Affiliate agreement

A affiliate agreement or contract is a legal agreement under which a website operator will (directly or indirectly) pay to another person (usually also a website operator) a commission or other fee in respect of users referred by that other person.

A typical affiliate agreement would involve a website operator placing links on his or her website to an ecommerce website, and receiving commission on sales on that ecommerce site arising out of visitors who found the ecommerce site via those links.

The majority of affiliate arrangements are mediated by affiliate networks, who bring together large numbers of affiliates and merchants, provide the software to track purchases, and process the payment of commission. If you are entering into an affiliate scheme through one of the major affiliate networks, you will be subject to their contractual documentation (which will usually be non-negotiable, unless you are a big customer).

If you are setting up your own scheme, then it should be set out in a formal legal document. This will make clear the rights and obligations of the parties, and reduce the chances of a dispute.

Common issues to consider when drafting an affiliate agreement are:

• the trigger giving rise to the payment obligation;
• content standards of the website hosting the affiliate links;
• trade mark licensing;
• the calculation of commission;
• the payment procedure (this may be through a self-billing arrangement); and
• rights to terminate and the consequences of termination.