Problem.Dispute.Athlete endorsement

     Anna Maria Athlete (hereafter "Athlete") is one of the world's premiere female soccer players and has been a regular starting player on her country's women's national team for seven years.  She recently signed a five-year endorsement contract with Free Kick International (hereafter "Free Kick"), a manufacturer and worldwide distributor of soccer shoes and apparel. Free Kick is obligated under the contract to pay Athlete $1,000,000 per year, payable each year in four equal quarterly installments. Athlete is obligated under the contract to participate in a specified number of promotional events and television commercials each year and to wear Free Kick shoes and apparel at any time (other than during games) when Athlete is wearing soccer shoes and soccer apparel in public.

     Part A

     In addition to clauses imposing the foregoing obligations, the contract also includes the following clauses:

     The signing of the contract took place in Free Kick's corporate headquarters, which were located one block from an abortion clinic. On the day of the signing ceremony, the abortion clinic was the site of a demonstration against abortion. At the time of signing, Athlete mentioned her sympathy with the demonstration. The president of Free Kick told Athlete that she disagreed with Athlete but acknowledged to Athlete that it was a difficult issue.

     During the first month of the contract, Athlete expressed her views on abortion to a journalist. When her views were reported in a magazine article, Free Kick's president called Athlete to remind her not to discuss such views with the media. Athlete apologized and said that she would refrain in the future.

     Five months into the contract, Athlete had undertaken all public appearances scheduled for her by Free Kick and had filmed the one television commercial scheduled by Free Kick. Free Kick had paid Athlete $250,000 at the end of the first quarter of the year.

     During the sixth month, Athlete was having dinner with a close friend, Annette Work (hereafter "Annette"). Early in the evening, Annette told Athlete about how Annette was writing and posting stories about famous athletes on Annette's new web site at www.sportshero.com.

     Much later the same evening, Annette pulled out a joint and offered to share with Athlete. Athlete declined, saying that she had smoked marijuana and even snorted some cocaine a few years earlier, as a teenager, but quit because of its adverse effects on her athletic performance. Athlete also said that she wasn't so sure that marijuana was all that bad for people generally.

     The next day, Annette wrote and posted on her web site a story about Athlete that quoted Athlete's statements about use of marijuana and cocaine as a teenager and quoted Athlete's opinion about marijuana.

     Within a few weeks, Free Kick had received hundreds of complaints from people who had read or heard about the story posted on Annette's web site.   Many of those complaining threatened to boycott Free Kick's products unless Free Kick terminated its relationship with Athlete.  Free Kick is considering several options, including doing nothing to respond to the complaints, asking Athlete to publically explain or apologize for her remarks, or terminating its contractual relationship with Athlete.

     Free Kick wants your opinion about the consequences of terminating its contractual relationship with Athlete.  In order to advise Free Kick about the consequences, it seems appropriate, does it not, to consider the meaning of clauses 48 and 49?  Has Athlete engaged in any conduct that might impair the value of Athlete's association with and endorsement of Free Kick products?  Has she expressed any political views to the media that might impair the value of Athlete's association with and endorsement of Free Kick products?

     In developing your opinion, consider Cal. Civ. Code 1635-54, Bond Drug Co. of Illinois v. Amoco Oil Co., and The Prytania Park Hotel, Ltd. v. General Star Indemnity Co.

     [Note:  In 1997, NBC fired well known sports broadcaster Marv Albert because of his guilty plea to charges of assault and battery lodged by a former girl friend.  His contract with NBC included a "morals clause" analagous to (but more lengthy than) paragraph 48 of the hypothetical contract described above.  One story of his guilty plea and termination by NBC was carried by CNN interactive.  NBC rehired Albert a few years later.  In another story, David D'Alessandro, CEO of John Hancock (an insurance company), is quoted as saying that sponsors of the 2004 Olympics have clauses in their contracts with the International Olympic Committee permitting the sponsor to "walk out on your contract" if "the IOC conducts itself in a manner that damages the reputation of your company."  Newsweek, p. 4, October 9, 2000.]

Part B

     Instead of the issues raised by Part A of this problem, consider the following possibilities and apply either the common law rule expressed in R.2d Contracts 261 or the common law rule expressed in R.2d Contracts 265, whichever you think is applicable.

     1.  A year into the contract, Anna undergoes surgery on her vocal cords. Her doctor instructs her not to talk for six months.  She wants to get out of the contract because of recent accusations that Free Kick unfairly exploits child labor in foreign countries.  May she use her inability to talk as a basis for discharging her duties under the contract?

     2.  A year into the contract, Anna is involved in a serious automobile accident as a result of which, to save her life, doctors amputate one of her legs below the knee.  She can no longer play soccer, but remains able to perform her obligations under the contract.  Free Kick wants to know whether it may terminate the contract without liability for breach.

     3.  A year into the contract, a new person is appointed to coach the United States Women's National Team and the coach cuts Anna from the team.  Free Kick wants to know whether it may terminate the contract without liability for breach.

     4.  Several years ago, Ervin "Magic" Johnson, basketball superstar for the Los Angeles Lakers, publically announced his early retirement from professional basketball because he had contracted HIV, probably as a result of unprotected sexual intercourse with more than one woman during his professional basketball career.  If at that time Johnson were party to an endorsement contract analagous to the contract between Anna and Free Kick, would the company in Free Kick's position have been entitled to terminate its contract with Magic Johnson without breach on the basis of his public announcement.