On the heels of a number of athlete endorsement deals gone awry (think: Nike’s ousting of Maria Sharapova from its celeb athlete roster after discovering that the Russian tennis star tested positive for a banned performance-enhancing substance and revoking the contract of champion boxer, Manny Paquiao, after he made disparaging comments about gay couples), fashion is in the spotlight thanks to Johnny Depp. The actor, who is the face of Christian Dior’s Sauvage fragrance, has made headlines recently when his wife, Amber Heard, came forward with domestic abuse allegations.
Unlike with Paquiao, who was dropped from Nike’s endorsement roster, and Sharapova, from whom Nike initially distanced itself, Dior has kept Depp on board as the face of its campaign, sparking no small amount of controversy among fans and activists, alike. This is particularly the case because in all likelihood, Dior could probably quite easily get out of its deal with Depp. This is because such endorsement or brand ambassadorship contracts come with explicit morals clauses, the violation of which allows a brand to give the celeb the boot.
Companies take on quite a significant amount of risk when contracting with professional athletes and/or celebrities to endorse their products, as the famous individuals and their behavior – whether in terms of sporting or in their often paparazzi-plagued personal lives – serves as a reflection of the brand. In order to protect themselves and their carefully crafted identities, brands include explicit morals clauses in their ambassador’s contracts.
Morals clauses are typically worded in such a way as to allow a brand (read: Dior) to immediately terminate an endorsement contract, without any penalty, should the celebrity act in a certain manner that would tarnish the reputation of the brand.
A particularly strict clause (which is what Dior likely bargained very hard for) may read as follows: "If at any time, in the opinion of [brand], Ambassador becomes the subject of public disrepute, contempt, or scandal that affects Ambassador’s image or goodwill, then [brand] may, upon written notice to Ambassador, immediately suspend or terminate this Ambassador Agreement and Ambassador’s services hereunder, in addition to any other rights and remedies that [brand] may have hereunder or at law or in equity."
But regardless of what behavior triggers the clause, the remedy for such a violation may ultimately be more significant. The endorser/brand (Dior, for instance) will likely seek any number of potential remedies for such a violation, including but not limited to: the termination of the agreement; suspension the agreement for a period of time; imposition of a financial penalty for the behavior at issue without terminating the endorsement contract; or the payment of damages by the celebrity for breaching the agreement.
As Christopher Chase of Frankfurt Kurnit Klein & Selz, PC accurately states: “Termination and suspension raise another issue – the payment of compensation. If either option is exercised, the advertiser may want to: hold back compensation owed to the celebrity; pay the celebrity on a pro-rata basis either for the services performed to date or based on the term of the agreement (and pay nothing else going forward); or seek a refund of any compensation paid to the celebrity (however, a refund clause is often a difficult provision to insert).”
So, while it is certainly news in itself that Dior has not terminated its relationship with Depp, it will be interesting to see what, if any, action it takes in terms of seeking recourse for the controversy surrounding Depp. Chances are, we will not be privy to what likely amounts to confidential information, unfortunately.