Tag Archives: Contract

A primer on consideration and the law of contracts

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In order for a contract to be legally enforceable, there must be some sort of legitimate consideration. What is “consideration”? Consideration is a bargained-for change in legal position between the parties. Basically, two elements must be present for a valid contract to exist. First, there must be a bargained-for exchange between the parties. And second, that which is bargained for must have legal value (it must be a detriment to the person to whom the promise is made, and should constitute a benefit to the person who makes the promise). Substitute doctrines may permit the enforcement of an agreement without consideration, but those are outside of the scope of this primer. An example of the elements of consideration may help with the concept:

Robert promises to sell his car to Jeffrey for $5,000 in exchange for Jeffrey’s promise to pay $5,000. Both elements of consideration (a detriment and a benefit) are found here. Robert’s promise was bargained for, and it induced a detriment to Jeffrey. Jeffrey’s detriment induced Robert to make the promise. Also, both parties suffered detriments. The detriment to Robert was the transfer of ownership of the car, and the detriment to Jeffrey was the payment of $5,000 to Robert.

Unless the promise induces a detriment and the detriment induces the promise, there is no “bargained-for exchange”.

Additionally, if either of the parties intended to make a gift, he or she was not bargaining for consideration. Also, “past consideration” is generally not sufficient consideration. For instance, if something was already given or performed before the promise was made, it will not satisfy the “bargain” requirement. Here is an example of past consideration:

Jennifer was about to be struck by a speeding car. Eva pushed her out of the car’s path, just in time to save her from being struck. However, Eva was herself struck by the car and was seriously injured. Jennifer later promised Eva that she would pay her $1,000 per month for life. There is no consideration because Eva did not bargain for Jennifer’s promise.

It should be noted here that there is substantial disagreement with this general rule, and therefore many exceptions exist to past consideration issues. However, it is important to be aware that past consideration can influence the legal sufficiency of a contract.

These are just a few things to consider when determining the validity of a contract. If you are contemplating entering into a contract, or if you would like to have an existing contract reviewed, you should contact a licensed attorney to determine the best course of action, or to preserve your legal rights.

*Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

SPORTS, FILM & TV CONTRACTS: MORALS CLAUSES

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Within the last year, we have witnessed a laundry list of personalities in the public eye come under fire for their behavior off camera and off the playing field. Some of these personalities behavior crossed the line from being morally offensive to the average person into alleged criminal acts.

So, let’s talk about: (1) sports figures; and (2) film and television actors. Sports figures may have large endorsement deals that depend on the public holding the sports figure in high-esteem. Production companies depend on the availability of film and television stars so they can appear on set and do what they do best–shine in front of the camera.

However, what happens when these people have lost their promotional luster or they are unavailable due to behavior that the general public would find morally reprehensible–enter morals clauses in contract.

A morals clause is part of a contract that defines certain behaviors that are unacceptable to a party. If the conduct defined in the morals clause comes into question, then the contract may be voidable or subject to termination. The reasoning here is that the party contracting with the sports figure or film and television star has been subjected to conduct that is detrimental to their interest; or it devalues the performance due under the contract.

Historically, morals clauses have been thought to be too vague to be enforceable when drafted in a catch-all manner–like “X may terminate this contract upon written notice to Y if Y shall at any time fail, refuse, or neglect to conform their behavior to the moral standards of the community.” Doesn’t that clause just feel too sweeping to have any effect. Nobody should be able to define what a person can or can’t do in their personal life right?

But, what about a production company considering an actor that has a drug abuse problem that has been widely publicized and is generally known to be true–maybe, even admitted to by the actor. There is an inherent risk that their behavior off the set may result in the production coming to a screeching halt. Alternatively, what about a sports figure who’s squeaky-clean public image sells products at a premium price paid to the sports figure for the right to use their image?

A well drafted morals clause that defines specific behavior that makes the sports or film and television star unavailable or erodes the value of their public image may be the best way to try to curb the risk. It’s like everyone’s parents use to say about private behavior and personal risk taking: “Don’t do anything that you wouldn’t want to end up on the front of the New York Times.”

In areas like sports and entertainment, almost all behavior from these public figures ends up on the front of the New York Times. This is why morals clauses are so important. If drafted properly, they may allow advertisers and production companies to limit damaging economic effects and distance themselves immediately from the latest public figure turned social pariah by implementing a morals clause in their contracts.