Peculiarities of contracts on provision of advertising services on the Internet

Probably it is a well-known statement that advertising is an engine of progress. With the proper usage of advertising you can tell about yourself, your activities, your new services as well as  about your progress at work to a wide audience. There are many ways  of advertising – on billboards, on the radio, on TV, in mass media, on leaflets and flyers,  etc. However, today, in the period of active development of information technology, the most effective way of advertising is via the  Internet. This form of  advertising has many different types, such as media, context, banner and others.
Despite the fact that the Internet advertising is very popular, advertisers and advertising distributors often make a huge mistake by omitting conclusion of contracts that fix the terms of their cooperation. And as a result, such improper cooperation sometimes causes a lot of troubles for both parties. Moreover, it is necessary for  the advertiser  to acquaint thoroughly with all types of online advertising, their advantages, disadvantages and features before conclusion of such contract, as they directly affect the content of the contract.
The contract of advertising services on the Internet does not have a separate legal regulation, but it belongs to contracts on services provision, and is regulated by the general legal provisions on contracts on services provision, as well as the general provisions of the contract law. But one should not forget that such contract has specific features, which will be discussed further.
Consequently, the subject, the term and the price are the essential conditions  of any contract. In the legal doctrine, the subject of the contract is defined as the main action (obligation), which determines the direction of the contract: the transfer of property to ownership or use, performance of works, provision of services, etc. The subject of a contract on the Internet advertising services may be creation (in case the Client does not have any advertising campaign or he wants to restart the existing one or fundamentally change the concept), adjustment (in case correction of advertising campaign is necessary) and/or support of advertising campaign on a monthly basis. A specific list of such services (for example, the creation of an account, the collection of a basic semantic core, the expansion of the semantic core, segmentation of the semantic core, etc.) must be detailed and defined by the contract or an annex to it. Also, the contract should  specify the type of Internet advertising mentioned above.
In case the subject matter of the contract is, for example, contextual advertising, then you should pay additional attention to the account transfer and access to it. In particular, the contract should stipulate the transfer of login and password to the account to the Client (as such account may be available to the advertiser) and the terms of contract`s performance. It is also necessary to specify web resources on which the advertising materials will be placed.
The advertiser is usually responsible for provision of the materials, however this service may be provided separately by advertising distributor, if they are involved in such activities. Some special requirements for such materials may be stipulated in the contract (for example, if the advertisement is posted in Google, it must comply with the editorial Google requirements). In addition, there may be requirements for the content of the advertising materials. For example, concerning compliance of the materials with the requirements of the Ukrainian legislation in the field of intellectual property, advertising, protection of personal data, use of a person’s image, norms of morality, etc. In this context, the amount and quality of services provided should also be mentioned. Moreover, the parties should specify the expected results and the methods of their verification, as  the discrepancy between the outcome of the services provided and client’s concept may lead to numerous disputes despite not being advertising distributor’s fault.
The next essential condition is the term of the contract. The term during which the services should be provided should be clearly specified. Namely, it may be an indication of time during which the ad campaign will be created / configured, or during which the services of conducting an advertising campaign should be provided. Additionally, the term of advertising budget payment can be prescribed in the contract.
Another essential condition is the price of the contract. It is very important for both parties to separate the cost of advertising services itself and the cost of the advertising budget (the amount paid, for example, to the owner of a specific platform for advertising on it). It is imperative to specify who should pay for the advertising budget and when. For example, the contract may require the advertiser to transfer a certain amount of funds to the provider of advertising services, and the latter to spend them accordingly to their appointment during a certain period of time with certain payments determined by the provider depending on the needs of the advertising campaign. If the parties assume that the amount of the advertising budget may change, there should be a corresponding provision in the contract . Moreover, the procedure of payment shall be specified in the contract (for example, by means of prepayment or postpayment).
Thus, when ordering services on Internet advertising one should remember that any arrangement needs to be properly prescribed in the contract in order to protect its position and secure it against potential disputes. The best way of such protection is a detailed written contract, for analysis or development of which you can contact our law firm.
]]>

You may like
A new law on virtual assets: the picture is formed, but without details. On September 8, 2021, the Verkhovna Rada has finally adopted the long-awaited law "On Virtual Assets", which clarified many ambiguous points. This is especially true for the status of cryptocurrency and the rules of its circulation in the country. Let`s take a closer look at novelties. An ambiguous term Let's start with what the legislator actually means by "virtual assets". There are the following features:  they are an intangible good (cannot be represented on tangible media)  fall under the list of objects of civil rights (that is, they can be owned and be disposed of)  represent an electronic form of a set of data (essentially, they are blocks of information put in order);  the existence and circulation of assets are due to software tools (specific electronic environment). From these features we can draw the following conclusion: virtual assets are not limited to cryptocurrency. Digital currency is part of the concept, but other instruments, such as tokens, NFTs, or even in-game items, fall under the definition. Actually, the actual existence of most digital products, having a certain value, is due to the software environment (ecosystem), either it is blockchain technology, a trading platform, or an online game server. It should be noted that the attempt to define virtual assets was already made in the adopted Law of Ukraine in counteracting money laundering. In this act, they understand it as digital means of payment, which goes against the new definition. As a result, there are now two different explanations for virtual assets, which causes significant confusion not only in regulation but also in interpretation. It is definitely necessary to expect clarifications from competent state bodies. Let's return to the new law. Its application covers legal relations in which the "Ukrainian element" is present:  provider or recipient of services represented in Ukraine;  an agreement according to which the turnover of virtual assets is carried out in accordance with Ukrainian legislation;  the acquirer of assets (or both counterparties) is a resident(s) of Ukraine. The law also introduces an interesting division of all virtual assets into two groups: secured and unsecured. Here again, there is a problem of interpretation. The first category includes products exchanged for (state) currency, the second category includes instruments that can be exchanged only for other digital assets. There is an alternative opinion: that the turnover of secured assets is supported by real goods (money or other property), while unsecured ones are not supported by anything. The latter interpretation is the most credible, as the new law stipulates that virtual assets are NOT means of payment. Moreover, they cannot be exchanged for real goods, be they property, services or money. This significantly narrows the potential for the use of virtual assets not only for commercial but also for civilian purposes. About obligatory licensing The new law states that in some cases, the use of virtual assets will require licensing. The 4 types of activity are mentioned:  storage and management of virtual assets (or its` keys)  servicing of exchange operations with virtual assets (both for other analogues and for real goods);  translation of digital assets;  any intermediary services. A list is quite impressive, but there are some important exclusions:  if your service works with cryptocurrency wallet (it means users can dispose of accumulations into cryptocurrency independently);  If your service works on smart contracts or decentralized protocol, based on which internal transfers are performed. As to intermediary services, everything is more compicated. Actually, any mediation is based on the public share offering. That is why it is subject to licensing. How to get a license? A company that wishes on legal grounds to engage in virtual assets must satisfy legislative requirements. The key role is played by the minimum amount of the statutory capital, which equals 1,19 million hryvnyas (for non-residents it is 5,95 million hryvnyas) in case of storage and administration. For other types of activity (trading, translation and mediation services) the minimum size of the statutory capital amounts to 595 thousand hryvnyas (for non-residents is 2,98 million hryvnyas). The order of the registration of license:  to compose an application and prepare documents.  to pay state fee (68-136 thousand hryvnyas for residents and 340-680 thousand hryvnyas is for non-residents).  to pend review of the request (30 days).  to get a license. The duration of the license is 1 year. No norms about the continuation of legal force of permission are set (we are expecting amendments or explanations from the Ministry of Digital transformation of Ukraine). Notably that non-residents must pay a far greater sum, than domestic companies. The Ukrainian legislator obviously encourages an internal market, getting rid of a strong foreign presence (that, in fact, coincide with modern politics of the state on the whole). Together with an application, the following documents must be prepared: The access code to the copy of the Statute of the company (or the foundation agreement) kept in an electronic file in the database of the Unified State Register of Enterprises and Organizations (USREO);  Funding sources of the statutory capital (where the money are taken from);  confirmation of the actual injection of money;  information about beneficiaries (special attention must be paid to business reputation);  the information about the director and founders;  the check about payment of state fee;  the internal regulations, in accordance with which ones, the privacy policy rules are regulated. In the terms of volume of necessary documentation of licensing is very alike with complete registration of legal entity. It is understood that the state wants the severe adjusting of activity of organizations that will engage in virtual assets. Is it already possible to get a license? The adoption of the law by the parliament is a significant step forward in adjusting and legal market of virtual assets creation in Ukraine. However, the new rules haven`t come into effect yet - their term of introduction depends on making amendments in the Internal Revenue Code. It is yet unknown, when a legislator will decide to enter the renewed system of taxation for such assets. Being "IT-hub" and territory, where cryptocurrency enjoys large popularity, the question of taxes must be decided maximally safely. Despite the presence of obvious gaps in interpretation, a new law on virtual assets gives the official narrative of what takes place and that, how the legal relationships related to cryptocurrency will be regulated. It is to be hoped that in the nearest time the Ministry of digital information will give out the detailed explanations concerning debatable norms.
20/01/2022
We will
call you