New edition has a section on contract law for PR and new media entrepreneurs

By MARK PEARSON

Our latest edition of The Journalist’s Guide to Media Law (Mark Pearson & Mark Polden, Allen & Unwin, 2015) has a whole chapter on law for public relations, freelancing and new media entrepreneurs.

the-journalist-s-guide-to-media-lawOne of the key topics arising for such people is the law of contract, which is a complex field requiring expert legal advice.

We’ve mapped out the very basics though for the benefit of such professional communicators. Here’s a short excerpt:

A breach of an important contract can be devastating to the financial viability of a public relations consultancy or freelance writer, and it can ruin the prospects of a start-up media venture getting off the ground. While the law of contract can get very complex, the basic concept of a contract is fairly simple: a contract is a legally enforceable promise. It is something crucial to the effective operation of a business, because our financial system operates on the principle of promises being kept rather than broken, so that there is an element of trust and predictability in our dealings. Contracts play a role in a variety of situations in the PR and news business. They can cover the terms of employment for a freelance journalist or other staff, the agreed price and timelines for professional services being offered, and the division of royalties that might flow to investors from a creative news product you are bringing to market. Gibson and Fraser (2011: 305–6) list the essential elements of a contract:

  • an intention to contract
  • an agreement between the parties (including an offer and acceptance)
  • ‘consideration’—what Gibson and Fraser (2011: 305–6) describe as ‘something of value passing from one party to another in return for a promise to do something’.

Contract law can be a specialised area, and constitutes a subject in law degrees—partly because there is a body of case law over the circumstances in which a contract might be deemed valid by a court. In determining a contract’s validity, a court will consider the legal capacity of the parties who have entered into the contract, evidence of their consent, the legality of the purpose of the contract and the form the contract takes (Gibson and Fraser, 2011: 307). The action for ‘breach of contract’ arises when one or more terms of the contract have not been met—which might include work not being completed within an agreed timeline. This is usually where lawyers enter the fray, and a contract dispute can involve long and expensive court action, although alternative forms of dispute resolution are becoming more common. Griggs, Clark and Iredale (2009: 85) recommend that managers follow these steps when they are drawing up a business contract:

  • reducing the agreement to writing and ensuring it contains all the agreed terms
  • drafting it in plain English that does not require interpretation
  • ensuring it contemplates obvious problems and presents a process for a solution
  • ensuring compliance with any relevant legislation
  • limiting exposure to liability
  • identifying the law that should apply, particularly in international contracts.

A complex sub-branch of the law of contract is the law of agency—the term used to describe the authority you might assign to someone to enter into contracts on behalf of your business. An example of a contract dispute over public relations services was a West Australian District Court case involving a consultant to a South African mining company considering buyouts or mergers with other mining companies (Mining PR case, 2004). The dispute surrounded a ‘partly written, partly oral and partly implied’ agreement to provide ‘public relations, lobbying, consulting, networking, facilitating and co-ordinating’ services. The problem was that very little was detailed in the agreement, forcing the judge to look at previous work done by the consultant and to come to an estimate of the number of hours he had worked and their value on this occasion. He awarded him $830 per day for eight weeks, totalling $33 200 plus expenses.

References

Gibson, A. and Fraser, I. 2011, Business Law, 6th edn, Pearson Education, Sydney.

Griggs, L., Clark, E. and Iredale, I. 2009, Managers and the Law: A Guide for Business Decision Makers, 3rd edn, Thomson Reuters, Sydney.

Cases

Mining PR case: Newshore Nominees Pty Ltd as trustee for the Commercial and Equities Trust v Durvan Roodepoort Deep, Limited [2004] WADC 57, <www.austlii.edu.au/cgi-bin/sinodisp/au/cases/wa/WADC/2004/57.html>.

© Mark Pearson 2015

Disclaimer: While I write about media law and ethics, nothing here should be construed as legal advice. I am an academic, not a lawyer. My only advice is that you consult a lawyer before taking any legal risks.

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