What is Sequential Liability?
Sequential liability refers to a rule that states a company has to pay money it owes only after it has had due payments received from its customers. This is a common rule that is has a stronghold primarily in traditional media in relation to publishing and/or advertising. Sequential liability does not require a publisher to accept all orders from an agency. Many ad agencies have had lucrative relationships with production companies jeopardized by this practice which is now being widely adopted. The adoption of sequential liability goes back as far as twenty years. The idea of implementing sequential liability was always nearly a standard procedure, but recent developments have simply made the application of the idea more explicit. Some production companies allege that agencies are simply using sequential liability as a shield to avoid payment and pass all the risk to the production firm. As sequential liability and it’s wording in contracts matures, the advertising landscape will surely change accordingly.
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