Affiliate Agreements: Key Drafting Considerations

An Affiliate Agreement sets out the terms of a working relationship between a company and another entity (the affiliate), through which the company rewards the affiliate for its performance of specific, agreed-upon actions. Affiliate Agreements, which are comparable to Influencer Contracts, have gained prevalence with the rise of the internet and social media, as they allow companies to make arrangements with affiliates for the promotion of products or services, making payments based on the number of posts or consumer interaction caused by the affiliate’s promotional content.

As with any legal document, an Affiliate Agreement must be carefully constructed in order to ensure that it has the intended effect and creates no unexpected consequences. Specific to Affiliate Agreements, the following are some of the key considerations one must make in structuring the company-affiliate contractual relationship.

Performance Expectations Should be Clearly Defined

• The Affiliate Agreement should clearly define what performance the company desires and intends to reward the affiliate for. This includes the specific requirements that the affiliate must meet, so that the company can ensure it will only be required to pay for performances that materially meet the company’s expectations.

Include Details on how Performance Data will be Collected

• Depending on the kind of performance that the company seeks, the quantity of the affiliate’s eligible actions may be able to be recorded automatically, or the actions may need to be reported manually. The agreement should set out the mechanism for collecting this data so that there can be no dispute as to how much is owed to the affiliate, or how many times the affiliate performed. Creating a simple way to collect this data is vital, especially when a company is working with a vast number of affiliates and must keep track of its obligations to each one.

The Company Should be Able to Review Performances

• An Affiliate Agreement should allow a company to review the affiliate’s reported performances in order to ensure that the company’s requirements are met. This allows the company to investigate the performance data to confirm its truthfulness and accuracy. For instance, language such as this could be included: “Each time a user clicks thought the Link posted on the Affiliate Site and we determine that it is a Qualified Click . . . you will be eligible to receive the following specific amount . . .”

Protect Intellectual Property Rights

• Because Affiliate Agreements typically involve an affiliate using the products or work of the company, it is important for a company to control its intellectual property.  The agreement should specifically reference the company’s intellectual property and grant the affiliate a license to use the IP pursuant to the agreement.  To the extent an affiliate is utilizing another company’s IP, the contracting company should disclaim any and all liability related to the affiliate’s use of the same.

Contemplate the Agreement’s Scope and Duration

• The scope and duration of the Affiliate Agreement should be clear include mechanisms for changing that scope in extreme circumstances. The duration of the agreement should be established from the beginning, clearly defining when the affiliate can begin performing for the reward and when the obligation for the company to pay ends. The parties should be able to terminate the relationship if circumstances require. Additionally, the company may want to limit the number of performances for which it is obligated to pay.

Overall, companies should go into Affiliate Agreements with their expectations in mind, which will ultimately allow the company to have control over their obligations. This will save money and effort in fixing costly mistakes that could cause issues and ensure that the agreement is beneficial and productive for both parties.

Traverse Legal’s attorneys have experience in drafting Affiliate Agreements and can help your company draft an agreement that meets your goals, all while staying within your budget. Contact Traverse Legal to see how we can assist with your Affiliate Agreement needs today.

This blog post contributed, in part, by Traverse Legal Virtual Law Clerk Scott Pehoushek.