Sequential Liability

Thu, 01 Apr 2004 00:00:00 -0500
Trends and Technology

Argues that, as the economy improves in the US (2004), it would be a good time to adopt sequential liability as an industry standard for paying the media. Sequential liability means that if a media buying agency goes bankrupt before the media are paid (as may happen in recession), it is only liable if it has already been paid by the advertiser. In the alternative, joint and several liability, the media can look to either the media buyer or the advertiser regardless of whether the media buyer had been paid. Where there is no written agreement, how the courts will decide the issue can be unpredictable. The media have tended to dislike sequential liability, but its adoption as standard would lead to smoother and more equitable media buying with much less need for legal involvement. Past history leading to the current situation is summarised.