Essential Commercial Contracts: Advertising, EPC, and Leasing Law

Posted on Nov 6, 2025 in Law

Key Commercial Contracts: Advertising, EPC, and Leasing Law

Advertising Contracts Fundamentals

Advertising Contracts are commercial agreements characterized by the entrepreneurial status of both the advertiser and the advertising agency, aiming for the massive diffusion of the advertiser’s products or services.

Key Elements of Advertising Contracts

  • Advertiser: The natural or legal person in whose interest the advertising is carried out.
  • Advertising Agency: Natural or legal persons professionally organized to create, prepare, schedule, or execute advertising on behalf of an advertiser.

Types of Advertising Agreements

These include the Advertisement Contract, Advertisement Creation Contract, Broadcasting Contract, and Sponsorship Contract.

Advertiser Responsibilities

The advertiser must make available to the agency the necessary information regarding the product or service to be published, as well as the target sector or public being addressed.

Advertising Agency Responsibilities

The agency must provide the advertiser with various proposals and must conform to the essential elements of the campaign or the advertiser’s specific instructions.

Sponsorship Agreements

A Sponsorship Agreement is an agreement under which one party makes a contribution (monetary or otherwise) to the other party in exchange for promotional rights.

Advertisement Diffusion and Broadcasting

This relates specifically to the execution of the advertising campaign:

  1. The media outlet is obligated to diffuse (broadcast) the advertisement.
  2. The advertiser must pay the agreed consideration.
  3. The media outlet does not participate in preparation, only in spreading the advertising spot provided by the advertiser or agency.
  4. Liability for the content usually rests with the advertiser, not the advertising media.

Breach of Advertising Contracts

When an advertising contract is breached, the affected party has the right to request the fulfillment or termination of the contract, along with corresponding compensation for damages.

Remedies for Contract Breach Peculiarities

Remedies often depend on the specific type of contract:

  1. Reduction in price can be requested, provided the parties agree to this possibility.
  2. Repetition of bad or defective advertising.
  3. Compensation for the loss of opportunity (e.g., if an advertisement agreed upon for the Super Bowl is not broadcasted).
  4. Non-compliance when the sponsored party does not use the sponsor’s products (e.g., the famous case involving Cristiano Ronaldo and Coca-Cola).
  5. Possibility of agreeing upon a substitute sponsor.

Illegal Advertising Standards

Illegal Advertising is defined as content that poses a threat to the dignity of the person or violates values and rights recognized in the Constitution, especially those concerning children, youth, and women.

This includes:

  • Discriminatory advertising based on race, sex, sexual identity, gender, religion, or targeting people with reduced mobility or cognitive problems.

Renting and Operational Leasing

Renting (Operational Leasing) is characterized by the productivity and constant use of the asset, its need for maintenance, and accelerated depreciation. It is popular for company vehicles and computer equipment. When the contract expires, the customer is often given a purchase option.

Note: The leased asset (e.g., a car) is typically not listed on the company’s balance sheet.

Renting Procedure Steps

  1. Customer orders the company car or equipment from the supplier.
  2. Customer signs the renting contract with the leasing company.
  3. The leasing company confirms the order with the supplier.
  4. The supplier delivers the order to the customer.
  5. The supplier invoices the leasing company.
  6. The customer pays periodic fees to the leasing company.

EPC (Engineering, Procurement, Construction) Contracts

An EPC contract is a type of construction contract where the contractor is responsible for all engineering, procurement, and construction activities required to deliver the completed project to the employer or owner.

EPC Contractor Obligations

The EPC contractor must:

  • Perform detailed engineering and design involved with the project.
  • Procure necessary equipment and materials required to build the project.
  • Execute the construction of the facility.
  • Make the facility ‘ready to use’ and hand it over to the owner.
  • Deliver the complete facility within a guaranteed time and at a guaranteed price.

Essential Features of EPC Contracts

  • Single point responsibility
  • Fixed contract price
  • Fixed completion date
  • Performance guarantee
  • Caps on liability
  • Security
  • Liquidated damages
  • Defect liability period
  • Force majeure clauses

Outsourcing and Merchandising Agreements

Outsourcing Agreement Definition

An Outsourcing Agreement is a contract formed between a company and a service provider wherein the provider promises to deliver specified services. An example would be data processing handled by a service provider utilizing its own staff and equipment, typically working from their own location.

Merchandising Contract Definition

A Merchandising Contract is a marketing agreement that involves the provision of services. In this contract, a marketing company (or merchandising company) collaborates with a contracting company to make the latter’s products more competitive in the market, aiming for greater consumer acceptance and increased purchases.