By Rebekah O’Sullivan and Matt Burgess, Director..
Moral legal clauses are everywhere in sporting and talent contracts but the standard contractual language of these clauses might be too broad to stop a celebrity from posting their own opinions on social media sites, such as Twitter or Facebook.
That could be the lesson in a recent decision by a North Carolina federal judge. In that case, Rashard Mendenhall, a professional athlete for the NFL employed by the Pittsburgh Steelers, sued Hanesbrands Inc. for terminating his million-dollar contract to promote Champion sportswear. The clothing company ditched Mendenhall after he sent ‘eyebrow-raising tweets on sociopolitical topics, including an attempt to temper celebrations after Osama bin Laden was killed May 2.’ Now, a judge has denied Hanesbrands’ attempt to escape the lawsuit, saying that Mendenhall alleged a plausible claim for breach of contract
What is a moral clause?
These types of clauses vest authority in sponsors to terminate contractual relationships with athletes and talent, if they are actively involved in any situation or occurrence that maybe controversial or offensive to the sponsor’s brand. These could include statements or opinions on social media sites that bring the company into public disrepute; cause a scandal; ridicule; or offend the majority of the consuming public.
Mr Mendenhall entered into a Talent agreement with Hanesbrands in North Carolina to advertise and promote Hanesbrands’ products sold under the “Champion” trademark. The moral clause in his contract allowed Hanesbrands to terminate the contract should Mr Mendenhall become involved in any situation or occurrence that brought public disrepute to the brand.
Mr Mendenhall posted tweets about his opinion about the death of Osama bin Laden and the events of September 11, 2001, in order to foster debate. This caused a negative public reaction. Hanesbrands subsequently terminated the contract with Mr Mendenhall. Hanesbrands’ claimed that Mendenhall had breached the moral clause in his contract by posting comments on Twitter, which caused a public uproar.
Mr Mendenhall filed a civil action alleging that he did not wish to stir up controversy only generate conversation. However, Hanesbrands made a public statement to ESPN stating that their brand, Champion, was a strong supporter of the government’s efforts to fight terrorism and whilst they respected Mr Mendenhall’s right to express opinions about controversial topics, they did not believe that Mr Mendenhall could appropriately represent the brand, Champion, and therefore they were terminating the business relationship.
The Court found there was no breach of contract of the moral clause by Mr Mendenhall. The Court found the nature of the response to Mr Mendenhall’s Twitter comments were merely disagreements by the members of the public and did not constitute a public outcry. In the alternative, the Court found that Hanesbrands had unreasonably terminated the contract and violated the convenant of good faith and fair dealing in contract performance. The Court found that Hanesbrands had acted irrationally in exercising their discretion to terminate the contract.
And what did we learn from this?
Legal practitioners should aim to be more specific in the way they draft these moral clauses in order to protect their client’s brands from harm.
Although in this case the athlete was successful in his claim, athletes and talent must understand that even though they have the freedom to express and publish their opinions on social media sites, there are still consequences for doing so. These consequences could end up in the termination of their contracts with sponsors, resulting in irreparable harm to their financial status.
This scenario presents an interesting debate on what might define a statement as ‘shocking, insulting or offending’ to the consuming public. This may become an interesting area of debate in Australian law particularly in regards to intellectual property rights in breach of contract cases.
Ensure that any “morals clause” that you have in a contract is written carefully to take into account both the talent that is signing to exploit the commercial brand and you make sure that now more than ever, the brand to be exploited matches the personality of the talent and due diligence in the personality of the talent involved is comprehensive to minimise the risk of any unexpected outbursts like Mr Mendenhall’s.
This blog is for discussion purposes only. This must not be considered legal advice.
For legal advice on this topic and references to any information in this article, please contact
Matt Burgess, Director:
Phone: +61 405 722 739
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Image Credit: imagerymajestic
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