30 Jan 2020The rise of social media across the globe has opened a huge market for people wanting to make a living as a social media influencer. With the right knowledge, authority and reach, social media influencers have the ability to affect the purchase decisions of others, thus making them a very valuable marketing asset for many businesses.
While this sounds like a fun and very appealing way to make money, it’s important to understand the legalities around being a social media influencer and why it’s important to have more than a verbal contract in place to protect yourself.
Verbal contract between social media influencer and café owner in dispute
In a recent case, social media influencer Chloe Roberts took a café owner to the Victorian Civil and Administrative Tribunal. (See Roberts v Con Katsiogiannis Legacy (Civil Claims) [2019] VCAT 645.)
Ms Roberts argued that the café owner had failed to fulfil his verbal contract, in which he had agreed to pay Chloe for posting Instagram images of herself having a great time at his café.
Dangerously grey area of verbal agreement
When Ms Roberts formed the verbal contract with the café owner, she had had around 80,000 followers. It was agreed that the café owner would pay her $200 for each post that promoted his café. Ms Roberts kept creative control of her Instagram page, including how often she would post.
Soon, Ms Roberts’ audience increased to 100,000 followers, and she asked for and received $300 per post from the café owner. However, he was slow in paying, and when he found out that earlier posts were no longer on her page, he protested.
Explaining to the tribunal that she archived older images to keep the page fresh, Ms Roberts stated that 90 per cent of image views occur in the first week of posting. The café owner argued that he’d paid for the posts, and therefore they should remain visible on her page.
Ms Roberts agreed not to archive any new posts, on the condition that the café owner paid the $2100 she said he owed her.
Are verbal contracts legally binding?
Generally, if verbal contracts are reasonable, equitable and made in good faith, then they are indeed legally binding.
However, in this particular case, the tribunal ruled that as there was only a verbal agreement and no contract specifying the particulars of the deal, the pay to which the applicant was entitled must be assessed on quantum meruit, the fair and reasonable value of the work performed.
It was determined that because Ms Roberts removed the old posts without telling the café owner, she was only entitled to two-thirds of her bill, which equalled $1400.
It pays for social media influencers to enter watertight legal contracts with their clients
Ms Roberts has since put the café days behind her and now has 123,000 social media followers, promotes a fashion boutique at $1,200 a post, and has engaged a manager.
Yet this may only be the beginning of a very prosperous career for Ms Roberts as a social media influencer. According to recent news reports, influencers with a million followers can get $10,000 per post, and US stars like Selena Gomez and Kylie Jenner make $1 million per post.
With this level of money being paid to social media influencers, it soon becomes obvious why it’s crucial to enter into a formal, watertight legal contract. For more information please see our 2023 article Crackdown on social media influencers who fail to disclose payments.
For more information about unwritten contracts, please see our earlier article A handshake can legally seal a deal.
