Monday, 18 February 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.

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