12 Days of Contracts – Day 7 – Scope of Services + Exclusivity

On the 7th day of Christmas, my client gave to me, 7 missing redlines… (Mel’s Remix)

In honor of the holidays, I’d like to share a few tips with you to make sure you go into the new year with new knowledge. Instead of the 12 Days of Christmas, I present to you — The 12 Days of Contracts! Yes, I’m a legal nerd!

In these 12 days, I will share some contract basics, terminology, and other info so you can be more informed on what a proper contract needs to contain to make it valid and enforceable.

Prior 12 Days Posts:

IF YOU MISSED IT, SEE DAY 6 HERE | IF YOU MISSED IT, SEE DAY 5 HERE | IF YOU MISSED IT, SEE DAY 4 HERE | IF YOU MISSED IT, SEE DAY 3 HERE | IF YOU MISSED IT, SEE DAY 2 HERE | IF YOU MISSED IT, SEE DAY 1 HERE

Knowing the scope and exclusivity is paramount to understanding the rights and obligations under a contract.

Melanie Rodriguez aka The Entertainment Esquire

Scope of Services

Each party must be given a duty or responsibility in a contract. This is how the contract functions and turns into a binding agreement. Without assigning a duty or obligation, the contract could not exist. 

This is where defining the scope of services is essential. When negotiating the scope, make sure both parties agree on what is to be included and excluded under the contract. If there is any service to be excluded, list it as excluded. Don’t assume because something is left out that it means it is not included. This avoids ambiguity, which is the killer of any contract.

Don’t assume because something is left out that it means it is not included. This avoids ambiguity, which is the killer of any contract.

Exclusivity

Exclusivity is an important distinction when it comes to contracts involving intellectual property (IP) and IP licensing. The difference between exclusive and non-exclusive is that under an exclusive contract, an owner/licensor is unable to grant the rights to anyone else. In contrast, under a non-exclusive contract, the owner/licensor is able to grant these rights to other parties who are not part of the contract. In one instance, the rights are locked to one party (or parties), while in the other, the rights can be granted simultaneously.

Exclusivity can also be tied to the grant of rights and further limit them (as discussed in Day 6). For example, you can have a non-exclusive grant of one right, but exclusive grant of another right. Exclusivity can also be tied to term (as discussed in Day 3), having a contract be exclusive (or nonexclusive) for first two years and then automatically change over for the rest of the term. Exclusivity can be tied to territory (as discussed in Day 4) as well. A contract can be exclusive to a certain territory or state and non-exclusive elsewhere.

Questions to ask:

• 1) What are scope of services under the contract? Specifying exactly what services are anticipated under a contract is a must. Many people glaze over this or do not include thinking that the contract name or by itself is enough. However, if there is any ambiguity in the contract, that can lead to liability.
• 2) Is there any service excluded?
• 3) Is the contract for exclusive or non-exclusive services? The difference between exclusive and non-exclusive is that under an exclusive contract, the rights are granted to only one party (or parties) in the contract and cannot be shared with anyone else, while in non-exclusive contracts, the rights can be granted simultaneously to other third parties. How the agreement is structured can depend on whether it is exclusive or not.
• 4) Are there any limitations on exclusivity? Agreements can tie exclusivity to term, territory, and/or rights. Visit my blog to learn more about this.

If you have any questions related to an contract you signed or need guidance for constructing your contracts, please contact me.

*Disclaimer: This post is for informational purposes only and does not constitute legal advice. An attorney client relationship is not formed until there is a signed fee agreement*