Contractual Ambiguity: Why clarity only comes through the lens of audit

Contracts are designed to create certainty. They set out the rules of engagement, define services and fees, and provide both advertiser and agency with a common reference point. Yet in practice, we often see agreements that are vague, inconsistent, or simply out of date. Even when clients rely on widely accepted templates like the ISBA Media Services Framework (‘MSF’), a subtle wording change or the addition of a single seemingly innocuous clause can create vastly different interpretations between client and agency.

The truth is this: until you’ve audited your agency, you don’t really know how well your contract is working in practice.

At Financial Progression, we’ve seen how seemingly small deviations or misalignments around terms can snowball into significant financial and operational issues. A well-drafted contract is only part of the picture. The real test is how it’s being applied day to day.

Where Ambiguity Hides

Some of the most common issues we uncover during audits include:

• Scope of services – Vague descriptions leave room for differing views on what’s included in the fee versus what is billable separately
• Definitions of deliverables – Terms like “third-party costs” may be ill-defined, or defined differently in different markets
• Audit rights – Some clauses are so restrictive they prevent meaningful review; others are so broad they invite dispute when exercised
• Local vs global contracts – A global agreement may set expectations, but local variations often introduce inconsistencies that make compliance difficult to assess
• Fee structures and payment terms – Lack of clarity in how rebates, pass-through costs or incentive fees are handled can create confusion.

Why practice often deviates from paper

Even when contracts are well-drafted, real-world behaviour often drifts from what’s written:

• Email amendments – Fee changes or reporting tweaks agreed informally via email may never make it into the contract
• Verbal agreements – Understandings around rebates or treatment of costs can become problematic when staff change or memories fade
• Scope creep – Agencies might deliver work outside the formal scope with an assumption of later compensation. Without a clear change process, misunderstandings and disputes become likely
• Carved-out activities – Sometimes agencies will treat certain types of spend or activity as separate from the main agreement, applying alternative terms or clauses to them.

These deviations often go unnoticed until an audit reveals them. By then, the gap between contract and reality may be significant.

A real-world example

In a recent audit, we found that changes to commercial terms had been agreed informally and never documented. In some cases, fee structures had evolved via email without any contractual update. The result? Ambiguity over who was accountable for what – and difficulty determining whether either party was compliant.

This isn’t unusual. It’s exactly why auditing compliance with media and advertising contracts is essential, not just reviewing the words, but seeing how the agreement holds up in practice.

The hidden costs of ambiguity

• Financial risk – Undocumented changes and vague wording can result in overcharges, missed savings, or unrecovered balances. Small issues can quickly scale across campaigns or markets
• Operational inefficiency – Teams spend unnecessary time debating what was or wasn’t agreed, slowing down execution and creating internal friction
• Strained relationships – When expectations differ, even with the best of intentions, trust is easily eroded.

So how do you reduce risk?

Not just by writing better contracts, but by ensuring they’re followed.

• Define key terms clearly – Especially where money is concerned, use definitions and worked examples to avoid misinterpretation
• Standardise globally – Align local with global agreements to remove unintended inconsistencies and support consistent governance
• Formalise all changes – Create a structured internal process for documenting any variations via formal amendments
• Audit regularly – Only by auditing can you confirm that what’s written in the contract matches what’s actually happening in practice.

How Financial Progression can help

At Financial Progression, we specialise in contract compliance audits of marketing services agencies, examining not just your contract, but whether it’s being followed as agreed.

Our audits:

• Identify where actual practices have drifted from contractual terms
• Uncover areas of financial risk or inefficiency
• Provide practical recommendations to improve compliance and reduce ambiguity

We don’t just help you understand what’s in your contract, we show you how well it’s working in reality.

Whether you’re using your own contract, or one based on a standard template like ISBA’s MSF, only an audit will reveal whether it’s protecting you as intended.

If you’d like peace of mind that your agency is delivering in line with agreed terms, and that your contracts are being properly applied – get in touch.