The Morals Clause In Action

Even though just about every news outlet, website, blog, etc., has covered the Tiger Woods scandal to some extent, I have decided to throw my hat into the ring. News broke today that one of Woods' primary sponsors, Accenture, has dropped the embattled golfer because he is "no longer the right representative" for the company. While it may seem obvious that Accenture can do this, the reality is that they have a legal right to do so, likely pursuant to a morals clause in Tiger's endorsement agreement. As I explain in a law review article I co-authored, a "morals clause" is a contractual provision that gives one contracting party (usually a company) the unilateral right to terminate the agreement, or take punitive action against the other party (usually an individual whose endorsement or image is sought) in the event that such other party engages in reprehensible behavior or conduct that may negatively impact his or her public image and, by association, the public image of the contracting company. The clauses usually permit termination of the agreement based on behavior that is offensive to public morals, crimes of moral turpitude, and actions that would bring the individual into public hatred, scorn, contempt, or disgrace in the eyes of the public.

Although there has not been public confirmation at this time that Accenture terminated Woods' sponsorship agreement pursuant to a morals clause, it is practically certain that there was such a clause in Woods agreement (they are standard in the industry) and it was invoked by Accenture. Using this method to terminate Woods is the most expedited and legal way to do so. Surely engaging in repeated affairs with approximately a dozen women while married is the type of conduct prohibited by morals clauses. Indeed, it is this specific type of conduct from which companies want to distance themselves, and, assuming it did so, Accenture invoked the clause here to terminate its relationship with Woods and begin to disassociate itself with the scandal.

The Tiger Woods scandal is the perfect example why companies place morals clauses in their agreements with individuals. If a sponsor of Tiger Woods failed to do so here, it would be nearly impossible for it to terminate its agreement with Woods. Obviously, Accenture does not have this problem.