Agency2 min read
Agency contracts, E&O cover and limitation of liability
An agency's liability is not physical. It is a campaign that underperformed, an account that got banned, a claim in an ad that drew a regulator, or data handled in a way that turned out not to comply.
Published
Nobody is injured by a media plan. What happens instead is that a client's expectations were not met, and the gap between what they thought they were buying and what they got becomes a legal question.
The clauses that do the work
| Clause | Why it matters |
|---|---|
| Limitation of liability, capped at fees paid | The single most valuable line in an agency contract. Without it, a client's lost revenue is theoretically recoverable from you, and it can dwarf your fee. |
| Exclusion of consequential loss | Lost profits, lost opportunities and reputational damage are exactly the losses a disappointed client will claim. |
| Scope and deliverables | Defines what 'done' means. Scope creep is how profitable engagements become unprofitable ones. |
| No guarantee of results | You control inputs, not outcomes. Say so, and do not undermine it in your sales material. |
| Client responsibilities | Approvals, access, content, and the consequences of delay. Half of missed deadlines are the client's. |
| Termination and notice | How the relationship ends, what is owed, and what happens to work in progress. |
What E&O cover pays for
Errors and omissions — professional liability — cover responds to claims arising from your professional services: mistakes, omissions, missed deadlines, negligent advice. It pays defence costs, which are frequently the larger number even where the claim fails.
- Many mid-size and enterprise clients require evidence of it before onboarding a supplier, so this is often commercially necessary regardless.
- Check what is excluded. Some policies exclude claims arising from advertising content, which is an awkward gap for a marketing agency.
- Consider media liability cover if you produce advertising, which reaches defamation, IP infringement and false-advertising claims.
- Cyber cover matters if you hold client data or have access to their systems.
Your own marketing is regulated too
Agencies advise clients on advertising compliance and then make unsubstantiated claims in their own materials. Case-study results must be real and typicality disclosed where relevant; earnings and performance claims about what you can do for a client are advertising subject to the same rules you enforce for others.
Claims that come from the client's side
Two exposures agencies frequently overlook: content the client supplied that infringes someone's rights, and access credentials you hold to their systems. Put the indemnity for client-supplied material into the contract, and treat credential handling seriously — an agency is a convenient way into several businesses at once, and attackers know it.
A company that can sign a real contract
Founders 8 forms and maintains the entity, so the party to your client agreements is a properly kept business.
Build your workspaceThis is one section of the agency structure guide, which covers the entity choice itself.
Founders 8 tracks obligations and deadlines for your reference. It does not provide legal or tax advice — filings are prepared and reviewed by qualified partners.