Essential Business Practices For Sequential Liability Agencies - Part 1

If your agency adopts or operates under sequential liability, it’s essential to follow certain business practices to keep your agency on the right side of sequential liability.

Align The Parties

Sequential liability generally involves three parties … the agency, the client, and the vendor.

Agencies should educate employees on sequential liability and familiarize them with the agency’s sequential liability terms and practices.

Furthermore, agencies must clearly communicate to both clients and vendors that they adopt or work under sequential liability.

It’s important that all relevant parties are aligned to sequential liability at the onset. Any issues/concerns should be addressed upfront and not be an afterthought.

Put It In Writing

All agency contracts/agreements, purchase orders, insertion orders, written authorizations, credit applications, and the like with clients or vendors must include clear sequential liability language.

Agencies should have an established process for reviewing all potentially binding documents to ensure those documents align with sequential liability and incorporate the relevant sequential liability language.

Agencies should consult with their general counsel to obtain the appropriate language to include in any applicable documents.

Client Written Authorization

Agencies often act as authorized agents to purchase, acquire, book, or place advertising or advertising-related materials on behalf of their clients.

While a blanket authorization may exist in an agency-client contract/agreement (ex: AOR agreement) or similar document (ex: signed media plan), these documents are generally not ideal to provide to vendors as proof of written authorization as they may contain confidential information between agencies and their respective clients.

As such, obtaining a separate written authorization (ex: signed media buy authorization, signed purchase order, signed AOR letter) from clients clearly stating (1) the agency is authorized to act as an agent on behalf of the respective client, (2) the agency is authorized to purchase, acquire, book, or place the associated advertising and advertising-related materials on behalf of the named client, and (3) the client accepts full financial responsibility for payment of the said authorized advertising and advertising-related materials is important.

This written authorization can be provided to vendors if necessary.