Moral Clauses

Many celebrities have taken to social media sites, such as Twitter or Facebook, to post their own opinions about topical events in our society, such as the #MeToo movement. Whilst public debate is always encouraged, for a Studio who has contractually engaged a Talent, these opinions can sometimes be a minefield. Even the most harmless of comments, could be a recipe for a disaster.

Significant financial investment in motion pictures and television is made by Studios, networks, producers, distributors, financiers and advertisers. If comments by Talent lead to a backlash by the public against the Talent or Studio, this could place entire projects at risk. A clear example is the sacking of Kevin Spacey from popular television show, House of Cards, which cost Netflix millions. Whilst Spacey was paid for his entire final season of House of Cards despite being cut from the show, the final figure of damage for the Studio was estimated at $39 million.

Likewise, sporting bodies such as the Wallabies and Australian Rugby Union and their players have also come under fire, receiving harsh treatment by Sponsors, the media and the public for player’s conduct and opinions, outside of playing the sport.

To avoid such damage, moral legal clauses are sometimes inserted into Talent contracts. These clauses allow Studios, Employers or Sponsors to terminate contractual relationships with talent, if they display controversial or offensive behaviour, that may affect a brand or project’s image. For example, offensive statements may include those that bring a company into public disrepute; ridicule, cause contempt, scandal, embarrass, insult or denigrate individuals and the majority of the consuming public.

For example, NFL player Mr Mendenhall was engaged by Hanesbrands to advertise products for the “Champion” trademark. His opinions tweeted about the death of Bin Laden caused a negative public reaction, and Mr Mendenhall’s contract was immediately terminated for breaching the moral clause in his contract.

In Mr Mendenhall’s defence, he stated that,”he did not wish to stir up controversy only generate conversation”. Champion stated that whilst they understood he was entitled to express his opinions about such topics, Champion were “strong supporters of the Government’s efforts to fight terrorism,” and that Mr Mendenhall’s comments brought disrepute to their brand. The court ruled that the comments did not cause a “public outcry” and that terminating the contract was a breach of good faith and fair dealing in contract performance.

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, particularly if they have a moral clause in their contract. Breaching these moral clauses could end up in the termination of a Talent’s contract with Sponsors, resulting in irreparable harm to a Talent’s financial status.

There is an opposing argument to say that morality clauses that are drafted too broadly or ambiguously, are subject to abuse against Talent and are unfair. In the United States, The Director and Writer Guilds have abolished the use of moral clauses altogether. However, the Screen Actors Guild-American Federation of Radio and Television Artists (SAG-AFTRA) have not abolished these moral clauses and there are many bodies that still incorporate these clauses, in order to protect their interests.

In sports, whilst a player’s behaviour in many situations is not condoned, the response in how to treat a player, must be balanced against their rights as individuals. Whilst sporting bodies need to have contractual clauses in place to protect their reputation and interests, it is vital that these contracts are drafted fairly with regards to the personal behaviour of Athletes. For even though they are paid the big bucks, most of us would probably agree, it would be difficult for players to be a model citizen 24/7.

Whilst the #MeToo and other movements have made the entertainment and sporting industries more accountable, Studios and bodies may well be incentivised to include these moral clauses into Talent contracts to avoid the destruction of projects and their brand and the dire financial consequences that follow.

Should these moral clauses be included in a Talent contract, it is vital for parties to have a lawyer and/or Talent Agent negotiate to either remove these clauses altogether or ensure they are drafted narrowly to suit the needs of both parties. Furthermore, due diligence in the personality of talent must be comprehensive to minimise the risk of damage and commercial brands are advised to ensure that the personality of talent and company are a brand match.

Rebekah O’Sullivan, Senior Associate, Entertainment, Intellectual Property and Immigration Lawyer Migration Agent (Lic No. 1568412)

2019-06-04T01:15:01+00:00June 4th, 2019|Business Advice, Contracts, Corporate Advisory|Comments Off on Moral Clauses