How-to guide: Reviewing an online sales or marketing agreement (USA)

Introduction

This guide will assist in-house counsel, private practice lawyers and sales and marketing departments when reviewing online sales and marketing agreements. Taking time and investing resources at the outset is essential, in order to fully understand what an individual and their business are signing up for. This enables to fully assess the implications of the contract terms, conduct a proper risk assessment and assess organizational requirements under the contract. Undertaking reviews of online sales or marketing agreements means contractual negotiations are likely to be conducted more efficiently and help to avoid potential pitfalls later.

This guide covers:

Overview of online sales and marketing agreements
Reviewing online sales or marketing agreements
Best practices in contract review procedures

This guide can be used in conjunction with the following: How-to guides: Protecting intellectual property when drafting sales or marketing agreements, How to draft an affiliate marketing agreement, and Checklist: Drafting an affiliate marketing agreement.

Section 1 – Overview of online sales and marketing agreements

1.1 Understanding the purpose of the agreement

An online sales and marketing agreement is a legal contract that defines the relationship between the parties and sets out how a sales team and a marketing team will collaborate to market and sell products or services through online or e-commerce platforms. In the context of third-party vendors, this type of agreement is key in aligning the objectives of the sales team from one business with the marketing team of the other business to accomplish the key objectives of each organization.

Organizations should always consider the purpose of the agreement when considering a review of its terms. For many sales and marketing agreements, the ultimate goal is for the marketing team to produce a certain number of Marketing-Qualified Leads (MQLs) so that the sales team can turn those MQLs into Sales-Qualified Leads (SQLs), close on those SQLs to deliver sales, and generate revenue.

As the world becomes more and more digitalized, e-commerce is an increasingly vital part of any organization’s ability to buy or sell products and services. Additionally, as outsourcing becomes a more widely accepted business practice, organizations may look to outsource sales or marketing functions to keep themselves competitive without spreading their internal teams too thin across other competing priorities. Therefore, the use of a sales and marketing agreement can be an essential tool for any business that wants to benefit from effective sales and marketing services to help drive company profits. Organizations should review any sales and marketing contract in detail before its execution and implementation.

1.2 Consider the key terms of the agreement

As with any legal agreement, you need to consider whether the key terms reflect the required outcomes of the parties. The language used should be clear and unambiguous. The agreement will help to protect both companies from any unforeseen events in the future. A thorough review will ensure that the parties have considered the key terms of the contract and, if possible, prevent potential risks of disputes when the contract is signed. It is helpful to start with a plan so that you are assured that the most important questions in the contract have been analyzed fully.

Anticipating issues in advance allows the drafter and reviewer to consider the contract terms, pay close attention to them and ensure that the language of the contract is clearly understood and not open to interpretation. Any discrepancies that are identified or any questions that arise can be addressed and resolved between the parties at this stage of the contract review.

Every line in the contract needs to be reviewed carefully, and the clauses and terms are likely to vary depending on the type of company and industry, and whether the contract is internal or between third parties. For example, where the agreement is between the sales and marketing teams of the same organization to coordinate collaboration and communication between the in-house teams, the contract terms should focus on aligning the sales and marketing functions and laying out the different roles and responsibilities across teams to ensure accountability. This might include setting out the follow-up time for leads received by the marketing company. Making sure these teams work cohesively is paramount for the success of revenue generation for the company and the sales and marketing teams should ensure that they mutually understand the language of the contract. This will enable all sides to market and produce leads and drive sales that benefit the entire company.

On the other hand, where the agreement is between two different organizations, the desired terms for one organization may not fit as neatly with the optimal terms for the other, and more detailed contract negotiation may be required. The key clauses and terms that are significant to the external sales team will include creating obligations for the marketing business to create effective content that will produce marketable online sales leads. It is also beneficial for the sales side of the organization to include specific terms, including defined MQL criteria, requirements for customized marketing content, a specific number of MQLs that must be produced over a given time, and the number of MQLs that must be converted to SQLs. It is worth spending time on these key clauses to ensure that the language meets the desired business objectives of entering into the arrangement in the first place.

Likewise, the marketing side of the organization should consider optimal terms for the benefit of its organization. They should consider the inclusion of general terms relating to their established marketing strategy. Additionally, they may benefit from the inclusion of specific optimal terms, including terms relating to follow-up time on leads, the lead management process, and reporting goals and timelines.

1.3 Confirm validity and enforceability of terms and contract as a whole

Review of an online sales and marketing agreement should confirm the validity and enforceability of its terms, and of the contract in its entirety. A contract is valid when all of the elements essential to forming a legal contract are present. These include an offer, acceptance of the offer, consideration (exchange of something of value for each party), lawful purpose, capacity (parties must be of sound mind and legal age) and consent. An enforceable contract is one that meets all these legal requirements and is, therefore, able to be enforced in court. An enforceable contract must always be valid.

When reviewing for issues of validity and enforceability, organizations should take care in analyzing whether the parties have thoroughly discussed and accurately outlined their respective obligations and whether the parties have agreed to fulfil those obligations. Organizations should also ensure that the agreement includes clear terms which include all the elements listed above that make a contract valid. Additionally, the duties of each party under the agreement should have a reasonable possibility of being fulfilled.

Additionally, when reviewing the agreement, it is critical that the organization understand issues of legality regarding the terms of the contract. There are several specific legal issues related to online marketing and sales that must be considered, including, but not limited to, those provided below:

1.3.1 Federal Trade Commission (FTC) rules

The Federal Trade Commission (FTC) has rules and publications that relate specifically to online marketing. Organizations must consider these rules, and the FTC guidance documents, as any sales and marketing agreements with terms that violate these rules could result in the agreement being held to be unenforceable.

1.3.1.1 Mail, Internet, or Telephone Order Merchandise Rule

The FTC’s Mail, Internet, or Telephone Order Merchandise Trade Regulation Rule applies to many goods that customers order from sellers by mail, phone, fax or online. Under this rule, a company advertising consumer goods must have a reasonable basis for communicating, either explicitly or implicitly, that the goods can be shipped in a specified amount of time. Where the company advertising the goods does not provide a shipment statement, the company must have a reasonable basis for the belief that shipment can be made within 30 days. After a consumer places an order for goods, if the seller learns that shipment cannot occur within the time provided, or within the 30-day default time period if no time was provided, the seller must disclose the delay and obtain the consumer’s consent to the later shipment. If the consumer refuses to provide consent, the seller must refund any money paid for the goods.

In practical terms, this means that a seller or marketer must consider project delivery times, any means for extension where necessary, and a requirement that notice is given from either party if the contract will terminate due to a late delivery period. These points should form a key part of the service contract.

Violation of this rule carries several potential negative consequences for an organization, including the FTC suing the selling company for injunctive relief. As per 16 CFR Part 1, violations of the rule may also result in monetary civil penalties of up to $53,088 (as of 2025) per occurrence, as well as any legal redress available to the consumer (eg, breach of contract action).

When a sales and marketing agreement has been formed, this rule may implicate both the sales and marketing teams bound by the agreement. Organizations must carefully draft any representations made about the delivery of goods being sold or advertised. Though the selling party is ultimately the party generally held responsible for the violation, an advertising party may face reputational or other business-related consequences for their failure to properly represent delivery timelines for the seller’s goods.

1.3.1.2 General offers and claims

Under the Federal Trade Commission Act of 1914 (FTC Act), the FTC has the authority to prevent unfair and deceptive acts and practices. The Act prohibits deceptive or unfair advertising in any medium, including a wide range of online activities. The FTC states that representations, omissions or practices are considered deceptive if they are likely to either:

mislead consumers; or
affect consumer behavior or decision-making regarding products or services.

In addition, the FTC has determined that an act or practice is considered unfair if the injury caused, or is likely to cause, to the consumer by the act or practice is:

substantial;
not reasonably avoidable; and
not outweighed by other benefits.

Organizations reviewing a sales and marketing agreement should ensure the advertising practices undertaken by the marketing party do not involve misleading consumers (ie, ensuring that the advertising is truthful). According to the FTC, advertising may be considered misleading if it omits relevant information, so organizations should carefully review the advertising materials and strategies being utilized under the agreement to confirm all pertinent information will be included.

Further, under the FTC rules on unfair and deceptive practices, any claims made about a product or service must be substantiated, especially where those claims involve matters related to health, safety, or performance of the products and/or services. Organizations reviewing sales and marketing agreements should have a clear understanding of the claims each party is making or disseminating with regard to the goods or services being sold, as both sellers and third-party advertisers and marketers may be liable for violations of these rules.

1.3.1.3 Disclosures

The FTC Act requires that any disclosures made via online media must be clear and conspicuous. To determine whether a disclosure is clear and conspicuous, advertisers must consider the following factors:

the placement of the disclosure in relation to what it relates to (ie, how close the disclosure is in proximity to the claim);
how prominent the disclosure is;
whether the placement or location of the disclosure is unavoidable;
whether the disclosure needs to be repeated in various places on the website;
whether audio message disclosures are provided at an adequate cadence and volume;
whether visual disclosure messages are presented for a sufficient amount of time; and
whether the language the disclosure is presented in is understandable for the intended audience.

Organizations reviewing a sales and marketing agreement should ensure that disclosures are addressed under the terms of the contract. It is important to consider the various devices and platforms consumers are likely to use to access any marketing material and to account for those variations when determining the proper presentation of disclosure language. Organizations should also anticipate any technological solutions adopted to assist with contract review (eg, tools powered by machine learning) to ensure that the marketing strategies utilized under the agreement address those limitations to avoid a violation of the FTC disclosure rules.

1.3.1.4 Children’s Online Privacy Protection Act of 1998

More stringent requirements apply when advertising or marketing to children online, and abundant resources are available on the FTC website dedicated to this segment of the market. It is especially important that consideration be given to the Children’s Online Privacy Protection Act of 1998 and the associated FTC Rule. Another important piece of legislation to consider is Senate Bill 836 – Children and Teens’ Online Privacy Protection Act, which would amend the original Children’s Online Privacy Protection Act of 1998.

As per the FTC online FAQs, ‘A court can hold operators who violate the Rule liable for civil penalties of up to $53,088 (as of 2025) per violation. The amount of civil penalties the FTC seeks or a court assesses may turn on a number of factors, including the nature of the violations, whether the operator has previously violated the FTC Rule, the number of children involved, the amount and type of personal information collected, how the information was used, whether it was shared with third parties, and the size of the company. The determination of the appropriate civil penalty will vary on a case-by-case basis. In some cases, the FTC has elected to seek no civil penalty, while in other cases, the penalties have been millions of dollars.’ For example, in April 2021, two companies agreed to settle FTC charges in the amount of $416,000 for deceptively marketing two dietary fish oil supplements as proven to reduce liver fat in adults and children. (BASF SE, In the matter of).

Understanding the FTC rules and regulations is important when reviewing an online sales and marketing agreement to ensure that neither party to the contract risks compliance issues. Most importantly, all marketing and sales material involving children must not be deceptive. The FTC has pursued several cases where advertising and marketing to children involved advertising ‘puffery’ (where the company exaggerates and boasts to advertise their products). There is a heightened standard of scrutiny for advertising that would be considered deceptive when marketing to children. See, for example, Lewis Galoob Toys, Inc, 114 FTC 187 (1991) (consent order) (page 187 of the volume) and Hasbro, Inc, 116 FTC 657 (1993) (consent order).

Section 2 – Reviewing online sales or marketing agreements

2.1 Consider the implications of online trading

When reviewing a sales and marketing agreement, it is important that organizations ensure that the contract accurately describes the duties of each party. It is also important to consider the practical application of the contract to determine whether the scope and terms will still work in an online setting for online customers. Finally, organizations should consider whether some special terms or provisions should be included due to the impact of, for example, certain FTC regulations, as described above (see Section 1.3.1).

2.2 Scope of work and identity of the parties

The scope of work is an important provision in a sales and marketing agreement. The scope of work term will set forth the purpose of the agreement and the expectations of the parties. This might include a description of the products and services being marketed and sold together and setting out the intentions of the parties when entering into the agreement. Organizations should ensure adequate descriptions of how the contracting parties will expect to utilize e-commerce to accomplish their mutual goals. In addition, it is important that the contract also correctly identifies the parties to the agreement and the payment terms and conditions (including time for payment, amount, and any termination clause for non-payment).

2.3 Rights and responsibilities

For rights and responsibilities under the contract terms, parties should aim to define their respective specific expectations. The overall goal of the online sales and marketing agreement is to create as many sales leads and to generate as many sales as possible using resources that are customer-focused and adept at utilizing the tools that the internet offers. The role of each party and the criteria they need to satisfy should be clearly set out.

For example, the contract will set out that one party will perform specific work and the other party will provide specific materials to support the finalization of the project (eg, one party supplies logos or other branding materials of the company to assist the contractor with website development), and any other necessary work that will be required by each party to ensure the contract is seen to completion.

How the parties will accomplish these common goals needs to be described in the agreement. For example, if it is anticipated that the sales and marketing efforts will include the use of endorsements or reviews, it may be useful for parties to include additional language under the agreement, especially since this is an area regulated by the FTC.

Technologies that will be utilized should be listed and described, including how the parties will work together and will hold the license and pay for the use of the technology during the term of the agreement. Organizations should take care to lay out their particular goals under the agreement, as well as setting pre-determined milestones to measure the progress being made towards the goals.

2.4 Confidentiality

Confidentiality provisions in the contract are important, and keeping information obtained about the other party confidential is a critical component of any business relationship. Providing assurance that technology, information, and the associated value will be protected is key, and the parties will need to agree a clause that ensures their required confidentiality obligations are imposed. Confidential information is closely aligned with intellectual property, such as customer lists, trade secrets, etc, where reasonable measures must be taken by the owner to protect it.

Incorporating trade secrets into an agreement involves balancing protecting the interests of the company while still providing enough detail regarding the trade secrets in the agreement to be able to assert a claim for infringement if the other party should misappropriate the secrets. See, for example, Alta Devices, Inc v LG Elecs, Inc, 343 F Supp 3d 868, 877 (ND Cal 2018) (‘A plaintiff need not spell out the details of the trade secret’, but must ‘describe the subject matter of the trade secret with sufficient particularity to separate it from matters of general knowledge in the trade or of special persons who are skilled in the trade, and to permit the defendant to ascertain at least the boundaries within which the secret lies.’).

Therefore, the ways in which confidential information will be used in the sales and marketing of the company and the associated products or services need to be set out clearly so that each party understands not to disclose information to others without the appropriate authorization.

2.5 Allocation and assumption of risk

Allocation and management of risk is central to all commercial contracts. Each party seeks to minimize their exposure to risk and maximize reward, and the parties manage risk by negotiating the provisions to transfer or share risk with third-party suppliers. Online agreements may increase the risk of violating special federal and/or state rules and regulations as the online marketplace crosses geographic boundaries. Managing contracts and third-party risks requires a strong understanding of the technical legal issues and an awareness of the commercial focus (ie, commercial outcomes balanced against operational considerations balanced against the risk appetite of the parties). For example, if a marketing company provides marketing materials for a client that are deceptive or misleading, and the client subsequently uses those materials, the sales and/or marketing company may find themselves a party to any subsequent litigation. See How-to guide: How to prepare and respond to a governmental investigation or enforcement action for violation of US privacy laws.

Most organizations choose to add limitation of liability clauses in their contracts to minimize those commercial risks; however, in the case of serious negligence, a person or organization may still be liable for their actions. It is important to maintain meticulous attention on the performance of a contract, as opposed to relying on a limitation of liability clause.

2.6 Intellectual property

The agreement should provide that each of the parties acknowledge that they currently own and will continue to own all rights, title and interests in their respective intellectual property including all data, information, techniques, methodologies and materials, including patents, patent rights, copyrights, trade names, trademarks, trade secret rights and other intellectual property rights that each party owned prior to the commencement of the agreement. In addition, consider how any intellectual property will be owned in circumstances where both parties make substantial contributions to its creation. See How-to guide: Protecting intellectual property when drafting sales or marketing agreements.

The use of existing intellectual property should be limited and specific as to the authorized use. A significant federal law regarding the protection of intellectual property is the Defend Trade Secrets Act of 2016 (DTSA). The DTSA provides American companies the opportunity to protect against and remedy infringement of important propriety information.

Especially important, the DTSA provides uniform definitions for many terms – two of the most important terms being ‘trade secret’ and ‘misappropriation’. Trade secret is defined as:

‘all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if:

the owner thereof has taken reasonable measures to keep such information secret; and
the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.’ (18 USC section 1839(3))

The term ‘misappropriation’ is defined as:

acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
disclosure or use of a trade secret of another without express or implied consent by a person who:
- used improper means to acquire knowledge of the trade secret;
- at the time of disclosure or use, knew or had reason to know that the knowledge of the trade secret was
  - derived from or through a person who had used improper means to acquire the trade secret;
  - acquired under circumstances giving rise to a duty to maintain the secrecy of the trade secret or limit the use of the trade secret; or
  - derived from or through a person who owed a duty to the person seeking relief to maintain the secrecy of the trade secret or limit the use of the trade secret; or
- before a material change of the position of the person, knew or had reason to know that:
  - the trade secret was a trade secret; and
  - knowledge of the trade secret had been acquired by accident or mistake …’ (18 USC section 1839(5)).

From a state law perspective, one of the primary concerns with state intellectual property laws is that they may vary from jurisdiction to jurisdiction, although the Uniform Trade Secrets Act of 1979 (UTSA) helps to address this. The UTSA is not federal legislation, but instead is a model act promulgated by the Uniform Law Commission for adoption by states in the United States, with the goal of making state laws governing trade secrets uniform.

A good working knowledge of these laws, as well as any state-specific provisions, should be gained prior to the contract review. It is especially important to keep in mind those provisions that require that the owner take reasonable measures to keep intellectual property protected since any dispute as to misappropriation would turn primarily to the written agreement between the parties.

2.7 Resolution of disputes

Agreements involving e-commerce should be specific as to both the choice of jurisdiction and venue, together with the governing laws that will be applied in the event of a contract dispute. Parties may choose between their own state laws and the customer’s state laws to govern the agreement; though changing each time may be burdensome, so considering the practicality of amending the jurisdiction each time is necessary.

Some state laws may be more onerous than others in the context of online activities. For example, California has legislation that addresses both data privacy (California Consumer Privacy Act of 2018) and children’s online privacy (Chapter 22.1 of the Business and Professions Code - Privacy Rights for California Minors in the Digital World). Such legislation may impact the choice of governing law provisions in the agreement. To the extent possible, the state choice of law would be in a state with provisions most favorable to the organization or client. The contract should also provide for the agreed mechanism for the initial resolution of disputes (eg, will the parties attempt mediation prior to litigation, or have the parties considered an alternative form of dispute resolution?).

2.8 Term and termination clause

The specified term of an online sales or marketing agreement may be shorter than other sales or marketing agreements due to the evolving technology that may be used, creating less steps and less work for the contractor. In addition, reasons for termination (or post-termination issues as well) may need to be modified depending on e-commerce-specific considerations, like technology failures that may cause a delay in the project. It is important to consider whether the duration of the contract is clear, and whether there are any final performance dates or provision for termination clauses in the case of certain events occurring (eg, failure to deliver on time, non-payment, false or incorrect documents or information from the client, etc).

2.9 Terms and conditions

Commonly referred to as ‘boilerplate’ provisions, the review should consider whether any of the standard language of commercial contracts needs to be modified considering the online nature of the agreement.

Section 3 – Best practices in contract review procedures

3.1 Are the right parties involved?

The primary concern in the review of any contract is to have the appropriate parties involved. With legal or compliance personnel serving as the main point of contact, input should be sought from any other department that has an interest in the agreement or has expertise on the subject matter involved. Having multiple people review the agreement builds in safeguards, as someone reading the agreement with ‘fresh eyes’ may see something from a different perspective and raise different questions and considerations prior to executing the contract. A ‘team mentality’ should be established to consider multiple review across the following internal departments:

management;
sales;
marketing;
IT;
HR;
finance; and
operations.

3.2 Allow enough time

Review of a contract takes time and resource allocation across different internal teams. It is critical that when you are conducting a review, you plan it carefully, and ensure that you have factored in sufficient time for analysis of the contract across all the required stakeholders in your organization.

3.3 Maintain a control document

When multiple parties are involved in the review process, there is a danger of comments and edits of the parties getting lost in the process. Using technology, enabling access to the agreement should only be granted to parties authorized to negotiate in relation to the specific agreement. The process should also incorporate a sign-off process whereby the final approval of each party involved in the review is documented. It is preferable to work with tracking, and ensure that only one version of the document is ever in circulation to try and minimize errors associated with costly and often avoidable mistakes.

3.4 Ongoing review and maintenance of agreement

A regular ongoing process (eg, quarterly, semi-annually or annually) should be developed that calls for periodic review and, if appropriate, updates to the contract or taking steps to terminate the contract in the event of breach. Contract reviews should take place for existing agreements as well as brand new agreements. Review is necessary to adapt to changes in laws and regulations, fix something that was overlooked or simply to adjust to an evolving or changing business environment. Contracts can be adapted based on lessons learned from a particular commercial deal or you can improve the contract based on experience that you have acquired since signing. The fact that an agreement is signed and in existence does not prevent you from building a review mechanism into your procedures and a thorough contract review management process is advised.

3.5 Common mistakes during a contract review

Businesses frequently stumble during contract negotiations by committing several critical errors. These include dismissing thorough reviews of complex documents, signing contracts without any prior examination, assuming inflexible terms, neglecting to scrutinize ‘standard language’, agreeing to ambiguous or unclear agreements, and engaging in unnecessary pushback on minor points. Crucially, while legal teams are essential for risk mitigation, they must also recognize when their involvement becomes counterproductive, potentially hindering commercial interests. Legal professionals must balance risk protection with the practical realities of the contract. Ultimately, any of these missteps can lead to signing unfavorable agreements or, worse, preventing a deal from closing altogether.

3.6 A contract review checklist

To efficiently review contracts, focus on these key areas:

critical clauses: prioritize confidentiality, indemnification, termination, and dispute resolution clauses, as they significantly impact risk allocation;
clear language: eliminate ambiguous language to prevent future disputes by ensuring terms are precise and unambiguous;
default terms: carefully review default clauses to understand the consequences of non-compliance and available remedies;
blank fields: eliminate all blank fields to prevent ambiguity and maintain contract validity;
termination and renewal: thoroughly understand termination and renewal terms, including automatic renewals and opt-out procedures;
significant milestones: verify that all dates and deadlines align with agreements and establish tracking systems for contract obligations;
risk allocation: ensure risks are fairly distributed between all parties to prevent undue burden on any single party;
remedies provisions: understand available remedies and recourse in case of breaches or undelivered promises; and
reference documents: scrutinize all reference documents attached to the contract as they contain vital information.

Additional resources

US Federal Trade Commission, Online Advertising and Marketing
Kwilinski, et al, E-Commerce: Concept and Legal Regulation in Modern Economic Conditions, Journal of Legal, Ethical and Regulatory Issues (2019)