Morality clauses in the era of social media scandals: what brands should know

The morality clause – a contractual provision requiring a party to comply with certain standards of behaviour – has long been a feature of spokesperson and endorsement agreements. Yet, in the current age of cancel culture, social media and influencer marketing, these provisions have become a primary focus for businesses when onboarding an individual to be the public face of their brand.

The behaviour of those who represent a company will undoubtedly be perceived as an extension of the values, beliefs and attitudes of the company itself. As such, it is essential for a brand to ensure that the public behaviour of brand partners corresponds with the image that it wants to project. If a brand representative becomes embroiled in scandal or controversy, or should public opinion otherwise turn against them, this could ultimately pose a significant risk to the brand.

To protect against this, companies will typically include morality clauses in contracts for new brand partners. These usually stipulate that a company may terminate an agreement and also be compensated for certain damages incurred as a result of illegal or immoral actions. Naturally, such clauses serve as an essential tool for a brand wishing to maintain control over its public image. A strong morality clause enables a safer brand-talent relationship but drafting them is increasingly complex, given the diverse range of circumstances they may have to cover.

When drafting a morality clause, a brand might like to consider the following key questions:

  • What behaviour or circumstances should trigger the clause? Historically, morality clauses were intended to come into play in the event of criminal charges, but now increasingly cover much broader situations. Many recent examples have shown that behaviour need not be criminal to significantly damage a company’s brand. In some cases, morality clauses can be tailored to the individual in question, or take into account a particular community, target audience or the brand’s clientele.
  • Will the clause be triggered solely by the actual conduct of the individual, or could it also be prompted by allegations about their conduct? Several incidents in recent history have shown that widespread public belief in nefarious allegations (including sexual misconduct) have caused significant damage to reputations. From the perspective of a brand, public opinion absolutely matters when safeguarding one’s reputation.
  • Will the clause be triggered only by an individual’s actions, or could it encompass the actions of others? For example, if the controversial behaviour of the brand partner became known through the publications of the third parties.  
  • How is the clause worded? Vague terminology, such as stating that a partnership may be terminated in the case of “immoral activity” or “behaviour that shocks the public conscience”, remains open to interpretation. In order to avoid potential disputes, the wording of these clauses should be clear and unambiguous.
  • Could the clause be triggered by conduct outside the terms of the agreement? What happens, for example, if controversial actions or statements from the past emerge while a brand partner is under contract, or takes place while the individual is enjoying post-agreement benefits? These questions are particularly important in the age of social media; in several recent high-profile examples, controversial comments posted online years ago have come back to haunt their authors. Consider whether a morality clause should be triggered based on when the acts or allegations become public, as opposed to when they occurred.  
  • How does the morality clause interact with the rest of the agreement? Can funds invested be recuperated once the clause is triggered? What will happen to content that is already in market?
  • Who handles communications in the event of a scandal or controversy? The brand may wish to emphasise that if a controversy triggers the morality clause, the brand will have control (or the right of pre-approval) over all public communications regarding the issue, including statements on social media and to news media outlets.

When considering Russia as the relevant market, it might be helpful for brands to reflect on the basis on which there could be early termination of the agreement, where a brand partner is thought to have acted in violation of the company’s values.

The morality clause might be enforced by means of the following provisions under Russian civil law:

  • Unilateral termination of the agreement at the discretion of the brand if the brand representative violates the morality clause. Such provision can be set out in the services agreement between the customer (the brand owner) and the contractor (the brand representative), as permitted by Article 450 of the Russian Civil Code. 
  • Termination condition, if previous controversial behaviour is revealed or the brand partner’s immoral actions take place in the future. According to Article 157 of the Civil Code, the agreement can be ended under the termination condition or condition precedent, the occurrence of which depends, inter alia, on the behaviour of the party to the transaction.
  • Representations provided for by Article 431.2 of the Civil Code, by which the brand partner represents that prior to the conclusion of the agreement, they have not committed any actions that could be interpreted as contrary to the brand’s values.

The agreement can also provide for the brand representative’s financial liability in the form of a specified contractual fine, in the event of the moral clause being violated. 

Increasingly, those who represent a brand are viewed as the brand itself, and robust morality clauses will help to ensure that a brand’s values are well-represented. Communication is key to ensuring that all parties understand their obligations, as well as the shared values they wish to promote.

Finally, once a morality clause comes into effect, it is important for a brand to monitor the behaviour of the individual involved, online or otherwise, to help gauge the public’s reaction and to keep an eye on any media attention being generated.

This is an Insight article, written by a selected partner as part of IAM's co-published content. Read more on Insight

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