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How a Force Majeure Clause Can Help an Online Business

woman investigating how force majeure clause can help an online business

In this COVID-19 world, everyone wants to know if force majeure applies. In this post, you’re going to learn what “force majeure” means, what it does, and when it applies. We’ll also look at some force majeure sample clauses and I’ll give you some examples of business transactions and how they’re affected by force majeure. Essentially, you’ll see how a force majeure clause can help in times of emergency.

First, what is “force majeure”?

It’s French for “superior force.”

It’s a clause that appears towards the end of a lot of contracts, especially service-based contracts.

It basically excuses non-performance or not living up to your end of the contract for circumstances out of anybody’s control.

What can a force majeure clause do?

Well, it could suspend everything until the force majeure is removed or eliminated or out of the way,

It can say, “everybody can walk away if a force majeure event happens,”

It can, but it doesn’t always, talk about what happens to any money that’s changed hands as of the force majeure event. So, refunds, deposits, etc.

When does force majeure apply?

Currently because of COVID-19, everybody wants to know if it applies in the case of a pandemic. Of course, the answer is it depends on what the contract says. 

So, let’s look at these two sample force majeure clauses.

How a force majeure clause can help: Clause Example No. 1

This first version specifically talks about what is considered a force majeure event.

The second version is similar, but different.

How a force majeure clause can help: Clause Example No. 2

Notice it says “force majeure includes, but is not limited to…” certain things. That leaves room to say hey, maybe a pandemic is included in this definition, even though it’s not specifically listed.

How a force majeure clause can affect online businesses: two scenarios

As I said, it can affect different businesses in different ways.

One example would be in a brand or partnership/collaboration agreement. As an influencer you may have agreed to do a certain number of posts on a specific topic.

Well, does force majeure somehow prevent you from doing that? Are you supposed to be posting from a live event of some kind or in a specific location that you can’t access because of a force majeure event? These questions show how a force majeure clause would be important in this scenario.

It also applies to in-person events. Even though the final event is conducted in person and not really on the Internet, certainly tickets are sold on the Internet. And, promotion of the event goes on on the Internet, sponsors are announced and splashed across the Internet. So, reviewing sponsorship agreements or other similar agreements may be necessary during a force majeure event.

What to look for

It’s important to know what happens under your contract because when an event that’s out of anybody’s control happens, of course everyone is going to be worried about funds. So, you want to determine:

  1. What is a force majeure event under my contract?
  2. Is there an express definition of what is considered a force majeure event or does it have that kind of “including but not limited to” language.
  3. What does my contract say happens during a force majeure event? Is everything just kind of stopped and suspended until it all goes back to normal? Or, does it say everybody can walk away if a force majeure event happens with no further obligation?
  4. Finally, and you may actually have to look elsewhere in your contract, but what happens to money paid up to that force majeure event date? Does it get refunded? If your contract talks about a non-refundable retainer I might say, yeah, even if the force majeure clause doesn’t talk about what happens to money in the case of a force majeure event, non-refundable means non-refundable.

So, look at your contract, see what it says in terms of what to do in a force majeure event.

I hope this post has helped you to understand what is force majeure, how it applies in different industry settings, and how it can help an online business.


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Anatomy of an Influencer Endorsement Contract

If you have a dedicated following in your niche market, you might have dipped your toe in the affiliate pond, creating sponsored content with brands that you adore or just plain believe in. Or, you’ve found the perfect ambassador for your brand. Someone with a decent sized following that is (more importantly) very engaged. You know your sales will take off after affiliating with this influencer.

Sound familiar? Then this post is for you. It dissects some important provisions that a brand owner and influencer are likely to hash out when entering into an Influencer Endorsement Contract. Remember, contracts are you friend! (Or they should be.) A good contract makes sure both parties are on the same page so there is no ambiguity. It eliminates the need to comb back through texts, emails, or DMs to figure out what you agreed upon.

Disclaimer: Of course, this doesn’t cover each and every provision you’ll find in an Influencer Endorsement Contract. It does go through some important provisions that a good Influencer Endorsement Contract should cover. When in doubt, please contact a lawyer.

The Sponsored Content & Platforms.

A good Influencer Endorsement Contract will get very specific on the deliverables. And “deliverables” means whatever the Influencer is providing or “delivering.” What type of content are we talking about — a photo + caption? Photo or video-only media (like Instagram Stories or Snapchat)? A blog post? A blog post and a photo + caption? There shouldn’t be any question as to what’s covered, here.

Frequency.

Is the Influencer expected to post daily? Weekly? Monthly? Or maybe this is a one-off, one-time thing? Either way, a good Influencer Endorsement Contract will spell it out.

Exclusivity in Brand’s Field.

Many times, an Influencer will be expected to say “sorry, no” to brands competitive with the brand that’s hiring them for a specific endorsement campaign, at least for a certain amount of time during and/or after the term of the relationship with this brand. If that’s the case, the Influencer Endorsement contract should say so. It should also specify the exclusivity period that applies after the contract ends. One month? Three? A year? 

IP Ownership.

It’s common for IP ownership to go to the Brand, since the brand is paying the Influencer to post (and, sometimes, create) content in support of the Brand. Still, depending on the reach and “muscle” of the particular Influencer, ownership could go the other way. Either way, remember that copyright ownership usually goes to the creator by default. If Brand and Influencer agree otherwise (or even if they don’t), it behooves them to put that understanding in writing.

Compensation.

Compensation can come in the form of free goods provided to the Influencer, a lump sum payment, a percentage of sales, or some creative combination of these options. A sound Influencer Endorsement Contract will make the form of compensation, and other payment dates and details, clear.

Approvals and Brand Guidelines.

Approvals often come down to who has more bargaining power, although again, because the Brand is paying for an endorsement, a favorable Influencer Endorsement Contract should give some level of approval rights to the Brand. Many times a Brand will make Brand Guidelines part of the agreement. Brand Guidelines consist of text and image guidelines. For example, no swearing, no cigarettes, no religious references, no references to Brand’s competition by name, etc. An alternative to a Brand’s unfettered approval rights is to allow objection/rejection of content solely as it doesn’t comply with the Brand Guidelines. (After all, the Brand is likely familiar with the Influecer’s voice and style, or the Brand wouldn’t have the desire to enter into this agreement in the first place.)

Compliance with Laws.

Remember that FTC crackdown we’ve talked about? (Thanks, Fyre Festival.) The Influencer Endorsement Contract should make clear that whoever is responsible for the copy — whether that’s Influencer or the Brand — is responsible for complying with the FTC’s guidelines on disclosing that promotional connection between Brand and Influencer. 

So what’s a guy or gal to do when it comes time to enter into an influencer-brand sponsorship arrangement? You have options. For a bespoke contract that speaks to your each and every need, you can (and should) contact a lawyer. But for the DIY-ers out there, Spear IP is officially releasing an Influencer Endorsement Contract Template as part of its contract template arsenal! Click below to check it out. And, for being a devoted follower of the Spear IP blog, use code BLOG for a $10 discount!

What’s next? Click here to download your [free] Essential Legal Checklist from Spear IP.

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Pen v. Paintbrush: Contracts for Artists

Contracts for Artists from Spear IP

We can all agree that handshake deals are not your friend, right? Artists often rely on the handshake deal or verbal agreement, maybe due to the assumption that contracts for artists are ten-page beasts, chocked full of legalese. On the contrary, a written contract can make certain that each side’s understanding matches up to the other’s. Put differently, a contract makes sure everyone is on the same page (pun intended) when it comes to important terms such as payment, delivery, and copyright.

Continue reading “Pen v. Paintbrush: Contracts for Artists”