The Advertising Standards Authority (ASA) will be extending its authority to include advertisers’ own marketing communications on their websites and marketing communications in non paid-for space i.e. Facebook and Twitter from the 1^st of March 2011.

Advertising Standards Authority

The Advertising Standards Authority is the UK’s independent advertising regulator. It deals with complaints about advertising which breach its CAP Code. The ASA currently only regulates paid-for online advertising on the Internet and has no authority to regulate website content.

From the 1st of March 2011 this will change and the ASA will be responsible for regulating advertisement and marketing communications on a company’s own websites and in other non-paid-for online space under its control. This will cover corporate web presences, official Facebook pages and Twitter feeds. These will all need to comply with the CAP Code.

Also, if you use and incorporate user content on your website this may also need to comply with the CAP Code, particularly if you review such content before it is posted.

Sanctions for Breaches of the Code

In addition to its existing powers, the ASA will be able to:

• remove with the co-operation of search engines, paid-for links to pages hosting a banned advertisement (e.g. Google’s sponsored links);
• place paid-for adverts highlighting your non-compliance;
• publish details of any non-compliant communication and advertiser on an ASA website.

Further Information

Further information will be issued by the ASA in 2011 on the above rules and how in practice these will apply to website content.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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Do you always ensure that your SaaS terms apply to contracts with customers. If not, the High Court has decided in Ghsp Inc v Ab Electronic Ltd that where two companies fail to agree on whose terms and conditions shall apply to an agreement, neither company’s terms can be enforced. This resulted in the supplier having unlimited liability to the customer for defective parts it had supplied.

Failure to Agree Terms

During the course of negotiating a sales agreement the supplier and customer failed to agree on whose terms would apply to the sale. They both rejected each other’s terms on a number of occasions and started to deliver and use products, without agreeing on the issue of liability, although both acknowledged that the issue needed to be resolved at some future date.

Later when some defects in the products arose the customer claimed that liability was unlimited, as its terms applied. The supplier argued that the limited liability clauses of its terms applied to the agreement.

Battle of the Forms

Each company stuck to its own terms and conditions in the hope that they would be seen as being accepted by the other. However the court looked at the negotiations and actions of the parties and concluded that:

• there was no express acceptance by either party of the other’s terms;
• there was no offer containing either party’s terms; and
• there was no conduct by either party which amounted to acceptance of the other’s terms.

The Court stated that neither company’s terms could be said to have been accepted by the other. Instead the dispute would be governed by general commercial law and the Sale of Goods Act 1979. Under the Sale of Goods Act – goods must be of satisfactory quality. The supplier was therefore fully liable for all of the customer’s losses (both direct and indirect) as no exclusion clause limiting its liability was incorporated into the agreement between the parties.

Your Terms must be Incorporated into the Agreement

In order to avoid this situation from arising you must ensure that your terms and conditions are incorporated into the sales agreement by:

• expressly stating in the agreement that the other’s terms and conditions are excluded;
• expressly stating in the agreement and/or order form that only your terms and conditions will apply.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

______________________________________________________

Other related articles:

• SaaS Agreements – Essential Elements
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If you use agents in relation to your SaaS agreements, when you terminate the agency agreement under the Commercial Agents Regulations 1993 you must pay the agent compensation, regardless of the reason for the termination. A recent High Court decision McQuillan v McCormick 2010 has given some guidance on how the termination payment should be calculated.

Commercial Agents Regulations 1993

These are mandatory Regulations which apply to all agency agreements made with an agent based in the EU. They will apply regardless of where the supplier is based. The Regulations include mandatory rules on notice periods that have to be given to agents, payment terms and compensation or indemnities payable to the agent if the agency agreement is terminated.

Indemnity or Compensation

It is possible in the agency agreement to choose between paying an indemnity or compensation to the agent on termination of the agency agreement. If the agency agreement says nothing then compensation will be automatically payable.

If you specify an indemnity in the agency agreement, the amount payable is limited by the Regulations to a maximum of 1 year’s gross commission based on the average commission paid over the last 5 years.

If the agency agreement is silent or you specify paying compensation, a court will determine how much the agent is entitled to. There is no cap on the amount that can be awarded to an agent. In the past the amount awarded by courts was generally limited to 2 year’s gross commission. However, as few cases are disputed in court no guidelines existed until now on how this amount should be determined.

Calculation of Compensation

The High Court has recently identified the following factors which should be considered when determining how much compensation an agent should be paid on termination:

• loss of value of the agency relationship
• state of the market
• no cap on the amount
• future possible income stream to the supplier after termination
• whether the agreement is exclusive or non-exclusive

In this case the agent received approximately one year’s commission from the court.

Implications for Drafting Agency Agreements

This case my be appealed by the agent, but it now seems clear that it is not necessarily the best option to include an indemnity in an agency agreement. Courts will be entitled to assess compensation on a case by case basis. Accordingly, it may be a false economy to automatically agree to pay an agent an indemnity, as if compensation is chosen the risk of paying 2 year’s commission now seems low.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

______________________________________________________

Other related articles:

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On the 24th of November 2010 an employment services company A4e and Hertfordshire County Council were fined £60,000 and £100,000 respectively by the Data Commissioner for serious breaches of the Data Protection Act (DPA).

Data Protection Act 1998

The Data Commissioner has the power to impose a fine of up to £500,000 on a data controller who seriously breaches the DPA, if the contravention was of a kind likely to cause substantial damage or substantial distress. The contravention must either have been deliberate or the data controller must have known or ought to have known that there was a risk that a contravention would occur and failed to take reasonable steps to prevent it.

A4e and Hertfordshire County Council Cases

A4e allowed an employee to take home a laptop containing personal information, including the sensitive personal data of 24,000 people on an unencrypted laptop. The unencrypted laptop was stolen from the employee’s house and data was accessed due to the lack of encryption.

In June 2010 Hertfordshire City Council accidentally faxed child sexual abuse information to the wrong recipients twice in a fortnight.

In both cases the loss of data was reported to the Data Commissioner’s office.

When will Fines be Imposed?

The Data Commissioner said its office would take the following factors into consideration when considering whether or not to impose fines for data breaches:

• whether the breach is ‘serious’; and
• whether it leads to serious harm or distress for the data subjects involved.

How is the Level of the Fine Determined?

In deciding upon the level of the fine the Data Commissioner will consider:

• the size of the data controller organisation;
• the financial and other resources of the data controller;
• whether the breach is a “one-off”;
• the type of data that is lost or disclosed;
• the duration and extent of the breach;
• the steps taken to remedy the breach.

In the A4e case a fine was imposed because A4e did not take reasonable steps to avoid the loss of the data. It issued the employee with an unencrypted laptop, despite knowing the amount and type of data that would be processed on it.

In the Hertfordshire City Council case the fine was imposed because of the sensitive nature of the information and the fact that the same breach occurred within a period of 2 weeks.

How to Avoid Fines

If A4e had taken the simple step of encrypting the data, thousands of people’s privacy would not have been potentially compromised.

In view of the above, it is imperative that you take reasonable steps to avoid data protection breaches to limit your exposure to having such fines imposed. The following basic precautions should be taken:

• ensure that all laptops, memory sticks and backup tapes are encrypted;
• have appropriate data protection policies and procedures in place;
• carry out due diligence on your security procedures and those of your sub-contractors and third parties;
• audit compliance with your  security procedures of sub-contractors and third parties regularly.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

______________________________________________________

Other related articles:

• SaaS, ASP Agreements – FAQs – Data Protection
• SaaS, ASP Agreements – Data Protection, Sub-Contractors &  Model Clauses
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