novate the agreement
as in A-Z T.389 in University Library and Educational.

• Here institute A has the right to:

– assign, transfer, licence

– charge

– and novate

the benefit of the agreement to a third party.

• Any novation is subject to the signature of a formal document by institute A

and person B.

• Person B must also be paid a novation fee by institute A.

• In this clause any assignment or transfer where there is not a formal novation
will mean that the original parties remain liable to each other under the
original agreement.

A-Z T.389
The [Institute] shall have the right to assign, transfer, license and charge
the benefit of this Agreement to any third party provided that a formal
novation agreement is signed and authorised by the [Institute] and [Name]
and [Name] is provided with a one off payment of [figure/currency] by the
[Institute] as a novation fee.

• In a sponsorship agreement in A-Z T.386 in Sponsorship the issue is one of a

change of control and ownership of the company.
• Sponsor A does not have an automatic right to transfer and/or assign the
agreement if there is a change of control and ownership of sponsor A.

• Sponsor A must write to person B and seek their authority for the assignment.

• Person B is entitled to refuse consent to the assignment.

• Person B may also serve notice of termination of the agreement on the

ground of the change of control and ownership of sponsor A.

A-Z T.386
Where there is a change of control and ownership of the [Sponsor] then the
[Sponsor] shall not have the automatic right to transfer and/or assign this
Agreement to the successor in title. The prior written consent and authority
of [Name] shall be required. [Name] is entitled to refuse consent and to
serve notice of the termination of the Agreement due to the change of
control and/or ownership of the [Sponsor].

• Distributor B may be allowed to assign an agreement where there is an

internal restructuring of the company as in A-Z T.351 in Merchandising.

• All other assignments or transfers shall be subject to the prior written consent
of the company A.

• When company A receives a request from distributor B to assign or transfer

any benefit of the agreement. Company A must not unreasonably withhold or
delay consent.

• That does not mean company A cannot refuse consent but it must be able to
show that it was reasonable based on the facts.

• Note there is no time limit for a response of consent or refusal.

A-Z T.351
The [Distributor] shall not assign the rights granted to it in the Agreement
or the benefit thereof except as part of an internal restructuring of the
[Distributor] without the [Company’s] written consent such consent not to
be unreasonably withheld or delayed.
• It is possible to use any of the terms together or separately that consent shall
not be:

– unreasonably withheld

– delayed or

– refused

• A short general version is in A-Z T.325 in General Business and Commercial

which applies to both parties to an agreement.

• Neither party shall:

– assign, transfer, charge or make over this agreement or

– any of its rights and obligations

• This is subject to the condition that it may be done if the prior written consent
of the other party is provided.

A-Z T.325
Neither party hereto shall assign, transfer, charge or make over this
Agreement or any of its rights or obligations hereunder without the written
consent of the other party.

• A third party transfer clause may be extended to cover approval and consent
for third party agents, contractors, marketing and publicity agents and a wide
range of companies which may be involved in a project.

• There may be circumstances where it needs to be established that consent to

one assignment or transfer or appointment does necessarily follow that it
applies to all other third parties.

• Consent may be required to be given based on individual requests and facts

as in A-Z T.390 in University Library and Educational.

• Company B cannot assign, transfer, charge, make over, appoint a contractor,

agent or delegate to assume any responsibilities under the agreement unless
institute A has given prior written consent.
• Company B continues to be responsible for the terms of the agreement which
it has agreed and its obligations to institute A.

• Institute A has the right to refuse any request by company B for an

assignment, transfer or appointment of a third party.

• No third party shall be entitled to rely on or able to enforce the terms agreed
between company B against institute A. This fact therefore needs to be raised
and agreed in any third party agreement.

A-Z T.390
The [Company] shall not without the written consent of the [Institute] be
entitled to assign, transfer, charge, make over, appoint a subcontractor,
appoint an agent and/or delegate any of the duties, responsibilities, work,
obligations and liabilities in this Agreement without the prior written
consent of the [Institute] on each occasion. The [Institute] shall be entitled
to refuse all such requests. Any consent which is provided shall not absolve
the [Company] from the terms of this Agreement at any time. No third
party shall be entitled to rely on and/or enforce the terms of this Agreement
which is only between the contracting parties.

• In a merchandising agreement the focus is on the appointment of third parties

in A-Z T.353 in Merchandising.

• Licensee B agrees that the licensor A may:

– approve the appointment of

– any sub-agent, sub-licensee or third party

– for production, manufacture, supply, distribution, marketing or other

exploitation

• The approval could be limited to the final version of the product or also cover
the original work and copyright and intellectual property rights as well which
have been granted which is wider.

A-Z T.353
The [Licensee] agrees that the [Licensor] shall be entitled to approve the
 appointment of any sub-agent, sub-licensee, or a third party in respect of
the production, manufacture, supply, distribution, marketing or other
exploitation of the [Licensed Article/Record/Work/Rights] under this
Agreement.

• Where there is a personal contract between an artist and an agent then it

would be unreasonable for the agent to be able to treat the person as an asset
which they can assign.

• In A-Z T.377 in Services the agent agrees that they cannot, during the term
of the agreement, assign, transfer or charge any rights or obligations of the
agreement to a third party.

• The prior written consent of the artist is required in each case and consent to
one situation should not be taken as consent to another.

A-Z T.377
The [Agent] undertakes that he/she shall not for the Term of this
Agreement assign, transfer, or charge any of the rights or obligations in this
Agreement to any third party without the prior written consent of the
[Artist].

• An agreement may reiterate that it is restricted to the contracting parties as in

A-Z T.344 in General Business and Commercial.

• The clause applies to all parties to the agreement.

• The parties may not:

– assign, transfer, charge or otherwise seek to dispose of any part of the

agreement to any third party

– grant any sub-licence of any part or

– cause it to be carried out by third parties

• There must be a request for consent in advance which can be refused.

• Even if consent is given in any case then the party making the assignment or
 transfer is still bound by the undertakings and obligations of the agreement.

A-Z T.344
This agreement is restricted to the contracting parties. Neither party may
seek to assign, transfer, charge or otherwise seek to dispose of at any time
of any part of the Agreement to any third party. Nor shall either party grant
any sub-licence of any part nor cause it to be carried out by third parties
without the prior written consent of the other party. There is no obligation
to provide any approval and even where consent is provided it shall not
relieve either party of their undertakings and obligations under this
agreement.

No third party transfer

• The parties may not want to have either party to have any rights to assign the
order or agreement as in A-Z T.368 in Purchase and Supply of Products.

• The order form states that the work is not to be assigned, transferred or sub-
contracted to a third party.

• If they did so they would be in breach of the agreement.

A-Z T.368
You shall not assign, transfer or sub-contract the [Order/Work/Item] to any
third party.

• A very short version is in A-Z T.319 in General Business and Commercial

that there shall be no assignment.

• In this clause there is to be no assignment of all or part of the agreement.

• The clause applies to all parties.

A-Z T.319
This Agreement is not assignable in whole or part by either party.
 TITLE

• There are 110 clauses in the A-Z relating to Title from A-Z T.401 to A-Z
T.510.

• This section can be cross referenced to the main clause headings in the A-Z
of Assignment, Assignment Period, Brand, Buy-Out, Capacity,
Commission, Copyright Clearance, Copyright Notice, Credits, Delivery,
Exclusivity, Health, Hire Purchase, Indemnity, Liability, Licence Period,
Material, Medical Report, Moral Rights, Novation, Originality,
Payment, Rights, Risk, Territory, Term of the Agreement and Third
Party Transfer.

The meaning and purpose of the title or ownership clause

• The use of the word title is used in two ways in this section. The first is to be
the owner of something.

• Ownership may exist in many different ways where something new has been
created and is original and falls within the requirements of the legislation in
the country such as the United Kingdom.

• Examples include:

– Copyright ownership of artwork, drawings and sketches

– Copyright ownership of photographs, stills, slides and computer software

images

– Copyright ownership of text, quotes, book and film titles, names of

characters or slogans

– Copyright ownership of a film or parts of a film

 – Copyright ownership of the adaptation and exploitation of the film in any
form such as DVD, on television, any translation, merchandising, games
and other developments

– Copyright ownership of the performance, mechanical reproduction,

transmission, broadcast, adaptation and exploitation of a film or parts

– Copyright ownership of sound recordings

– Copyright ownership of lyrics

– Copyright ownership of music

– Copyright ownership of the performance, mechanical reproduction,

transmission, broadcast, adaptation and exploitation of music and lyrics

– Copyright ownership of a three-dimensional prototype

– Copyright ownership of a map

– Ownership of the database rights where original data is stored in a

computer system

– Ownership of a design, logo or image

– Ownership of a registered trade mark, community mark or service mark

– Ownership of computer software which is a registered patent

– Ownership of computer software which is not registered

• For every form of ownership there will be other forms of exploitation which
are adapted from the original one.

• Your ownership of the original copyright and material may be clear but that
is not necessarily the case for all the new versions which are created.

• Just because you have commissioned a new product, material or website do

not presume that you therefore own the rights to the copyright or other
intellectual property rights or the actual material which has been created.
• In order to effect a transfer of the rights that any third party may hold there
must be an assignment in writing which is signed and there must be
consideration. Without the assignment all you have done is commission
material but no rights have moved from one party to the other.

• For more on these subjects please look at the main clause headings in the A-
Z of Assignment, Buy-Out, Commission and Rights.

• In any agreement whether there is a transfer of ownership as in an assignment

where there may be a full or partial assignment. Or with a licence agreement
where there is a grant of rights. The assignor or licensor who are receiving
payment will usually confirm that they have:

– Full title and authority to enter into the agreement

• This is an important element of the agreement and should not be forgotten as

it is a confirmation of the fact that they have full title.

• It is also confirmation of the fact that they have the authority to enter into the
agreement which is quite a different matter.

• This statement is often followed by on which confirms that:

– there is no prior or existing agreement which conflicts with this

agreement

• It is not unknown for a company to try to assign or licence rights which they
do not currently own and have already been sold or granted to a third party.

• Therefore in any agreement when looking at title and ownership it is always

worth asking whether there are any potential conflicts with previous
agreements or existing agreements.

• A copyright owner may have already granted an exclusive licence to a third

party or partially assigned the rights. This would therefore prevent the
copyright owner being able to licence the same rights until after the
exclusive licence has ended. The copyright owner would not be able to enter
into another partial assignment for the same rights unless the assignment had
a fixed term which had ended.
• Where there is a contract of employment there is a presumption that all work
created by the employee during the course of his or her employment belongs
to the employer.

• However despite this fact there are often assignment clauses in employment
contracts or clauses in which the employee confirms that they acknowledge
that all rights in the product of their work and any material is, or will be,
owned by the employer.

• Some clauses which are drafted regarding title and authority are broader and
state:

– The licensor has not entered and will not enter into any agreement which
would conflict with and/or prejudice this agreement and/or adversely
affect this agreement and/or expose the licensee to any civil and/or
criminal proceedings at any time

• This same clause could also be adapted by the use of the words assignor and
assignee to apply to an assignment.

• Note the clause applies to agreements both in the past and the future. Where
an agreement has been concluded which may cause problems then these
should be disclosed. The following words may be added after the clause:

– Except for the following agreements which shall be excluded from this
clause

• The agreements would then be listed in detail.

• The undertaking is not limited to the duration of the agreement but could
apply at any time.

• The real function of the clause is to confirm that there are no impediments to
the rights being granted or assigned or to the actual fulfilment of the
agreement.

• The use of the word – title – can also apply to the title of a book or film or the
title rights of an event.

• There are alternative use of words which can be used other than the full title
 and authority statement.

• A company may agree and undertake that they control as opposed to own the
exclusive copyright and other intellectual property rights in a specific work.

• This is not the same as a company confirming full title and authority. Here
the confirmation and undertaking is in relation to specific copyright and
material for a specific territory.

• If you were the licensee of this agreement you would need to have an
explanation as to why there was not a confirmation of full title and authority.
You may wish to have access to the original document from the copyright
owner even if the financial details were deleted.

• It is wrong to confirm that you own the rights or are the copyright owner and
have full power and authority to enter into the agreement if that is incorrect.

• Partial ownership is not full ownership.

• There cannot be any transfer of something which you do not own. This is a
mistake made by many collecting societies. They think that because an
author or creator had not opted out under their exclusion policy that they
therefore have the rights and choice to exploit the copyright and intellectual
property rights held by that author or creator. That is completely wrong and
is in fact a flagrant breach of an author’s or creator’s rights as the owner.

• This is especially the case in the United Kingdom as an assignment or

exclusive licence must be in writing and signed by the author to be valid.

• There may be many clauses in an agreement which put the owner to proof
and create a series of confirmations and undertakings in relation to the
ownership of different aspects of a project. It is much better that these are
very individual clauses rather than one long extensive clause.

• There is nothing wrong with getting an assignor or licensor to state the scope
of their ownership and the basis on which it is held if necessary. You are
effectively creating evidence of the fact that you acquire the rights based on
the fact that they were owned or controlled by them.

• It is therefore – as you will appreciate –important to define in detail those

 copyright or other intellectual property rights or other rights you are getting
them to agree they own or control.

• You need to define ownership of rights completely separately from any

master material which is being supplied under the agreement.

• It is possible to have confirmation of ownership of individual types of

copyright and intellectual property rights and other rights as well as each
different category of master material.

• For more details on these topics please look at the main clause headings
Rights and Material in the A-Z.

• It is also possible for the confirmation of ownership or control to be drafted

in completely the opposite manner with no specifics but in very general
terms and just referring to the agreement as a whole.

• This approach is more a case of the fact that a company or person has the
right and ability to enter into the agreement.

• There is also a difference in those copyright and intellectual property rights

and master material which are owned or controlled and exist now as opposed
to those new adapted versions of the original copyright and intellectual
property rights and the new adapted versions of the master material which
will be created and developed in the future.

• If someone else is creating and developing material in any format of any

nature for you. It is of primary importance that you ensure that they assign
the ownership in a formal document to you. You need to make a positive
decision that you do not want to own the copyright and other intellectual
property rights or other rights rather than do so by failure to think about the
issue.

• There have been many instances where companies have commissioned new
designs of a logo for a website or label, or created a new website with new
content and they have not acquired ownership. It is often discovered when
someone wants to licence the copyright or create another format or sell the
business.

• There are various ways of confirming ownership to ensure that there are
 clauses in the agreement which make it clear that the agreement was
concluded on the basis the assignor or licensor actually owned the rights they
have assigned or granted.

• If it is discovered at a later date that in fact the company does not own the
rights then they will be in breach of the agreement and this will assist in any
legal action.

• Where any third party creates new material in any format there should be a
procedure to ensure that the title and ownership of the new copyright and
intellectual property rights and any other rights created are assigned and
transferred so that it is owned by an agreed person or company.

• Failure to do so may create clearance problems and costs at a later date. You
will pay much less for the assignment of rights when a project is in the early
stages than when it is a success.

• Every single aspect of work completed by a third party should be addressed

in this manner from a design for a book cover to a new logo for a brand.

• You would wish to acquire not only the rights but also physical copies of any
drafts in any format to which has been developed so that they are assigned to
you and become an asset which you own.

• The aim may be to prevent the third party from either trying to register a
trade mark for a logo or offering a licence to someone else for the same logo
which you have commissioned.

• If you are the artist or the creator then the aim is not to assign any rights but
only to grant a licence – preferably a non-exclusive one – so that you can
grant the rights elsewhere.

• If you do have to grant an exclusive licence then your preference should be

only to grant the licence for the use required on a limited basis. This would
mean that it would only be for specific countries and for a short licence
period. All rights would be reserved and any additional use would have to be
subject to a new licence and additional fees.

• For more on these topics please look at the main clause headings in the A-Z
of Assignment Period, Licence Period, Term of the Agreement,
 Territory and Exclusivity.

• The question of at which point ownership passes from one party to another is
very important and whatever you are drafting it should only pass when the
money has been paid.

• This applies to the supply and distribution of products and services even
where sums are paid in instalments. The aim should be that the ownership
shall only be transferred when the sums due have been paid in full.

• There have been many instances of suppliers allowing ownership to pass to a

company and for the company to sell on the products. Despite the fact that
the sums due to the supplier have not been paid and are outstanding.

• There have been situations where a company has gone into administration
and because the documents did not make it clear that ownership had not
passed to the company at that time. It has been more difficult for a supplier
to argue that it should be able to retrieve either its stock or a master copy
which is held by the company.

• The retention of the title or ownership by one party as opposed to another is a

key issue in any agreement. The wording in any agreement should be such
that it is clear which party owns any:

– copyright and intellectual property rights

– adaptations in any format in any medium

– master material

– copies at any time

– marketing, advertising and promotional material

– packaging

– logos, brand name, trade marks, slogans and domain names

• Title may also be used in the context of title rights. Where a company or
product or service becomes part of the title for an event and the main
 sponsor.

• A sponsor may also provide funding and product placement for a series of
programmes or events which entitle the sponsor to market and promote their
own brand independently using the association with the event.

• It is not uncommon for large events or projects to attract a whole series of

funding sources which all acquire certain benefits and responsibilities in a
series of agreements. The exclusivity may then be in relation to a genre of
products at the event so that no competitors are present or marketed.

• In any agreement where you are confirming ownership or control of rights

whether in the form of an undertaking or warranty, confirmation or
otherwise. You only confirm and undertake in respect of those facts of which
you are absolutely certain.

• You would limit the undertaking and confirmation of ownership to the

minimum that is required for the agreement if you are giving the
undertaking.

• If you are acquiring an undertaking in an agreement from someone else you

would try to get the widest and most comprehensive undertaking, not the
narrowest.

• At a later date you may rely on the confirmation or undertaking by the other
party as to their confirmation of ownership.

• Be quite clear that ownership does not mean necessarily mean that all the
rights have been cleared and paid for. You need to establish whether there
are any other persons or companies or organisations which may need to
supply consent or approval or from whom clearance may be required prior to
any form of exploitation. The question of consent, approval and clearance is
also a separate issue from any payments which may be due. The issues may
relate to artwork, music and sound recordings, stills and photographs,
performers, mechanical reproduction, transmission, moral rights and other
contractual obligations which exist.

• Title and ownership relates not only to those matters which are assigned or
licensed but also those which are retained. A licensee or assignee B may
therefore agree or acknowledge that they have not acquired all the rights and
 that they are retained by or reserved to the licensor or assignor.

• Where any confirmation and undertaking applies to the availability of an

individual under an agreement. The focus is not just on whether they are
available for the dates required but also whether or not they have the
capacity to enter into the agreement directly. They may for instance need to
obtain parental consent. They are also the issues of health and medical
reports which may be required to prove that they are fit to take part in the
project. For more on these topics please look at the main clause headings
Capacity, Health and Medical Report in the A-Z.

Drafting clauses relating to title or copyright ownership or other

intellectual property ownership

• In A-Z T.485 in Purchase and Supply of Products assignor A confirms rather

than warrants or undertakes to assignee B that it owns or controls the rights
in the defined product and its associated packaging.

• Note there is no specific mention of any brand name or logo this may be done
in the definition of the product.

• This clause is very short and to the advantage of assignor A.

A-Z T.485
The [Assignor] confirms that it is the sole owner of or controls all
copyright and any other rights in the [Product] and any associated
packaging which are being disposed of under this Agreement.

• It may be that there are pre-existing agreements which must be disclosed to

which an assignment must be subject as in A-Z T.426 in General Business
and Commercial.

• Assignor A confirms that it has:

– good title and authority

– and is not bound by any previous agreement

– subject to those documents disclosed

 A-Z T.426
The [Assignor] confirms that it has and will retain good title and authority
to enter into this Agreement and is not bound by any previous agreement
which adversely affects this Agreement except for those agreements
specifically referred to in Clause [–].

• A-Z T.427 in General Business and Commercial is even shorter and the
parties simply agree that the assignment is subject to certain existing
agreements.

A-Z T.427
The [Assignor] and the [Assignee] acknowledge and agree that the
assignment in Clause [–] is subject to the following existing agreements
[–].

• An agreement may contain a very general title and ownership clause which is
limited to any matters set out in the agreement as in A-Z T.414 in Film and
Television.

• Company A warrants rather than undertakes or confirms that it has:

– good title

– full rights

– and authority to grant the rights

– And the warranties, undertakings and representations in respect of the

film

• Company A also warrants that not only has it good title, full right and
authority now but it will also remain fully entitled to do so.

• Note the drafting of this clause is directed at the film.

A-Z T.414
The [Company] warrants that it has good title and full right and authority to
grant the rights hereby granted and it is and will remain fully entitled to
give the warranties, undertakings and representations in respect of the
 [Film] contained in this Agreement.

• There is a different approach in A-Z T.421 in Film and Television.

• In this clause licensor A confirms and undertakes rather than warrants.

• Licensor A confirms and undertakes that:

– it is the sole owner of or controls all copyright and any other rights

– in the film and/or parts

– and the defined film material

– which are granted under this agreement

• Licensor A also confirms that such rights are vested in it free from
encumbrances. In other words no one else has a claim on the rights.

• Licensor A also confirms that it is not bound by any prior agreement which
adversely affects or restricts its authority to enter into the agreement.

A-Z T.421
The [Licensor] confirms and undertakes that it is the sole owner of or
controls all copyright and any other rights in respect of the [Film] and/or
parts and the Film Material which are granted under this Agreement. That
such rights are vested in the [Licensor] free from encumbrances and that
the [Licensor] is not bound by any prior agreement which adversely affects
or restricts its authority to enter into this Agreement.

• Assignor A may confirm that it owns or controls certain rights as in A-Z

T.406 in DVD Video and Discs.

• Here assignor A confirms that it owns or controls the video which is defined
but specifically excludes the artist and musical work.

• It is therefore dependent on the facts whether assignee B would be able to use

the video unless it reaches a separate agreement with the artist and the owner
of the musical work.
 A-Z T.406
The [Assignor] confirms that it is the sole owner of or controls all
copyright and any other rights in the [Video] which are assigned under this
Agreement except in respect of the [Artist] and the [Musical Work].

• In A-Z T.487 in Purchase and Supply of Products supplier A confirms that it

owns or controls all:

– copyright

– design rights

– trade marks

– service marks

– and any other rights

– in the product which is defined

– and the suppliers logo which is defined

• Note this confirmation is limited to the defined territory and is not for the
world.

• There are also certain exclusions referred to which have already been
disclosed to seller B.

• The disclosures could be set out as an schedule to the agreement and form
part of the agreement.

A-Z T.487
The [Supplier] confirms that it is the sole owner of or controls all
copyright, design rights, trade marks and service marks and any other
rights in the [Product] and the [Supplier’s Logo] throughout the Territory
except as otherwise disclosed in writing to the contrary to the [Seller].

• In an agreement between an author and publisher or a creator and a

distributor then A-Z T.468 in Publishing may be used.
• Here author A confirms rather than providing a warranty or undertaking to
the publisher that he or she has:

– good title and authority to enter into agreement

– and is not bound by any previous agreement which adversely affects this
agreement

– any exceptions are listed

A-Z T.468
The [Author] confirms that he/she has and will retain good title and
authority to enter into this Agreement and is not bound by any agreement
which adversely affects this Agreement except [–].

• A slightly different version appears in A-Z T.428 in General Business and

Commercial.

• Here the assignor A confirms that it has good title and authority to enter into
the agreement.

• It confirms that it is not bound by:

– any previous agreement

– commitment

– or undertaking

– which conflicts with, jeopardises or adversely affects this agreement

• This clause therefore refers to more than just previous agreements but also
other forms of commitment.

A-Z T.428
The [Assignor] confirms that it has and will retain good title and authority
to enter into this Agreement and is not bound by any previous agreement,
commitment or undertaking which conflicts with, jeopardises or which
adversely affects this Agreement.
• In a licence agreement a licensor may confirm that it is the original creator of
a defined work as in A-Z T.431 in General Business and Commercial.

• Licensor A confirms that the defined work shall be the original creation of
the licensor.

• You could however substitute the words warrants or undertakes instead of

confirms.

• Licensor A confirms that he or she shall be the sole owner or control all
copyright and any other rights in the defined work but only in relation to
those rights granted in the agreement.

• In this clause licensee B acknowledges that other rights not specifically

granted under the agreement remain the sole property of licensor A.

A-Z T.431
The [Licensor] confirms that the [Work] shall be the original creation of
the [Licensor] and that he/she shall be the sole owner or control all
copyright and any other rights in the [Work] which are granted under this
Agreement. The [Licensee] acknowledges that all copyright and any other
rights not specifically granted under this Agreement remain the sole
property of the Licensor.

• A work may have already been exploited as in A-Z T.432 in General

Business and Commercial.

• In this clause there is no reference to good title.

• AssignorA agrees that he has full power to enter into the agreement.

• That assignor A is the sole owner of the copyright and any other rights in the
defined work which are assigned.

• Note there is no reference to control of the rights as an alternative to

ownership.

• Assignor A confirms that the defined work has not been exploited in any
form except as disclosed in the attached schedule.
 A-Z T.432
The [Assignor] agrees that he/she has full power to enter into this
Agreement and is the sole owner of the copyright and any other rights in
the [Work] which are assigned under this Agreement. That the [Work] has
not been exploited in any form except those matters set out in Schedule [–].

• There is a completely different approach in A-Z T.489 in Services.

• This clause applies to lender A and artist B not just one party. The focus is on
any previous or existing agreement or matter which may affect the current
agreement.

• Lender A confirms the preamble is correct.

• Both parties confirm that neither has entered into any commitment or has any
contract restriction or obligation with a third party which would affect their
ability to enter into the agreement or detract from the rights granted or the
ability of artist B to perform the services.

A-Z T.489
The [Lender] warrants and undertakes that the facts set out in the preamble
are correct and that neither the [Lender] nor the [Artiste] has or will enter
any commitment with any third party which has or will detract from the
rights granted in this Agreement or the [Artiste’s] ability to perform the
services hereunder, that neither the [Lender] nor the [Artiste] is under any
disability restriction or contractual obligation or otherwise which affects
the [Lender’s] or the [Artiste’s] ability to enter into this Agreement.

• In a licence agreement for a film as in A-Z T.412 in Film and Television. The
focus may be on not just the ownership and title but the fact that no liens or
charges are to be created during the licence period.

• Licensor A undertakes and warrants that it has full power and authority to
enter into and perform the agreement.

• Licensor A agrees that during the licence period there shall be no liens or
encumbrances on the film which would impair the exercise of the rights
granted to the licensee B.
• Licensor A also agrees that it has not and will not grant any rights to a third
party which are the same rights as granted to licensee B.

A-Z T.412
The [Licensor] undertakes and warrants that it has full power and authority
to enter into and perform this Agreement. At the date of this Agreement
there are not and during the full period of time during which the [Licensee]
retains the rights granted hereunder there will not be any liens or
encumbrances against the [Film] which will or might impair the exercise
by the [Licensee] of its rights hereunder. The [Licensor] has not and will
not grant any rights the exercise of which would derogate from or be
inconsistent with the rights granted to the [Licensee] hereunder.

• Where there is an individual providing a service such as a sportsperson or

athlete as in A-Z T.506 in Sponsorship. Then reference may be made to the
sporting body by which the person is governed or the medical health of the
person.

• The question of whether the person has the ability, capacity and physical and
mental health to enter into the agreement therefore covers other issues. For
more on these topics please look at the main clause headings in the A-Z of
Capacity, Health and Medical Report.

• In this clause sportsperson A confirms:

– Full title and authority to enter into the agreement

– They are not bound by any previous agreement

– They are not bound by any professional rules and/or code of conduct

– And/or medical report

– Which adversely affects this agreement

A-Z T.506
The [Sportsperson] confirms that he/she has full title and authority to enter
into this Agreement and that he/she is not bound by any previous
agreement or professional rules and/or code of conduct [and/or medical
 report within the last six months] which adversely affects this Agreement.

• Where a person is making a contribution to a website as in A-Z T.445 in

Internet and Websites. There may be material which is submitted which is
not owned by them and where the third party source is acknowledged.

• Contributor A agrees and undertakes that:

– To the best of his or her knowledge and belief

– The defined work shall be original true and accurate

– That third party material shall be acknowledged

A-Z T.445
The [Contributor] to the [Website] agrees and undertakes that to the best of
his/her knowledge and belief the facts and information contained in the
[Work] shall be original true and accurate and that where material is quoted
and/or relied upon from third parties that sufficient acknowledgement shall
be provided to the source material, title and copyright owner.

• A person may confirm title and ownership for the loan of some artwork as in
A-Z T.471 in Publishing.

• Here the person confirms in 1.1 that he or she is:

– The copyright owner of all intellectual property rights including

copyright in the defined artwork

– And owns and controls all the material which is supplied

• The person confirms in 1.2 that the defined artwork and material are not
subject to:

– any prior or future claim, right, contractual obligation or other interest

which would prevent, interfere with or be prejudicial to the publication in
the magazine

• Note that the confirmation only relates to the intended purpose of the
 agreement and nothing more.

• 1.3 is used to get assurances from the publisher that the agreement is non-
exclusive and limited to the reproduction of the artwork in the specific
article.

• In 1.4 there is a confirmation that the publisher is not entitled to sub-licence,

syndicate or otherwise exploit the artwork. Note here that this restriction
applies to other related companies.

• The reason for this type of confirmation of facts is that then if it is breached
there is a specific contract clause where the restriction or prohibition is set
out.

A-Z T.471

1.1 [Name] confirms that he/she is the copyright owner of all intellectual
property rights including copyright and any other rights in the
[Artwork] and owns and controls the material that is to be supplied on
loan under this Agreement due to [circumstances of ownership].

1.2 That neither the [Artwork] nor the material is subject to any prior or
future claim, right, contractual obligation or other interest which would
prevent, interfere with or be prejudicial to the publication in the
[Magazine].

1.3 The [Publisher] agrees that it shall acquire no rights in the [Artwork] or
the material except for the non-exclusive right to publish the [Artwork]
in the [Magazine] in the following article [description/title/publication
date/countries].

1.4 There are no rights granted to the [Publisher] to sub-license, syndicate

or otherwise exploit the [Artwork] or material either to a parent,
associated, subsidiary or third party. Any such action shall be
considered a serious breach of this Agreement.

• A clause which covers the issue of title and ownership may also refer to
clearances and contract obligations as in A-Z T.433 in General Business and
Commercial.
 A-Z T.433
The [Assignor] agrees that it is the sole owner of all intellectual property
rights and any other rights in the [Work] and parts and in which the
[Assignor] is bound by and obliged to provide the following contractual
obligations, credits and moral rights to third parties set out in Schedule [–].
The [Assignor] shall be responsible for all payments up to the day before
the Agreement and the [Assignee] shall bear all costs and expenses owed to
third parties from the date of the Agreement.

• In a website material and content may be owned by a variety of persons as

well as the company as in A-Z T.446 in Internet and Websites.

• This clause is from website company A to customer B. Company A is only

confirming the fact that it either owns or controls all the rights on the website
except where it states otherwise.

• The rest of the clause focuses on customer B not acquiring any rights or
ownership by using the website.

• The right granted to customer B to use the website is limited and personal.

• Customer B does not have:

– the right to exploit the website in any media in any nature at any time or

– the right to permit others to do so

• Customer B does not acquire any rights or interest in the website. All rights
are reserved by company A.

A-Z T.446
The [Company] is the copyright owner and owns and controls all rights on
this [Website] unless stated otherwise. The right granted to use this
[Website] is limited and personal to the [Client] and does not permit the
[Client] to exploit the [Website] in any media of any nature at any time or
to permit others to do so. The [Client] shall not acquire any rights or
interest in the [Website] at any time which may be exploited by the [Client]
and all rights are reserved by the [Company] and there is no permission,
authorisation and/or rights granted by virtue of this Agreement.
• Again in this clause regarding a website in A-Z T.444 in Internet and
Websites. The attention is on customer B not acquiring any title or
ownership or rights through the use of the website.

• You therefore get customer B to acknowledge and agree that:

– All copyright and any other rights in the website and any trade mark,
logo or associated goodwill shall remain the property of company A

– The customer shall not acquire any rights in the website or any name,
slogan, word, phrase, trade mark, logo, title, artwork, images, design,
music, lyrics, stills, recordings, film, sound recordings

– Customer B shall not acquire any rights in any developments or

variations or any right to adapt and/or translate and/or exploit the website

– This agreement does not purport to transfer, licence or assign any

copyright ownership or any other rights to customer B

A-Z T.444
The [Customer] acknowledges that all copyright and any other rights in the
[Website] and any trade mark, logo or associated goodwill shall remain the
property of the [Company] and that the [Customer] shall not acquire any
rights in the [Website] or any name, slogan, word, phrase, trade mark, logo,
title, artwork, images, design, music, lyrics, stills, recordings, film, sound
recordings or any developments or variations or any right to adapt and/or
translate and/or exploit the [Website]. Nor does this Agreement purport to
transfer, licence or assign any copyright ownership or any other rights to
the [Customer].

• Where a sponsor is allowing the use of its logo and supplying products as in
A-Z T.501 in Sponsorship. The focus of the clause is with the defined
sponsor’s logo and the defined sponsor’s products.

• Sponsor A confirms ownership only in relation to the countries which the

agreement covers and no more.

• That it is the sole owner of or controls all intellectual property rights

 including copyright and any other rights in the sponsor’s defined logo and
the sponsor’s defined products in the defined territory.

• That the defined sponsor’s logo and defined sponsor’s products do not and
will not infringe the copyright and any other rights of any third party in the
defined territory.

A-Z T.501
The [Sponsor] confirms that it is the sole owner of or controls all
intellectual property rights including copyright and any other rights
throughout the Territory in the [Sponsor’s Logo] and the [Sponsor’s
Product]. The [Sponsor] undertakes that the [Sponsors Logo] and the
[Sponsor’s Product] do not and will not infringe the copyright and any
other rights of any third party in the Territory.

• If a company or distributor is supplying products then the purchaser is only

likely to want a confirmation of good title and no reference to any logos or
other copyright as in A-Z T.479 in Purchase and Supply of Products.

• Company A warrants:

– That it holds full title to the products

– That the transfer is lawful

– That the products are delivered free from any security, interest or
encumbrance

– Any exceptions must have been agreed in writing before between the
parties

A-Z T.479
The [Company] warrants that it holds full title to the [Products] which are
to be conveyed to the [Purchaser] and that the transfer is lawful and that the
[Products] are delivered free from any security, interest, or encumbrance
except as agreed in advance in writing between the [Company] and the
[Purchaser].

• If there is an acknowledgement of ownership of copyright and other rights it

 may refer to the present and future as in A-Z T.452 in Merchandising.

• Company B acknowledges and agrees that:

– All present and future copyright and design rights in the product and its
title and the prototype shall remain the sole and exclusive property of
licensor A

– That the agreement does not transfer any copyright or design rights to
company B

A-Z T.452
The [Company] acknowledges and agrees that all present and future
copyright and design rights in the [Product] (including the title) and the
[Prototype] are and will remain the sole and exclusive property of the
[Licensor] and that this Agreement does not in any way purport to transfer
any copyright or design rights to the [Company].

• If a person is interviewed for an article there may be a sound recordings as in

A-Z T.465 in Publishing.

• Person A acknowledges that publisher B will own all present and future
copyright and all other rights in the article and the sound recordings in all
media.

• This clause is very similar in form to an assignment clause. You could have
an assignment clause in the agreement as well.

A-Z T.465
In consideration of the Fee the [Interviewee] acknowledges that the
[Publisher] owns all present and future copyright and all other rights in the
[Article] and the [Recordings] in all media whether in existence now or
created in the future throughout the Territory for the full period of
copyright and any extensions and renewals.

• If a person or company has an agent then the aim is to ensure that the agent
does not acquires any rights or interest as in A-Z T.493 in Services.

• Agent B acknowledges that:

 – The name of actor A and his or her image, slogan, text, logo and any
material and any goodwill will remain the sole property of actor A

– This agreement is not intended to transfer, assign or vest any copyright or

other intellectual property rights of the actor or the product of his or her
services in the agent

• Agent B agrees to complete an assignment to actor A if material is

commissioned by agent B and he or she acquires any rights.

A-Z T.493
The [Agent] acknowledges that the name of the [Actor] and his/her image,
slogan, text, logo and his/her family and any other material supplied,
written, performed, filmed or recorded and any goodwill and reputation
under this Agreement to the [Agent] shall remain the sole and exclusive
property of the [Actor] whether in existence now or created in the future.
No part of this Agreement is intended to transfer, assign or vest any
copyright and/or any other intellectual property rights in the product of the
[Actor’s] services or any associated material in the [Agent] at any time.
Where material is commissioned by the [Agent] the [Agent] agrees to sign
whatever assignment of copyright documents may be required and
requested by the [Actor’s] legal advisors upon payment of a nominal sum
to carry out the intention of this Agreement.

• In a sponsorship agreement between sponsor A and television company B in

A-Z T.497 in Sponsorship.

• Sponsor A must acknowledge that it is not acquiring:

– Any intellectual property rights including copyright, trade marks,

services marks, designs, logos, slogans, text, artwork, title, films,
recordings, sound recording, scripts, photographs, business name, music,
graphics, computer generated material and any other rights in the defined
series of programmes

– Rights in any associated advertising, promotions and marketing

– Rights in the series of programmes or any associated material or any

developments or variations
• That all rights and material belong to television company B.

A-Z T.497
The [Sponsor] acknowledges that all intellectual property rights including
copyright, trade marks, services marks, designs, logos, slogans, text,
artwork, title, films, recordings, sound recording, scripts, photographs,
business name, music, graphics, computer generated material and any other
rights in the [Series] together with any associated advertising, promotions
and marketing shall remain the sole property of the [Television Company]
and that the [Sponsor] shall not acquire any rights in the [Programme] or
any associated material or any developments or variations.

• A similar situation arises where company A is engaged in a project with

institute B as A-Z T.509 in University Library and Educational.

• The issues relating to title and ownership in this clause are to protect institute
B.

• In 1.1 company A agrees that institute B:

– Owns all rights in the institute’s name, trade mark, logo, image and
goodwill

– That it shall remain the sole property of the institute

• Company A confirms in 1.2 that it shall:

– Not acquire any rights or interest in the institute’s name, trade mark, logo
and image or any part

• Company A confirms in 1.3 that it shall:

– Not acquire any rights or interest in the material used or any

developments or variations under this agreement in the institute’s name,
trade mark, logo and image

• The clause also makes it clear that the company shall:

– Not attempt to register the institute’s name, trade mark, logo and image
either in the name of the company or a third party
 – Nor shall the company try to exploit the institute’s name, trade mark,
logo and image

A-Z T.509
1.1 The [Company] agrees that the [Institute] owns all rights in the
[Institute’s] name, trade mark, logo and image and that any goodwill
created under this Agreement shall remain the sole property of the
[Institute].

1.2 The [Company] shall not acquire any rights or interest in the
[Institute’s] name, trade mark, logo and image or any part.

1.3 The [Company] shall not acquire any rights or interest in the material
used or any developments or variations under this Agreement in the
[Institute’s] name, trade mark, logo and image.

The [Company] shall not attempt to register the [Institute’s] name, trade
mark, logo and image as belonging to the [Company] or a third party nor
shall the [Company] try to exploit them.

• A shorter version is set out in A-Z T.503 in Sponsorship. The principle is the
same that the clause is used to protect the ownership and title to the
licensors’ defined logo.

• Licensee B acknowledges that licensor A owns all rights in the defined logo
as well as any goodwill.

• Licensee B acknowledges that the defined logo shall remain the sole property
of licensor A. So there is no intention under this agreement to change
ownership.

• Licensee B agrees that it shall not acquire any rights or interest in:

– The licensor’s defined logo or any part

– The material used to create and develop it

• Licensee B agrees not to attempt to register any interest in the defined logo in
its own name.
• For more details on how to define a logo please look at the main clause
headings Logo and Trade Marks in the A-Z.

• Note in this case the defined logo may consist of a name, image and slogan
but may not be registered as a trade mark.

A-Z T.503
The [Licensee] acknowledges that the [Licensor] owns all rights in the
[Licensor’s Logo] and that with any goodwill created under this Agreement
it shall remain the sole property of the [Licensor]. The [Licensee] shall not
acquire any rights or interest in the [Licensor’s Logo] or in any part of it or
the material used to create or develop it under this Agreement nor shall the
[Licensee] attempt to register such interest in its own name.

• In A-Z T.451 in Merchandising where there is a character from a book or a

film which is being developed and exploited. Although licensor A is granting
an exclusive licence for the development, reproduction and distribution of a
toy. The licensor will not want licensee B to acquire any copyright or other
rights in the name of the character or any other associated material.

• Licensee B acknowledges that:

– all copyright

– intellectual property rights

– computer software rights

– design rights

– and any other rights in the character

– the name, the words and phrases, slogans, sounds

– and any associated samples, models, images, artwork, graphics, sound

recordings, computer generated material, articles, clothes or other
material

– and any trade mark, logo, words, phrases or associated goodwill

 – or any developments or variations

– shall remain the property of licensor A

• Licensee B acknowledges that the licensee:

– shall not acquire any such rights and/or interest

– represent that they own and/or control them or

– attempt to register any interest

A-Z T.451
The [Licensee] acknowledges that all copyright, intellectual property
rights, computer software rights, design rights and any other rights in the
[Character], the name, the words and phrases, slogans, sounds, and any
associated samples, models, images, artwork, graphics, sound recordings,
computer generated material, articles, clothes or other material and any
trade mark, logo, words, phrases or associated goodwill or any
developments or variations shall remain the property of the [Licensor] and
that the [Licensee] shall not acquire any such rights and/or interest and/or
represent that they own and/or control them and/or attempt to register any
interest.

• Where there is an agreement between an executive and a company as in A-Z

T.409 in Employment.

• The aim of the clause is to ensure that the executive agrees that all the rights
and material created by him or her during the course of his or her
employment belongs to the company.

A-Z T.409
The [Executive] acknowledges and agrees that all intellectual property
rights including copyright, design rights, data and database rights,
computer software rights, trade marks, patents, photographs, text, images,
logos, film, sound recordings, documents, emails and reports and all other
material created, developed, produced and/or authorised by the [Executive]
during the course of his service shall belong to the [Company]. No rights or
interest are acquired, transferred and/or assigned to the [Executive] under
 this Agreement.

• In an agreement between a supplier and a customer A-Z T.481 in Purchase

and Supply of Products.

• Ownership in this instance only passes when payment has been made in full.

• Title is therefore retained by supplier A until customer B has paid the full
value required for the goods.

A-Z T.481
All Goods supplied under this Agreement are supplied on a retention of
title basis. Ownership of the Goods shall pass to the [Customer] as and
when all monies (however arising) owed by the [Customer] to the
[Supplier] have been paid in full.

• In A-Z T.476 in Purchase and Supply of Products company A remains the

legal owner of the products even after delivery.

• Company A will have the legal right to retrieve the products if the agreed
price is not paid.

• Buyer B is required to store the products separately and to leave the products
clearly identifiable as belonging to company A.

A-Z T.476
The [Goods] shall remain the sole and absolute property of the [Company]
as legal and equitable owner until such time as the [Buyer] shall have paid
to the [Company] the agreed price. The [Company] may for the purpose of
recovery of its [Goods] enter upon any premises where they are stored and
may repossess the [Goods]. Until such time as the [Buyer] becomes the
owner of the [Goods] he/she will store them on his/her premises separately
from his/her own goods or those of any other person and in a manner
which makes them readily identifiable as the [Goods] of the [Company].

• The use of the word title may also refer to exclusive title rights for an event
as in A-Z T.411 in Film and Television.
• This is a definition of the title rights which will then be used in the grant of
rights in the agreement.

• There is an exclusive use of an agreed title in relation to an event.

• This applies to all forms of the media and any format but only for the
duration of the term of the agreement.

A-Z T.411
‘The Title Rights’ shall mean the sole and exclusive right to have the
[Event] referred to in all forms of the media of any nature and in any
format at any time during the Term of this Agreement as [specify
words/logos/trade marks] in all forms of exploitation by the
[Association/Company] and any agents, licensees, distributors and/or any
third parties including but not limited to digital, satellite, cable terrestrial
television, radio, DVDs, newspapers, magazines, mobiles, advertisements,
display materials, brochure.

• Where sponsor A provides funding as in A-Z T.499 in Sponsorship for a

television programme.

• Although sponsor A may have the right for its name, logo and products to
appear before and after and during the programme.

• That does not mean that sponsor A has also acquired the right to exploit the
name and logo of company B or the title of the programme or other material.

• The purpose of this clause is to protect company B.

• Sponsor A acknowledges that:

– the sponsorship does not give the sponsor the right to use the name of the
company, logo, programme title or other material owned by the company
in any promotion, advertising, marketing or product owned and
controlled by the sponsor

• Company B does agree some authorised use which is very specific.

A-Z T.499
The [Sponsor] acknowledges that the sponsorship of the [Programmes]
does not give the [Sponsor] the right to use the name of the [Television
Company], logo, programme title or other material owned by the
[Television Company] in any promotion, advertising, marketing or product
owned and controlled by the [Sponsor]. The [Television Company] agrees
that the following use is permitted [specify each type and details of layout,
colour, size].
 TRADE MARKS

• There are 75 clauses in the A-Z relating to Trade Marks from A-Z T.511 to
A-Z T.585.

• The other main clause headings where trade marks arises as a topic which
you may wish to look at in the A-Z include Assignment, Brand, Copyright
Clearance, Credits, Designs, Domain Name, Editorial Control,
Exclusivity, Format, Logo, Marketing, Material, Quality Control, Rights
and Title.

Is the mark registered as a trade mark?

• The registration of a design or mark - in the United Kingdom and the use of a
physical mark or design on a product and its packaging is well established.
We are not addressing in this book the legislation and technical detail
required for registration. We are only looking at how trade marks are dealt
with in agreements as a drafting issue. There is a list of trade mark, copyright
and patent organisations in the directory at the back of the A-Z.

• The first question when looking at any design or mark which someone else
claims is registered is to ask for evidence of registration to verify that fact. A
trade mark, design, marks, images or logos or slogans may be new and not
registered. Alternatively it may be a well established brand which has
hallmarks, domain names and other rights registered in different countries
worldwide.

• If the mark or design is completely new then you would want to ensure that
the person who created the three-dimensional design or artwork or other
format has assigned all the rights either to the person who has paid them for
the work or to the new company which has been created for the project.

• Failure to organise an assignment from the creator of the design or mark to

 the company who commissioned the work would mean that the company is
not the copyright owner and does not own or control the art work and cannot
register any rights or register a trade mark in the name of the company.

Registration of a trade mark

• If an organisation or company wishes to register a design or mark or logo or

word as a trade mark. They usually want to establish what the benefits would
be; the total costs and how long the process would take before the
registration is complete.

• There are different types of cost to consider – the cost of registration, the cost
of dealing with opposition to the application by third parties and also renewal
fees which may charged by the relevant registration body.

• There is no doubt that having a mark or a design or even a slogan registered

as a trade mark carries considerably greater legal protection when compared
to the remedies available for encroaching on the far more limited rights of an
unregistered mark.

• The registration of a trade mark is often an important component of both the

management of the brand for a product as well as the marketing strategy. The
fact that a design or mark is registered does enhance the status of a brand for
marketing and promotional purposes.

• The benefits of a successful registration are substantial in litigation because,

in the absence of a contractual relationship, if the mark is not registered then
reliance is placed on the common law argument of passing off. A claim for
passing off will require evidence of goodwill in relation to the unregistered
mark or design; evidence of misrepresentation and actual or anticipated
future loss by the plaintiff. Litigation in such circumstances is a high risk and
expensive strategy to commence.

• Whereas, when there is litigation regarding trade mark infringement you are
able to start with the registration number of the registered trade mark which
identifies and confirms the mark is registered.

• If the mark which is alleged to infringe a registered trade mark turns out to be
the same or similar. The other party who is using the infringing mark or
 design is immediately at serious risk from losing a legal action for an
injunction to prevent further distribution of the infringing products. There
would also be an order for delivery up of all the infringing products and an
order to pay most if not all of the legal costs of the other party which owns
the registered trade mark.

• The real advantage is that legal action for trade mark infringement is
fundamentally predicated on the use of the same or similar mark which
creates a likelihood of confusion without having to establish or prove actual
or anticipated loss.

• The costs of registering a trade mark depends on which organisation you

make the application to and in how many classes the trade mark is intended
to be registered and for which countries. As well the extent and complexity
of any difficulties or obstacles encountered along the route to the
registration.

• The first decision to be made is choosing in which jurisdiction to register the

mark. A trade mark could for example be registered solely in the United
Kingdom in one class or as a Community Trade Mark which is registered
and given protection throughout the European Union.

• A trade mark can be defined in the United Kingdom in a very limited way by
reference to the legislation as in A-Z T.532.

A-Z T.532
‘The Registered Trade Mark’ shall mean such trade mark as defined in the
Trade Mark Act 1994 as subsequently amended.

• Alternatively the definition may be wider and refer to both registered and
unregistered trade marks used by the company as well as any subsidiary as in
A-Z T.533. Here the company can notify the distributor of new trade marks
which it wishes to fall within that definition.

A-Z T.533
‘Trade Marks’ shall mean the registered and unregistered Trade Marks
belonging to the [Company] relating to the [Goods] and/or used by the
[Company] and/or its subsidiaries in connection with the [Goods] and/or
which shall be notified by the [Company] to the [Distributor] from time to
 time.

• A-Z T.530 defines a community trade mark by reference to the European

Union Directive.

A-Z T.530
‘Community Trade Mark’ shall be defined in accordance with Directive
2008/95/EC and Regulations (EC) No 207/2009 and (EC) No 2868/95 as
defined as at [date].

• Trade mark registrations last for ten years whether as a registered trade mark
in the United Kingdom or as a Community Trade Mark but both can be
renewed at an additional cost to extend that period.

• A decision needs to be made in which classes the registrations for the mark
are to be made. This is always a difficult decision and is often based on the
costs to be incurred. A mark may be registered in one or more classes such as
food, drink, clothing and transport.

• There is a list or taxonomy of trade mark registrations which now have 45

different classes or categories according to the Nice classifications.

• It is usually a fairly easy task to decide which is the appropriate class or

classes under which to register a trade mark. If for example a publisher
wanted to protect the title of a printed book it will quickly come to the view
the work should also be protected as an electronic book and perhaps as
potential merchandise at which point the application has expanded to at least
three classes.

• There are separate classifications for registered designs under the Locarno
classifications.

• As well as a completely different set of classifications for the figurative

elements of marks such as designs which feature natural phenomena
including representations of the sun, moon, stars and constellations under the
Vienna classification.

• Every trade mark body in each jurisdiction has its own pricing policy
addressing multiple applications and will charge a range of fees according to
 the number of classes which an applicant has applied to register.

• The Office for Harmonization in the Internal Market in the European Union
which deals with Community Trade Marks has at least 30 fee categories.

• The real hidden costs for securing a successful registration of a trade mark
are the costs of dealing with opposition from third parties to an application
and the delay this causes to the process of registration. This opposition will
only come from third parties after the application to register the trade mark
has been made. The level of opposition to the registration may therefore be
difficult to assess in advance.

• You do not have to limit yourself to the above classifications when drafting
an agreement. They are only relevant to an application for registration.

• In an agreement you can draft a definition to be wide enough to include

marks, designs, logos, text, slogans and images which are not registered at
the moment. Some of which may not be in existence at the time the
agreement is signed and some of which will become registered trade marks
or design rights in the future.

• The clause in A-Z T.531 is drafted deliberately widely to cover international

trade marks and service marks. As well as titles, images, text, words,
designs, sign, packaging, letters, manuals or shapes including real and made
up names.

• This clause could be extended further to specify character names, slogans and
new icons.

A-Z T.531
‘Trade Marks and potential trade marks’ shall be defined for the purpose of
this Agreement to include any actual registered trade marks, community
trade marks, international trade marks, and/or service marks and/or any
other titles, images, text, words, designs, sign, packaging, letters, manuals
or shapes including real and made up names of places, people and products
capable of being represented graphically that may potentially or actually
distinguish any product, service, work or other material in existence before
and/or created during this agreement.
Trade mark user licence

• If a company has registered a trade mark then it may choose to licence the
use of the trade mark by a licensee in a separate document which is issued in
addition to the main agreement. There is an example of a Trade Mark User
Licence Agreement in Contract 20 in The Media and Business Contracts
Handbook 5th edition by the authors.

• It is worth noting that a trade mark user licence can itself be registered with
The Office for Harmonization in the Internal Market in the European Union.

• In A-Z T.520 In General Business and Commercial the parties have agreed
that both parties will join to make an application in the United Kingdom to
register the user as a registered user of the trade marks. This clause is very
basic and could be expanded. The point here is that the user must pay the
costs of the application and registration.

A-Z T.520
The [Proprietor] shall join with the [User] at the [User’s] expense in
making an application to the Register of Trade Marks for the purpose of
securing the registration of the [User] as a registered [User] of the Trade
Marks [in accordance with the Trade Marks Act 1994 as amended.

• Addressing trade mark issues within the context of an agreement can be as

detailed and complex as the parties consider appropriate and proportionate to
the circumstances.

• The issue can be addressed very briefly or a great length using both a
substantial ‘Trade Mark User Licence Agreement’ and a trade mark style
book. The challenge as always is to ensure that all parties have expressed
clearly what rights are – or are not – being granted and which party bears the
costs of creating material required under the agreement.

The use of the brand and trade mark by third parties and the
protection of the brand and trade mark integrity.

• A trade mark user licence agreement is not the only way to protect the
ownership, the authorised reproduction and the brand perception of a trade
 mark, design, logo or slogan for a company.

• If the parties decide that a lengthy and involved trade mark user licence
agreement is not necessary in the circumstances. Where for example the use
of the trade mark may be tangential to the agreement rather than central. The
way in which the integrity of the trade mark is addressed in an agreement can
vary enormously.

• The decision regarding the clauses to use which apply to trade marks is also
related to the importance and value that the parties to the agreement place on
protecting the titles, names, logos, slogans, characters, images and company
names and brands. Please look at the main clause headings in the A-Z of
Brand, Costs, Logo, Marketing and Material.

• When drafting for this topic you must think not only of the rights and who
owns them but also the material that will be created, the packaging and how
it will be marketed and promoted. You cannot just address the issue of the
product and ignore all the other areas.

• A crucial question at any stage is which party is paying for any costs which
might be incurred. It needs to be stated whether it is the licensor or licensee.
The licensor may be providing copies of trade marks, images and designs in
different formats for use on a product, film or for advertising and marketing.
It should be clear whether the licensee has to meet any costs incurred.

• Another crucial point is that trade marks and designs by their nature are
extremely specific and detailed. Therefore if the use of a registered mark is
to be authorised then the licensee should agree not to make any changes or
alterations to the mark. A sponsor of an event would expect the name and
logo of the company and the associated service and trade mark it is
promoting to be reproduced in a form which is in exactly the same detail as it
is used by the sponsor.

• The trade marks, service marks and logos as well as any slogans could be
referred to in an agreement by reference to the company’s products’ as in A-
Z T.547. A detailed description and image which shows the products from
different angles can be attached.

A-Z T.547
 ‘The Company’s Products’ shall mean the products and services of the
[Company] including packaging, trade marks, service marks, designs,
logos, and any associated words, phrases, slogans which are as follows [–].
A two-dimensional copy of the Company’s Products is attached to and
forms part of this Agreement.

• There is an even wider clause in A-Z T.549 which is in relation to a character

which could be used in a film, book or merchandising or as a key feature in
an advertising campaign. You will note that the description of the character
refers to far more than just the name and any potential trade mark.

A-Z T.549
‘The Character’ shall be the original concept and novel idea for a character
which is briefly described as follows [name/description]. Full details of the
Character are attached to and form part of this Agreement including
copyright, other intellectual property rights, domain name, design, trade
mark and logo statement, representations and words, plot, storyline,
artwork, colour, signs, equipment, slogans, clothes, scripts, drawings, films
and sound recordings.

• The licensee in A-Z T.512 in DVD, Video and Discs has agreed not to:

– change, alter, adapt or vary

– the copyright notice, trade mark and logo of the licensor

– without their prior written consent

• The licensee has also confirmed that the copyright notice, trade mark and
logo which are attached in a schedule to the agreement shall remain the sole
property of the licensor. In other words the licensee shall not acquire any
rights or interest in them through the agreement.

• The licensee has also agreed that it shall not have any authority to sub-licence
or authorise the reproduction of the copyright notice, trade mark and logo by
a third party.

• The licensee has agreed not to attempt to register a similar trade mark or logo
or to register as the copyright owner of the original work which is supplied
 by the licensor.

A-Z T.512
The [Licensee] agrees and undertakes not to change, alter, adapt and/or
vary the copyright notice, trade mark and logo of the [Licensor] without
their prior written consent. The [Licensee] agrees that the copyright notice,
trade mark and logo set out in Appendix [–] shall be and remain at all times
the sole property of the [Licensor]. The [Licensee] agrees that it shall not
have the authority to sub-license and/or authorise the reproductions of the
copyright notice, trade mark and logo by a third party. The [Licensee]
agrees not to attempt to register a trade mark and/or logo which is similar
and/or an imitation and/or to register as the copyright owner of the [Work].

• In A-Z T.554 in Merchandising the concept of a style book is incorporated as

the reference for the full details of the trade mark. Style books can be very
extensive and set out in precise detail not only the components of the mark
itself but the way in which the mark is to be integrated or displayed on a
product, its packaging and in all other circumstances where the mark may be
displayed. The distributor has agreed to follow the exact details of the style
book for the copyright notice and trade marks.

A-Z T.554
The [Company] shall provide the [Distributor] with a style book
incorporating the manner, form, size, colour and position in which the
copyright notice and Trade Marks are to be used. The [Distributor] agrees
not to deviate from the style book and that the [Distributor] shall use the
Trade Mark in the exact form and manner specified.

• The other extreme is a brief reference to use of the trade mark as in A-Z
T.565. Note here there is no reference to the use of the trade mark in
marketing and promotional material. This may not have been raised at all or
could be set out in a separate clause.

A-Z T.565
The [Licensee] agrees that the [Licensor’s] Trade Mark shall be
incorporated in the [Product Package] in the following specific manner [–].

• In drafting any agreement it helps to establish the detail of the trade mark,
 logo, image or design before it is licensed or authorised for reproduction. So
in A-Z T.560 in Merchandising ‘The Licensor’s Trade Mark’ which may
refer to a registered trade mark, a pending trade mark or other images, logos
or words is defined at the start of the agreement with a comprehensive
description.

• If there is no detailed definition as to what this means and general words are
used in the clauses then there is potential ambiguity as to which marks you
may have referred to when someone else looks at the agreement at a later
date.

• In this clause the licensor will also provide a two dimensional colour copy of
the marks or logos or other images or words which fall within the definition.

A-Z T.560
‘The Licensor’s Trade Mark’ shall be the following trade mark, design,
image and logo together with any associated words briefly described as
follows [–].
A two-dimensional full colour copy of the [Licensor’s] Trade Mark is
attached to and forms part of this Agreement.

• In addition an agreement may contain approval or consent clauses which also

are very useful to ensure that the concerns of the licensor are addressed prior
to the reproduction of a product or work for distribution and sale to the
public.

• The concern being addressed in A-Z T.570 in Merchandising is that there

may be a number of ways in which the trade mark, copyright and design
rights of the licensor will be reproduced by the licensee. The licensee is
obliged to submit samples of all the licensed articles or products and any
packaging and marketing material to the licensor. The licensee cannot
market or distribute or sell anything until the licensor has provided written
approval for each sample.

• This type of clause allows the licensor to have a tight control over the actions
of the licensee. It also provides an opportunity for quality control over the
licensed articles and marketing material. Please look at the main clause
heading in the A-Z Quality Control for other clauses which maintain
standards.
 A-Z T. 570
The [Licensee] shall submit to the [Licensor] for written approval samples
of the [Licensed Articles] and of any contents thereof including trade mark,
copyright or design right acknowledgments together with samples of all
wrappings, containers, display materials, advertisements, publicity, internet
website material and banners and any other material intended to be used
therewith and the [Licensee] shall refrain from distribution, sale or
publication of any [Licensed Article] and production of advertisements,
publicity and internet material until such approval shall have been given in
writing by the [Licensor].

• The licensor in A-Z T.566 has a right of approval before the product and the
packaging is reproduced and distributed. Note that although written approval
is needed by the licensee it is not specific as to which samples need to be
shown. There is also no reference to any marketing or promotional material.

A-Z A.566
The [Licensee] agrees that the [Licensor] shall be entitled to approve in
advance of production, manufacture, supply or distribution all material in
respect of the [Licensee’s Product] and the [Product Package]. The
[Licensee] agrees that it shall not be entitled to use, manufacture, distribute
or supply any material until the written approval in each case of the
[Licensor] has been obtained.

• The issue of whether the licence and use being granted is exclusive or non-
exclusive can be fundamental to the monetary value which can be negotiated
for an agreement. Please look at the main clause heading Exclusivity for
further examples of clauses.

• Although exclusive trade mark licences are not uncommon, as with all other
exclusive arrangements the nature of the exclusivity is often restricted by
other factors such as the period of time of the exclusivity, the territory or the
purpose of the use.

• A-Z T.524, although brief, addresses a number of restriction issues including

the non-exclusive nature of the agreement and a passing reference to a
number of related conditions to the use of the trade mark.
 A-Z T.524
The [Proprietor] authorises the [User] on a non-exclusive basis during the
Term of this Agreement to use the Trade Marks in respect of the
[Product/Work] made by the [User] in accordance with all such conditions
specified in the Agreement.

• Whereas in A-Z T.582 in Sponsorship the sponsor has funded a major event
and in return is entitled to certain sponsorship rights in respect of the event.
These rights may be a combination of exclusive and non-exclusive rights. In
many instances below it is not stated whether the arrangement is exclusive or
not.

• The display and advertising of the sponsors name, trade mark, logo slogans
and products at the event. This would be non-exclusive but there could be
areas where only the sponsor’s advertisements are displayed.

• The right to use the association’s name, trade mark, logo and slogan on the
sponsor’s products and in its marketing. This could be exclusive or non-
exclusive.

• An advert for the sponsor and a statement in the official guide produced by
the association. The question here would be whether there are going to be
any other adverts or not.

• The exclusive right to have the sponsor’s name, trade mark, logo or design on
the competitors numbers.

• The right for the sponsor to market the event and its business with the words
– the official supplier. This could be exclusive or non-exclusive – there may
be more than one official supplier.

A-Z T.582
The [Sponsor] shall be the major sponsor of the event and shall be entitled
to the following rights in respect of the Event during the Term of this
Agreement:

1.1 The right to display banners and advertising boards bearing or

incorporating the [Sponsor’s] name, trade mark, logo, design, slogans
and the [Sponsor’s Products].
 1.2 The right to reproduce the [Association’s] trade mark, logo, slogan or
design on the [Sponsor’s Products] and in any publicity, promotional
or marketing material relating to the [Sponsor’s Products] or the Event.

1.3 One full page advertisement for the [Sponsor] in the official
programme guide and one full page statement from the [Sponsor]. All
such artwork, text and photographs to be supplied at the [Sponsor’s]
cost to the [Association].

1.4 The exclusive right to include the [Sponsor’s] name and trade mark,
logo or design on all competitor’s numbers.

1.5 The right to use the words the Official Supplier of [–] together with a
depiction of the [Association’s] trade mark logo, or slogan to the Event
in all publicity, advertising, promotional, and marketing material.

• A-Z T.542 in Merchandising the licensor undertakes not to use the character
and trade mark or logo for any purpose than producing and marketing the
finished licensed article. So the licence may be for a duvet set or lunch box
and the licensee is not licensed to produce a costume or other toy.

• The licensee has also agreed that no film, recording or sound recording or
commercial is to be made for advertising or promotional purposes unless the
licensee has provided written consent in advance. The licensor would want to
protect the television series and feature film rights.

A-Z T.542
The [Licensee] undertakes to use and apply the [Character] and any trade
mark and logo for the sole purpose of manufacturing, distributing, selling
and marketing the [Licensed Article] and not for any other purpose. The
[Licensee] agrees that no film, recording, sound recording or commercial
featuring the [Character] for advertising and promotional purposes shall be
made without the prior written approval of the [Licensor].

• The licensor may wish to have certain trade marks and words set out on the
product and every box in which it is sold. In A-Z T.571 in Merchandising
the clause sets out the required words to be used with the trade mark owned
by the licensor.
 A-Z T.571
The [Licensee] shall ensure that the following words are set out on each
and every item of the [Product Package]: ‘The trade mark is manufactured
and reproduced under licence from the [Licensor] and the trade mark is a
registered trade mark of the [Licensor]’.

• The costs involved in the creation of the material such as artwork or two or
three-dimensional images are usually paid for by the licensee not the
licensor.

• In A-Z T.552 the Commissioning Company the licensor has agreed to pay
the cost of the supply of the artwork and other material which the production
company needs to reproduce the product, packaging, trade mark, logo or
other credit.

A-Z T.552
The [Commissioning Company] agrees to supply at its sole cost copies of
such artwork and other material relating to the [Product] in its possession
or control including any goods, packaging, trade mark, logo or other credit
which are required by the [Production Company] for the purpose of this
Agreement.

• A company may wish to prevent persons whose services it has used from
using its logo and trade mark to promote themselves as a form of
endorsement. In A-Z T.573 in Services the artist has agreed that they cannot
use the name of the company or any trade mark, design or logo without prior
written consent.

A-Z T.573
The [Artist] warrants that he/she shall not at any time use the name of the
[Company] or any trade mark, service mark, design, logo or other device in
any manner likely to give the impression that any performance or other
matter is authorised by or is endorsed by or associated with the [Company]
unless the prior written consent of the [Company] has been provided in
each case.

• You may also need a clause where a third party agrees to sign and execute
any documents which you may need in the future to transfer rights and
 ownership of material as in A-Z T.581.

A-Z T.581
The [Promoter] agrees to execute any document or do anything required by
the [Company] to confirm that all copyright, design rights, artwork, trade
marks, service marks and logos and any other rights in the products of its
services provided under this Agreement shall belong to the [Company].
Bloomsbury Professional, Maxwelton House, 41–43 Boltro Road, Haywards Heath, West Sussex,
RH16 1BJ
First Edition published by Bloomsbury Professional Ltd 2016
© Deborah Fosbrook and Adrian C Laing 2016

Moral Rights

Deborah Fosbrook and Adrian C Laing are the authors and copyright owners of Contract and Copyright
Drafting Skills in all media and in all formats and medium throughout the world and the universe. We assert
our legal and moral rights to be clearly and prominently identified as the authors of the book in all media as
Deborah Fosbrook and Adrian C Laing. All rights are reserved to the authors as the copyright owners and
the publishers as exclusive licensees. No licence is granted to reproduce and/or exploit any part and/or all of
this book. No part of this book may be scanned, photocopied, reproduced, photographed, recorded,
transmitted and/or exploited in any media and/or by any means and/or stored in any electronic and/or
retrieval system of any nature without the express prior written consent of the authors and the publishers.
This book is an excluded work and no licence has been granted to the Copyright Licensing Agency and/or
any other collecting society, trade and/or industry organisation in any form in any part of the world by the
authors and/or the publishers. No licence is granted to use extracts of the contents of this book and/or to sell
and/or supply sample clauses and/or the contents by any person and/or from any business, legal advisory
website and/or otherwise on the internet or elsewhere. There is no permission granted to load and/or store
this book for multiple use for persons at a business and/or educational establishment and/or any other
purpose. You are advised to contact the authors and publishers and to request prior written consent and a
licence.

Disclaimer

Neither the authors nor the publishers accept any responsibility and/or liability for any errors, omissions,
costs, expenses, losses, damages and/or legal and/or other consequences which may arise directly and/or
indirectly as a result of the use of all and/or any part of this book and/or any adaptations which you may
make to any of your own agreements and/or those of a third party at any time. You are at all times advised
to consider all relevant legislation and the jurisdiction and to seek independent and specialist legal advice
before entering any agreement and/or providing advice to a third party. Any use and/or reliance upon this
book is entirely at your own risk and cost and the authors and publishers do not accept any liability.

A CIP catalogue number for this book is available from the British Library.

ISBN 978 1 78043 823 8

ePub ISBN-13: 978 1 78451 527 0

Typeset by Phoenix Photosetting, Chatham, Kent