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FAQs On Affiliate Agreement

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Q1: What is an affiliate agreement?

Affiliate agreement simply means an arrangement (agreement) between two parties where they work together for mutual benefits, i.e. the affiliate agrees to market the product/brand of the other party which is a larger entity in lieu of compensation/commission which may or may not be fixed.

Q2: Are affiliate agreements only for ‘internet marketing’?

No. A narrow perception about this type of agreement is that it is only linked to internet marketing but in reality it can be for any type of services and businesses.

Q3: Who should enter into an affiliate agreement?

Any party/individual who seeks to market/publicize their product for profitability or otherwise, through an independent party (the affiliate) can enter into an affiliate agreement.

Q4: What is the duration of an affiliate agreement?

An affiliate agreement is just like any other agreement. It can vary from a few months to few years depending on mutual consensus.

Q5: What are the essentials of an affiliate agreement?

One should keep in mind the following clauses before entering into an affiliate agreement –

  1. Name of the client company/institution/organization.
  2. Name of the affiliate company/institution/organization.
  3. Enrollment.
  4. Purpose of the agreement
  5. Responsibilities of the parties concerned.
  6. Duration of the affiliate agreement.
  7. Payment/Compensation/Commission Structure.
  8. Mode(s) of payment.
  9. Contents in the Affiliate Website (Only if it is for internet marketing).
  10. Terms and Conditions of the affiliation agreement which includes indemnification, liabilities, representation and warranty, and Intellectual Property Rights. The detailed explanation is given below –

    • Indemnification – This clause discusses as to who is going to indemnify the other in the event of loss, claim, demands, damages, judgments, settlements, costs, and other expenses (which includes attorneys’ fees and costs).
    • Liabilities – This provision discusses about as to when and under what circumstances will the party be liable.
    • Representation and Warranty – Representations and Warranties are a series of clauses inserted into the agreement that elucidate the facts which inspired both or either side to come to an agreement. So, if there is a misrepresentation on behalf of any party, they will be held liable.
    • Intellectual Property Rights – Simply put, this clause gives the affiliate non-exclusive, non-transferable right to use/access/market the product of the other party. Such rights exist as long as the agreement is valid. If the affiliate is found to alter, modify or manipulate the intellectual property concerned, he might be held liable subject to the terms agreed to in the contract.
  11. Grounds for Termination of the affiliation agreement and consequences/pecuniary damages arising out of it.
  12. Governing Law(s), i.e. the relevant law which would govern the agreement.
  13. Jurisdiction, in case any dispute arises.
Q6: Under what grounds can an affiliate agreement be terminated?

If there is a violation of the clauses mentioned under the agreement by either party (mostly the affiliate), the agreement can be terminated (mostly by the bigger entity).

Q7: In the event of a violation, is it necessary to compensate the other party monetarily?

Mostly, yes. But again, it depends on the nature of the violation and terms of the agreement.

Q8: In case of an Intellectual Property violation, what remedies does a party (the bigger entity) have?

If you are aggrieved by IP violation, a suit can be instituted at any court of original jurisdiction which is subject to pecuniary and territorial jurisdiction. The lowest designated court for intellectual property matters is the District and Sessions Court. Such suits can also be instituted at the High Court provided if the High Court has an original jurisdiction. Certain suits can also be instituted at the Intellectual Property Appellate Board subject to the nature of IP infringement.

26 Aug, 16

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