Morals Clauses: Who’s The Judge?

Companies take on an extreme amount of risk when contracting with professional athletes and/or celebrities to endorse their products. As soon as both sides are able to come to a mutual understanding regarding the terms and conditions that will be contained in the agreement, the athlete immediately becomes a spokesperson serving as one of the many respective faces for that brand. While many of the provisions found in the agreement may utilize standard language or address subject matter that does not warrant substantive negotiation, athletes and celebrities should nevertheless strive to make sure that they fully understand the entirety of the agreement, and the consequences that may come as a result of any violation thereto. An example of one such provision that athletes should be certain to examine with great detail and assistance from their lawyer or qualified representative is the morals/personal conduct clause (“Morals Clause”).

Generally speaking, a Morals Clause found in a typical endorsement agreement reads as follows:

PLAYER’s conduct shall at all times conform to the highest standards of good sportsmanship, good citizenship, and good moral conduct (“Conduct Standards”). PLAYER shall not partake in any activity or act that, in the COMPANY’s sole and absolute discretion, may reasonably, in any way, injure or adversely reflect on the name, goodwill or reputation of COMPANY, its affiliated companies, or its products, logos, or trademarks (“Negative Acts”). Shall PLAYER either (a) fail to comply with any of the Conduct Standards, or (b) commit any of the Negative Acts, COMPANY, at its option, shall fine PLAYER in the amount of _______. Furthermore, PLAYER agrees that a third (a) failure by PLAYER to comply with Conduct Standards or (b) engagement by PLAYER in Negative Acts shall give COMPANY the right, in its sole and absolute discretion, to immediately terminate this Agreement in its entirety.

As evidenced above, a Morals Clause tends to be quite expansive regarding what an athlete cannot do and what may, or will, occur in the event the athlete triggers the penalties contained therein. However, despite its expansive nature, the terms utilized in a Morals Clause occasionally carry the disadvantage of being ambiguous regarding what is and is not condonable behavior. Using the above language as a model,  one may reasonably ask who defines what constitutes good citizenship or moral conduct? Is it conduct that is generally acceptable in the eyes of society? Or are these terms subject to the definitions of the company that contracted with the athlete?

An example of this ambiguity can be seen through the handling of Adrian Peterson, who was recently placed on the NFL’s exempt list by the Minnesota Vikings pending the resolution of the recent child abuse charges brought against him. By being placed on the exempt list, Peterson has been effectively barred from all team activities. In addition to this punishment, Castrol Motor Oil terminatedHyperice terminated, and Nike suspended their endorsement deals with Peterson.

Nike’s suspension of its contractual relationship Adrian Peterson is particularly interesting giving the fact the company has an extensive history of standing behind endorsers who have faced significant legal trouble and/or public scorn. In 2003, Nike supported Kobe Bryant when rape charges were brought – and eventually dropped – against the Los Angeles Lakers superstar. Additionally, the company stood behind Ben Roethlisberger as multiple sexual assault charges accumulated against the Pittsburgh Steelers quarterback. Most notably, the athletic apparel company refused to disassociate from Tiger Woods despite the fact numerous companies such as Gatorade and EA Sports actively sought to distance themselves from the disgraced golfer as he suffered in the court of public opinion during his cheating scandal that rocked the world in 2009.

However, the company did drop Michael Vick after he pleaded guilty to dog-fighting charges in 2007. Furthermore, once the United States Anti-Doping Agency (USADA) published its 1,000 page report claiming that former seven-time Tour de France champion, Lance Armstrong, had operated “the most sophisticated, professionalized and successful doping program that [cycling had] ever seen,” the company quickly cut ties with one of its most prominent endorsers.

Without having the exact language of Adrian Peterson’s endorsement deal with Nike, it is rather difficult to speculate on whether Peterson’s contract contained the same Morals Clause language found in the other contracts signed by Nike and Kobe Bryant, Ben Roethlisberger, Tiger Woods, and all the other athletes signed by the company to represent its brand. Nonetheless, it is important for the athlete to understand that everything is negotiable. Should the endorser feel concerned that a Morals Clause is ambiguous, or does not adequately define what does and does not constitute activity worthy of termination or suspension, he or she should request specific terms that would trigger same. For example, if the athlete is not sure whether being charged with a misdemeanor would trigger termination, he or she should request specific language such as: “Being convicted of a felony shall serve as grounds for immediate termination of this Agreement” or “Shall PLAYER be charged with a crime of moral turpitude, COMPANY, at its option, may elect to terminate this Agreement.” Such language makes it specifically clear what the athlete cannot do and does not leave it to the absolute – and sometimes unclear – discretion of the company, or subject the athlete to a penalty later handed out by the company based solely upon public opinion.

While companies may fear incorporating exact language in their Morals Clause based upon the notion they may not cover all scenarios, in most situations, it is the athlete and/or celebrity that is being pursued. As a result, the endorser should never let the thought of losing a potential endorsement opportunity prevent him or her from ensuring that all terms and conditions are clear for the purpose of protecting his or her rights and eliminating the likelihood of waking up to an unexpected Twitter post or trending topic stating that the endorser has been dropped or suspended indefinitely by the company.

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