Saper Law regularly drafts sponsorship agreements as it relates to events, contests, or other programs being launched by our clients. The following article provides an overview of key sponsorship terms.
Every sponsorship agreement is unique. Although it is best to consult an attorney when reviewing a sponsorship agreement to understand its terms, here are some general things to consider so that both you and your sponsor each know their obligations under the agreement.
Disclaimer: Because all sponsorship agreements are unique, it is best to discuss your questions and needs with a licensed attorney experienced in drafting and enforcing sponsorship agreements.
The most prevalent terms in a Sponsorship agreement are as follows:
Overview of the Parties
This section generally states the names, addresses, and in the case of corporations and other legal entities, the state of incorporation. This section also can include general information about the event and the sponsor.
Rights and Obligations of the Parties
This section will generally outline each of the parties’ responsibilities under the agreement such as the limitations on the use of the sponsor’s name in promoting the event, whether the sponsor will be exclusive sponsor of the event or whether other sponsors will be involved, and whether the sponsor will be responsible for or have final approval of the advertising materials to promote the event.
This section will also generally include the obligations of each of the parties in contributing the event. Each party will be looking to give and receive compensation for their involvement in the event—sometimes more than just monetary contributions and advertising. For example, sponsors might request the exclusive rights to sell t-shirts and memorabilia, whereas event operators may request the sponsor provide a public address system for the event in lieu of a big check.
No matter what the situation, “who is responsible for what” should be clearly spelled out in the sponsorship agreement so that each party knows what to expect come event time.
Ownerships Rights and Licenses
This section can be quite confusing, but can have great legal consequences. Because corporate sponsors are often one of the parties in an agreement, the corporation wants to protect its copyrights, trademarks, and other intellectual property rights so that the event owner, or any other person involved in the event, does not harm its property interests. This section can include limitations in using the sponsor’s official corporate logo on all event promotion materials to outright limitations on the number and size of advertisement posters.
Term of the Agreement and Termination
Sponsorship situations range from a one-time agreement to an ongoing relationship of multiple exchanges. Depending on the event, a renewable agreement can be beneficial to both the sponsor and event operator so that the terms do not have to be negotiated each month.
A termination section in the agreement also is beneficial to both sponsor and event operator so that if one party does not fulfill its obligations, the other party will not be responsible for completing its own obligations. This section allows a party to get out of the agreement when its counterpart is not following its agreed-up responsibilities.
An indemnification clause is useful in that it protects the parties to the agreement that one party will guarantee that any lawsuit or claim, which may arise as a results of the contract or agreement that it will be paid for or taken care of by the party making the guarantee. For example, if Company X agrees to donate Yo-Yos to the event and signs an indemnity agreement against claims arising because of its yo-yos, and Innocent Bystander is injured by a donated yo-yo, Company X will take care of any lawsuit by Innocent Bystander against Event Operator.
Especially in situations involving large corporations incorporated in different states than the event’s location, having a governing law provision gives security to the sponsor and the event operator that in the event a lawsuit arises due to the sponsorship agreement, laws of a pre-determined jurisdiction will be utilized.
Confidentiality clauses might include statements that the terms of the sponsorship agreement will remain confidential to all those besides event operator and that the sponsor request that its’ name or association with the event remain anonymous.
If you have any questions about sponsorship agreements, feel free to contact Daliah Saper of Saper Law Offices at (312) 641-1551 or firstname.lastname@example.org.
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