It’s rare that a month goes by without a new celebrity scandal bubbling to the surface of the public consciousness. Some of these are more serious than others, such as the recent allegations of physical and emotional abuse that Amber Heard has leveled against her ex-husband Johnny Depp.
Such a serious accusation has naturally drawn extreme criticism to Johnny Depp. However, it has also led to the condemnation of the businesses who use Johnny Depp as a spokesperson. Depp acts as the face of Christian Dior’s Sauvage fragrance line. Dior has drawn the criticism of the public, and legal experts, for maintaining their endorsement contract with Depp despite the despicable behavior his ex-wife says he engaged in.
Almost anybody who’s done business can tell you that ending a contract is not as easy as saying “I don’t feel like it anymore.” In most situations, terminating a valid contract before it has run its course is a breach opening you up to legal liability.
However, this isn’t the case for Dior due to something called a morality clause in their contract with Depp. These clauses allow the party benefiting from the clause (almost always the company seeking endorsement) to terminate an agreement where the other party engages in conduct that could reflect poorly on the brand of the party being endorsed. The exact nature of the conduct allowing termination varies from contract to contract. However, these clauses tend to be fairly broad.
The goal is to ensure that an organization’s agents do not undermine that company’s brand. Morality clauses accomplish this by allowing a company to quickly, and without consequence, sever ties with “rogue” talent. Cultivating a brand image is a long and expensive process; thus businesses take steps to prevent this work from being undermined.
A Brief History of Morality Clauses
Morality clauses have been standard fare in entertainment, endorsement, and sports contracts for almost a century. In 1921, the comedian Fatty Arbuckle was accused of rape and murder and while he was acquitted by a jury, the court of public opinion never forgave him. Universal Studios, looking at veritable tidal wave of trouble the incident caused, decided that it needed a way to easily distance itself from its contracted talent should things go belly-up for a celebrity. They immediately started to include morality clauses in all their talent contracts which, if breached, allowed Universal to terminate a contract—no questions asked—five days after letting their talent know they had violated the clause.
Only a year after Arbuckle changed entertainment contracts, the morality clause entered the world of sports in the contract of Babe Ruth. The clause forbad Ruth from, among other things, staying up too late or showing up to practice drunk.
In more recent history, morality clauses have been used to protect many different brands. Kate Moss was dismissed by H&M in 2005 after she was photographed using cocaine. After Lance Armstrong’s 2012 doping scandal, Nike, Trek, and Oakley all invoked morality clauses to cancel endorsement deals with him. Many more scandals have led such revocations for celebrities such as Paula Deen, Michael Vick, Kobe Bryant, and Tiger Woods.
What They Solve and What They Don’t
Morality clauses are an excellent way for any business to protect their investment in their brand. However, they are not always going to get every business completely out of hot water. Exactly what a morality clause can do for a business often depends on the exact phrasing of the clause—something that is likely to be hotly contested during negotiation.
There are many elements to a morality clause that have to be hammered out in negotiating an endorsement deal. The type behavior that allows a company to terminate an endorsement contract is a common point of contention—celebrities wanting narrow definitions and companies seeking broader terms.
The exact action a company can take when invoking a morality clause is also a subject for negotiation. These clauses often allow companies to levy fines against celebrities either in addition to or instead of terminating the contract.
Even with a morality clause in place, the termination of a contract is unlikely to be the end of the story in terms of litigation. Celebrities are likely to sue alleging that their actions were insufficient to allow termination under the contract. If it comes to litigation, it can sometimes be hard to prove that the behavior that you are terminating the contract for actually took place—although the clauses can be written to include termination for allegations of bad conduct. What’s more, there is a good chance that a celebrity may sue for money they feel they are owed for the work they have already performed under the contract.
All these considerations, as well as the business considerations of money already invested into upcoming advertising featuring the celebrity under contract, are things that a company such as Dior will take into account before invoking a morality clause. While the behavior of those endorsing them may be appalling, a company will always have to take into account the bottom line when deciding how to proceed on a contract—never mind the potential that they may simply not have grounds to terminate.
Reverse Morality Clauses: When Business Misbehaves
A concept that has been around for a while, but has recently gained much more traction, is the reverse morality clause. As much as businesses build their brand, a celebrity’s business is being a brand. The extreme value of their public perception is the very reason morality clauses exist in the first place.
With this in mind, some experts have suggested the need for morality clauses that work in favor of celebrities. It’s not uncommon for celebrities to agree to endorsements with a brand and then regret their choice after a company’s misbehavior comes to light. For instance, in 2011, Natalie Portman publically renounced an endorsement deal she had recently signed with Dior after the fashion house’s creative director was filmed spouting anti-Semitic sentiments.
As it stands, a celebrity in Natalie Portman’s situation is often left with two unpleasant options. You can carry on representing a company that you, and your fans, may have serious issues with—risking your credibility and celebrity cachet. Alternatively, you can refuse to continue representing that company—likely breaching your contract with them and risking the damages that could come in a lawsuit against you.
In a way, the greater your celebrity the greater the risk you run. The higher profile you are, the more your association with a company’s bad behavior will be talked about and damage your reputation. As expensive and difficult as it is to build a brand as a company, building a brand when that brand is yourself is equally challenging.
Morality clauses were introduced for a reason; protecting your brand is important. Without a morality clause on their side, either a person endorsing a company or the company itself could find themselves high and dry when that Ponzi scheme or dog fighting ring hits the news.
Authored by Jonathan Lurie, LegalMatch Legal Writer and Attorney at Law