If you’re running a digital marketing agency from time to time you’re going to come up against a client who decides to breach their contract. It happens. Sometimes it happens because the client thinks they can get away with it and sometimes because they don’t understand the contract. It’s frustrating, but in general, it’s something that can be dealt with without too much fuss. It’s just about working out what’s gone on, what the breach is and determine the steps you’re going to take.
Contract breaches happen all the time. It’s not just clients who breach their contracts but also the digital marketing agencies they work with. Most of these breaches are accidental in my experience and are something that an agency and a client can work through with good communication, occasionally it’s going to cause a bit more hassle.
What Is A Breach Of Contract?
It’s really simple, a breach of contract has taken place if one party hasn’t honoured the terms of the contract they have between them. The breach is either a major breach or a minor breach, and the severity of the breach will determine the action you are going to take.
There are lots of terms within most contracts and they will be – or should be – specific to your client/agency relationship. But in all contracts, you’re going to find a key number of terms that can easily be breached. These include:
- Affirmation that the document creates a legal relationship
- The work the digital marketing agency is contracted to provide
- The price your clients are going to be charged
- The payment terms
- The cancellation/termination terms
Examples Of How A Client May Breach A Contract With A Digital Marketing Agency
There is any number of ways that a client can breach their contract with their digital marketing agency, but we tend to find it happens in just a few areas:
- The client doesn’t pay you on time
- The client tries to terminate a contract against the terms
- The client tries to change the scope of the project without renegotiating the terms
If you think your client has breached the terms of your contract then it’s a good idea to get some legal advice to check you’re right. After 12 years running GrowTraffic and years longer in agencies it’s not something I need to do these days, but there are circumstances in which I’d want some advice.
What Should You Do If Your Client Has Breached The Terms Of Your Digital Marketing Contract?
The first thing you should do if you’re confident your client is in breach of their contract is: nothing! At least not to begin with. I often react emotionally, so when dealing with a situation like this I often give myself a period of a few days to work out how I am going to play it. This means I can ruminate, decide what I’ll do and come at it from a rational perspective.
The thing that I absolutely wouldn’t try to do is directly speak to the person who has breached the contract in person. If you go in all guns blazing informing them that they’ve breached the terms of their contract they are going to become defensive and before you know it positions will become entrenched and that’s never a good place to come at when dealing with a breach of contract.
Hopefully, the breach isn’t really intentional or it’s due to a misunderstanding and it’s just a minor breach. If that’s the case you can probably deal with the issue without even contemplating legal action and by being mindful of the ongoing relationship you’ll have with the client.
If your client breaches the contract via a major breach then you will probably be able to terminate the contract with the client and should you wish to, you’ll probably be able to seek damages against the client. The key thing is understanding your contract terms.
I can be quick to legal on a client who makes a major breach, but before you do this and you’ve had some time to think about things, then is the time to contact your client. It’s best to do this in an email, so there’s a paper trail. In this email, you need to let your client know about the issue you have and how you want to resolve it.
At GrowTraffic we offer long term digital marketing activities such as SEO and for that reason, most of our SEO agreements are 12 months in length but they can be longer with some of our clients being locked in with us for two years. These contracts are necessary for us because of the length of time it takes to see results and because it enables us to resource our agency accordingly.
Understandably, businesses can change during this kind of time period, and we have ways to bring a contract to an end that can be mutually beneficial and not punitive to either side. But in the heat of business, some business owners can decide to take the unilateral approach. This is where the fun can begin.
Another example of a breach includes a client who hasn’t paid you for months, despite you having short payment terms. At GrowTraffic our clients commit to paying their bills in 7 days. We generally let it slide when they don’t pay on time every now and then but we start to take a look at things if a client hasn’t paid up for months in a row. In this case, you’ll be able to stop working on the project until they’ve paid or even terminate the contract.
Once you’ve dealt with a few breaches from your clients, you’re going to become an expert in your own contracts. Also, you should use this as an opportunity to improve your contracts for the future as well. Tweak things that didn’t quite work and implement new terms to provide additional protection for your digital marketing agency (whilst remembering a contract must always be fair to both parties).
Whilst you might think this is the end of the world, these things can generally be dealt with in calm and rational manners and an amicable agreement can generally be reached by both parties without having to get solicitors involved. Although that should also be an option you have in your back pocket.
Be fair, communicate that fairness with your client. Don’t be overly punitive. Express the difficulties their breach will cause to your business and explain why the contract exists in the way it does.
Good luck with your client. These are some of the more difficult moments of running a digital marketing agency, but unfortunately, it is par for the course.