Civil Law

By Minuri Dharmasena


Why an oral contract just isn’t good enough

As more small businesses turn to social media influencers to advertise their products, the Victorian Civil and Administrative Tribunal (“the Tribunal”) has issued a timely reminder of the value of a good old-fashioned written contract.

In early May, VCAT heard a small claims dispute for $2,100.00 between Chloe Roberts, an Instagram influencer with about 128,000 followers, and Melbourne based café, Legacy.[i]

The Tribunal heard that the parties entered into an oral contract with no express terms other than the agreement that the café would pay Ms Roberts $200.00 for each Instagram post promoting the café (“the Agreement”). When the number of followers on Ms Roberts’ Instagram page grew from 80,000 to 120,000 the fee was increased, by consent, to $300.00 per post. However, once the higher rate was agreed to, the café fell behind on its payments to Ms Roberts.

The trouble began when the café’s owner Mr Katsiogiannis discovered, when preparing for a meeting with Ms Roberts, that the posts were no longer on her Instagram page – they had been archived. Mr Katsiogiannis refused to pay Ms Roberts her fees unless the archived posts were reposted. Ms Roberts agreed to do so but only once the café had paid her the amount she was due. The meeting and subsequent discussions proved ‘fruitless’ and the matter was taken to the Tribunal.

Ms Roberts said before the Tribunal that she had followed through on her side of the Agreement by posting photos promoting the café and keeping the posts up for at least one week. She claimed that it was in both parties’ interest that she archived the posts as 90% of views occur in the first week and an Instagram page with too many old posts loses follower engagement. The café owner disagreed – he argued that Ms Roberts should have kept the promotional posts displayed on her Instagram page until the he expressly agreed to have them archived.

The Tribunal discussed the express and implied terms of the oral agreement and found that, per the oral agreement, Ms Roberts was obliged to post a ‘reasonable number’ of promotional posts but retained creative control of her Instagram page and was entitled to decide which posts would keep her followers interested. Further, because the agreement had no fixed duration, it could be terminated by either party on giving notice.

The Tribunal also found that because there was no ‘fixed contract which specified how long the Applicant would display posts on her Instagram account in return for her fee, or whether and if so in what circumstances the Applicant could archive posts and therefore remove them from display’, the amount Ms Roberts was due needed to be assessed on the value of the work completed – in this case, the value obtained by the Legacy café.

In its assessment of the value obtained, the Tribunal found some weight in Ms Roberts’ claim that, since older posts were viewed less, their being archived would not cause a client to lose value. However, in this case, it was reluctant to find that she was entitled to remove the posts at any time without an express contract to that effect, or that the café had suffered a loss of value as a result of her archiving the posts. Accordingly, it held that the value of the service provided by Ms Roberts was only two-thirds of the outstanding invoiced amount, $1,400.00.

With the growing popularity of social media influencers in small-businesses’ marketing strategies, we are likely to see more disputes like this arise before the courts. But for now, the lesson for both budding influencers and small businesses is clear. As with any other commercial relationship, any agreement between an influencer and a small business should be accompanied by a comprehensive written agreement. Until some consensus is formed, either within the industry or at court, those agreements should address when, if at all, an influencer may archive or delete promotional posts.

[i] Roberts v Con Katsiogiannis Legacy (Civil Claims) [2019] VCAT 645 (6 May 2019)