Understanding liabilities and indemnities: Essential tips for UGC creators
Hey Twirl Creators!✨
It’s exciting when a brand loves your content and wants to work with you. But before you sign on the dotted line, there's some fine print you really need to understand – especially the parts about liabilities and indemnities. These terms can seriously affect your wallet and legal standing, so let's break them down and learn how to protect ourselves. 🛡️
What are indemnities?
Indemnities are like promises to cover costs or damages for someone else. In UGC contracts, this often means you, as the creator, agree to cover any legal fees or damages the brand incurs from your content. Let's break down a typical indemnity clause:
"The Talent shall indemnify and hold harmless the Company from and against any and all liabilities, losses, claims, demands, damages, costs, and expenses (including reasonable legal costs and expenses and VAT) suffered or incurred directly or indirectly by the Company in consequence of any breach or alleged breach of this Agreement by the Talent."
What is wrong with this clause?
The "blank cheque" risk 🚨
An indemnity can act like a "blank cheque" because you are promising to pay whatever the brand demands. You're essentially handing them a blank cheque to write whatever figure they want, and this could be up to an unlimited amount. This means you could be on the hook for huge costs far beyond what you were paid.
Direct and indirect liability ⚠️
The clause mentions both direct and indirect liabilities. Direct liabilities are obvious costs due to your actions, but indirect liabilities can be a wide range of unforeseen expenses that aren’t directly your fault. This broad inclusion can lead to unpredictable financial burdens.
"Any breach of the agreement" ❗
This part is particularly tricky. It means any minor or technical breach could trigger the indemnity clause, making you liable for all the brand's costs. Imagine missing a small deadline or overlooking a tiny requirement – you could still be held responsible for any damages the brand claims.
Is there a liability cap? 💰
A liability cap limits how much you can be held responsible for. Without a cap, your potential liability is unlimited, meaning you could be responsible for substantial costs far exceeding the amount you were paid.
Protecting yourself!
1. Negotiate terms 🤝
Always negotiate indemnity clauses to limit your liability. Try to remove the indemnity clause entirely if you can! If not, include a liability cap and specify that the indemnity should only cover direct liabilities. This way, your financial exposure remains manageable.
2. Seek assistance 📜
Before signing any contract, have it reviewed by a legal professional. As a legal consultant specialising in the digital and creative industry, I can help identify unfair clauses and suggest changes to protect your interests. Don't hesitate to reach out for tailored advice and support.
3. Document everything 📝
Keep detailed records of all communications with the brand, especially any instructions that could impact legal responsibilities. This documentation can be crucial if disputes arise, providing evidence of your compliance with the brand's requirements.
Conclusion
Understanding and negotiating indemnity and liability clauses in your contracts is crucial for protecting yourself from unforeseen financial and legal burdens. Be proactive, informed, and enjoy collaborating with brands while safeguarding your interests. If you need further assistance or have specific concerns about a contract, feel free to reach out to me for any of your legal concerns at kiera@krewco.com.
Stay creative and protected, Twirl Creators! 🌟💪
