{"id":78169,"date":"2023-02-14T16:11:37","date_gmt":"2023-02-14T16:11:37","guid":{"rendered":"\/tutorials\/?p=78169"},"modified":"2026-03-09T19:18:09","modified_gmt":"2026-03-09T19:18:09","slug":"agency-contracts","status":"publish","type":"post","link":"\/ng\/tutorials\/agency-contracts\/","title":{"rendered":"Agency contracts: writing a strong contract to ensure smooth work between the two parties"},"content":{"rendered":"

As an agency owner, you will provide specialized services on a project basis. In such cases, an agency contract is necessary to establish a solid partnership between your business and the client. <\/p>

A properly-written agency agreement sets out both parties’ roles and obligations, helping to avoid potential legal risks. <\/p>

In this article, we will explain agency contracts in more detail – what it is, why you should create one, and its essential aspects. We will also share the best practices for creating an agency agreement to help secure your business.<\/p>

Download business plan template<\/a><\/p>

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\n What Is an Agency Contract?\n <\/p>\n <\/div>\n

An agency contract is a legal agreement between a company and a third-party agent that outlines the terms and conditions of their working relationship. It defines the scope of services to be provided, the commission rate, the duration of the contract, and other important details.<\/p><\/div>\n\n\n\n<\/p>

Why Take Time Drafting an Agency Contract<\/h2>

An agency agreement defines the legal relationship between the agency and its client. It ensures both parties understand their roles and responsibilities in a project, creating mutual awareness that the client should pay compensation in exchange for services provided. <\/p>

If you’re managing a services-based business like an advertising agency or a web development company<\/a>, you can benefit from agency agreements to personalize your obligations in different projects. <\/p>

Additionally, adding specific clauses in agency agreements prepares you for potential legal measures. For instance, your work may expose your agency to legal proceedings for Intellectual Property (IP) infringement or a breach of contract. <\/p>

This might be especially important if you have recently shifted from a freelancer to an agency owner<\/a> and have your own employees. In this case, an agency client contract can make every employer responsible for their own projects, establishing ownership.  <\/p>

Also, draft specific clauses to secure your agency from operational or monetary loss, and review the document before signing the contract.<\/p>

Additionally, we recommend communicating with the client<\/a> even after signing the agency contract to avoid misunderstandings.<\/p>

\n \n \n \n <\/svg>\n Important\n <\/span>\n

\n Important!<\/strong> Web design agency owners might already be familiar with a web development proposal.<\/a> Although it is similar to a contract, note that their purposes are different. A proposal contains an offering for pitching to prospective clients. Meanwhile, an agency contract is a legally-binding document establishing the legal relationship between your company and the client.\n <\/p><\/div>\n\n\n\n<\/p>

What Should You Include in Agency Contracts<\/h2>

This section will cover nine important elements you should include to create an effective agency agreement. <\/p>

1. Client and Agency Details<\/h3>

Add your agency’s and client’s registered business names and addresses at the start of the contract, as well as legal names representing both parties. Also, don’t forget to include contact information, such as a phone number and a business email address.<\/p>

Write an executive summary about the client and your agency outlining an overview of the partnership – why the client hires your company and what services you should provide. <\/p>

This part sets out the main roles of both parties, which will lead to more detail as you go through the agency agreement.<\/p>

2. Work Duration<\/h3>

Time limit is an essential element in project-based work. Therefore, specify the start and finish date for the work and add deadlines for certain parts of the project if necessary. <\/p>

If you’re a web development company owner, calculate an estimated timeline<\/a> which may include the testing, revision, and launching stages. <\/p>

That way, you can spare more work hours and offer a realistic timeframe to complete the project, setting clear expectations for your client. <\/p>

Moreover, adding the project timeline lets both parties know when the client should make payment for the completed work.<\/p>

3. Scope of Work<\/h3>

This part is the core of an agency agreement that should cover the services provided by your company in detail. <\/p>

Start with adding the agreement between your agency and the client, as mentioned in the executive summary. Then, list all deliverables and services from your side based on the estimated timeline. <\/p>

We also recommend including the number of revisions your agency is willing to provide for clients without additional charge and how much they will have to pay afterward. <\/p>

4. Payment Schedule<\/h3>

Once you’ve set the work duration and scope, add a payment plan. Typically, agency pricing<\/a> includes monthly, hourly, or flat-rate schedules. To avoid confusion, clearly establish which pricing model you will apply.<\/p>

Mention the total amount the client needs to pay, then define the process. For instance, you may set a 50% down payment upon signing the contract and the rest when you complete the work.<\/p>

Also, include the supported payment method. This way, each payment will go through the same gateway, making it easier to track. As an example, if you’re allowing a bank transfer, put your correct account details in the contract. <\/p>

Furthermore, add a condition for possible late payments. Usually, agencies charge a late payment fee. But it is crucial to inform your client in advance to avoid conflicts.<\/p>

5. Termination Clause<\/h3>

You can terminate the contract before the ending date or when any involved party fails to meet certain terms and conditions. However, you will need to add a clause allowing such action. <\/p>

Including this clause in an agency agreement mitigates potential legal risks. This way, both parties can obtain their exit rights when they part ways.<\/p>

Typically, contract termination can happen for the following reasons:<\/p>