Monday, February 18, 2013
The Tragedy of Oscar Pistorius
The Oscar Pistorius situation is truly tragic for many reasons, including the loss of a life. The fallout has included a number of sponsors including Nike terminating their relationship with Pistorius, pulling ads or otherwise removing Pistorius from their advertising campaigns.
The ability of a sponsor to take these actions usually depends on the specific language of a morals clause. Some clauses will allow termination or other adverse actions if the athlete has been charged with a crime, regardless of whether there is ultimately a conviction. Other clauses might allow such actions only upon conviction of a crime.
This situation highlights the basic principle for contract drafting generally and morals clauses in particular -- in order to impose the proper penalties for a breach, specific language is often necessary to fit specific situations. Nike's contract with Pistorius apparently allows for termination in the event of a criminal charge or even just becoming involved in a public scandal. In an unfortunate situation such as this one, this type of broadly-worded morals clause gives the sponsoring company significant power in determining its response.