Hidden Risks in Brand Deals (Part II): Clauses That Undercut Your Leverage
In Part 1 of this series, we explored why verbal assurances don't replace a solid contract and how even seemingly simple promises can lead to significant liability if a brand-mandated claim or content element proves problematic. We addressed common creator questions about the legitimacy of these threats and the risks involved in signing blind.
Now, in Part 2, we take a deep dive into the critical clauses that often leave creators exposed and equip you with essential knowledge to protect your valuable career.
Liability
/līəˈbilədē/ (n.)
The legal obligation to pay for damages or losses if something goes wrong related to your content or actions.Key Contract Clauses You MUST Understand
Your creator contract isn't just about the deliverables and the pay check. It's also about who carries the risk if things go sideways due to your acts or omissions (i.e., things you should’ve done, but didn’t).
Here are some critical clauses where things often go wrong, and why they can leave you exposed:
1. Representations & Warranties (Your Promises)
Understanding this clauses is crucial, as it defines the key promises you are making to the party you’re contracting with and, ultimately, the liabilities you could face.
You are making legally binding promises to the brand that your content (and everything in it) is 100% original, legal, doesn't infringe on anyone's rights, and won't lead to lawsuits. This includes your ideas, your script, any visuals, claims, and even your overall performance.
The Risk
What if, for instance, you endorse a supplement claiming it causes rapid weight loss, and that specific claim was even expressly included in the creator brief received from the brand?
If that claim later proves not to be scientifically supported, or if you hadn't genuinely experienced that benefit, and a consumer sues, you have technically broken your promise (your representation and warranty).
The Outcome
The brand can then come after you for damages. Even if they mandated the claim and approved the content, your promise in the contract often still stands, leaving you vulnerable to being sued either by the brand directly or a third party for making a false claim and endorsing a non-effective product.
2. Indemnity (Your Blank Cheque )
This is one of the most dangerous clauses, often broadly worded, and frequently a unilateral provision where you indemnify the brand, but they don't offer you reciprocal protection. Essentially, you're agreeing to write a blank cheque to the brand.
If someone sues the brand because of your content (e.g., for copyright infringement, false advertising, defamation, violating privacy, or even for the brand's own negligence), you are often contractually obligated to pay for all of the brand's legal fees, court costs, settlements, and any damages awarded against them to pay to the suing party.
The Risks
Imagine you're promoting a brand in a sponsored post, but you're innocently wearing a T-shirt from your university days with the university's logo or crest clearly visible. Even if it's small and not a focus, the university might take legal action for unauthorized use of their trademark.
Or perhaps you're filming content, and the brand later receives threatening letters from the owners of the building where you filmed, claiming no authorization or permit was given. In these situations, while there may be more direct liability attributable to you as the creator, the brand almost certainly approved the content before it was published.
Yet, under the widely-drafted indemnity provisions we often see, the brand will likely not do anything to protect you.
The Outcomes
You, the creator, will then need to indemnify the brand for any loss (given the scope of these widely-drafted indemnity provisions) while also likely needing to defend your own separate claim against the third party where you are directly liable, in addition to the brand.
This results in zero protection from the brand and an extremely costly ordeal for you, the creator.
This clause can lead to losing your entire savings, facing long-term debt, and severe reputational damage, even for issues where the brand bears some responsibility or you had no direct control over their subsequent misuse of your content.
3. Limitation of Liability (Their Escape Hatch)
This clause typically limits how much the brand has to pay you if they mess up or breach the contract. For example, if they fail to pay you, their liability might be capped at just the fee for that single piece of content, even if it causes you bigger losses.
The Risk
While the brand limits their risk to you, your liability to them (under indemnification or for breach of representations) often remains unlimited.
The Outcome
This creates a severely imbalanced playing field where you take on massive downside risk, while the brand protects its own interests.
Visualizing the Fallout
When Remote Risks Becomes Real Life
It’s hard to believe these things will happen until you can picture it. So, let’s visualize how it this could play out:
The Unexpected Call
You get a call from the brand's lawyer, or worse, a letter from a third party. They're not "working with you." They're demanding you cover their legal fees for a cease-and-desist letter because a claim you made in a sponsored video was deemed false, or someone in the background of your "lifestyle" content is suing for misuse of their likeness. Or perhaps a former assistant is claiming their intellectual property rights were violated by content you published under the brand deal.
Lack of Control
Imagine you receive a cease and desist for content posted for a brand deal, but the brand itself isn't being sued (yet), you are. You immediately call the brand, asking them to take down the infringing content from their profile to stop the bleeding. To your dismay, the contract you signed states the brand has no obligation to remove posts from their socials, even if you're facing legal action. You've lost control over your own work, leaving it online to continue causing you legal issues, with no power to mitigate the problem yourself.
Legal Action
You receive a summons to appear in court. You're asked to give a deposition where lawyers grill you for hours. Your business dealings become public record, accessible to anyone.
Financial Ruin
You're ordered to pay significant damages—not just legal fees, but potentially hundreds of thousands of dollars for misrepresentations, privacy violations, trademark infringement, or copyright infringement. You might have to repay the brand, cover their legal fees, and face crippling debt for years. Your financial freedom, that you worked so hard for, could be gone.
Reputational Damage
News of lawsuits, misleading content, or contract breaches spreads fast online. Brands suddenly stop reaching out. Other creators might distance themselves. Your followers, who trusted you, start asking questions, and your comment section becomes a battlefield of accusations. Imagine losing trust, losing your audience, and seeing your carefully built career crumble.
Stress & Isolation
Beyond the money, dealing with legal letters, court proceedings, and public accusations is incredibly stressful. Imagine constant worry, sleepless nights, and feeling isolated as you navigate a complex legal system, unable to focus on creating the content you love.
Your Next Move: Protect Your Business & Get the Right Support
Your creative work is your livelihood. It deserves to be protected.
Don't sign blindly.
Always Get It Reviewed: Before you put pen to paper, get your contracts reviewed by a lawyer who understands the creator economy.
Ask Questions: If you don't understand a clause, ask. Keep asking until it's crystal clear.
Know Your Responsibilities: Understand exactly what you're promising and what liabilities you're taking on.
Negotiate: Don't be afraid to push back on unfavourable terms. A fair brand wants a fair deal.
Understand When It’s Time to Walk: If a brand refuses to negotiate on critical terms that leave you significantly exposed, or if the risks of a particular deal clearly outweigh the potential benefits, be prepared to walk away. Some deals just aren't worth the hidden cost.
Be a business-savvy creator who understands the real risks and proactively protects their amazing work.
Diverge Legal Empowers Creators with Legal Support
At Diverge, we understand the unique challenges that creators face in today’s digital landscape.
Our goal is to empower independent creators with the legal tools and support they need to take their business to the next level. We believe that every artist, influencer, and content creator deserves the same level of protection as big brands.
If you’re ready to safeguard your business, don’t wait until it’s too late. Investing in legal protection today means securing your future, ensuring fair deals, and positioning yourself for long-term success.
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More about DIVERGE
Diverge is not just a legal service provider. We’re your partner in building a legally sound and sustainable content creation business. We understand the unique challenges creators face and offer tailored solutions to protect your intellectual property, ensure regulatory compliance, and minimize legal risks.
Whether you’re an established influencer or an emerging creator, Diverge is here to help you focus on what you do best, while we take care of the legal complexities.
Reach out to Diverge today to learn more about how we can support your content creation journey.
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Important Notice: The information in this article is provided for general informational purposes only and is not intended as legal advice. Reading this content does not create a lawyer-client relationship. Always seek professional legal counsel tailored to your specific situation. No part of this article may be reproduced or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in any retrieval system of any nature, without the express written permission of Diverge Legal.
