Navigating the complexities of endorsement deals in Indian sports A legal perspective
In the recent years, endorsement deals have become an increasingly important aspect of sports events in India. Endorsement deals provide financial assistance to the sports events and sportspersons while providing a large audience to the popular brands. As the importance of these deals has grown, so has the need to understand the complexities associated with them. In this article, we explore the legal implications related to endorsement contracts in the Indian sports industry.
Endorsement contracts with sportspersons in India typically involve the use of the sportsperson's name, public image and likeness for promotional purposes in exchange for financial benefits. Typical legal issues associated with endorsement contracts such as breach of the terms of contract, ignorance of non-compete provisions and fineprints of the obligations of the parties, etc. For example, a brand may expect a sportsperson to maintain a particular image or behaviour, and if the sportsperson fails to do so, it may lead to the termination of the endorsement contract and/or legal action.
Further, such endorsement deals come with their own legal complexities that require meticulous and delicate handling of the situation, therefore, the legal nuances involved therein need to be thought through. Listed below are some of the clauses that are a must have in an endorsement contract:
- Rights and ownership of content
This clause covers the rights of the brand and the use of the sportsperson’s name, public image, and likeness in the promotional campaign or the concerned project. The Navigating the complexities of endorsement deals in Indian sports: A legal perspective rights and ownership of the content created, and how it can be used or modified by the company/ brand should be clearly specified. The sportspersons may also seek to retain ownership of any intellectual property, including promotional videos, NFTs (Non-Fungible Tokens), etc., that they may develop during the duration of the endorsement contract, provided that it has been expressly stated in the contract.
- Compensation and payment terms
The compensation and payment terms in the endorsement contract should be clearly defined and agreed upon by both parties. This clause should outline the consideration, payments schedules and method of payment for the use of the sportsperson’s name and likeness in the promotional campaign/ project.
- Conflict of interest
The sportsperson may have conflict of interest with similar contracts that the sportsperson may have entered into with other brands, and adequate cross-read of these contracts must be done in order to ensure that an act done in good faith does not lead to a breach of other contracts.
- Misrepresentation and false claims
Endorsement deals involve a level of trust between the sportsperson and the brand. Therefore, it is crucial to ensure that the contract includes provisions that specifically address misrepresentation and false claims. The contract should specify the standards to which the brand's advertising must adhere, and the consequences for any misrepresentation or false claims.
- Obligations of parties
This clause sets out the obligations & responsibilities of the parties involved in the endorsement contract, including the sportsperson and the company/brand. It should clearly specify the performance expectations, training requirements, and any other obligations that the parties agree to.
- Non-disclosure and confidentiality
This clause seeks to protect the confidential information shared between the parties, such as trade secrets, business practices, or personal information. It restricts the receiving party from making any unauthorized disclosures regarding the confidential information shared by the disclosing party. Any unauthorized disclosure or use of the confidential information can amount to breach of contract.
- Term of the agreement
The endorsement contract should clearly define the start and end dates of the contract period. Further, the conditions under which the contract can be renewed or terminated by either party and the survival clauses, which shall survive after termination of the contract should be clearly specified. If the contract is terminated prematurely or without proper notice to the other party, it can lead to legal action.
- Termination and breach
This clause outlines the conditions under which the endorsement contract may be terminated, such as non-performance or breach of contract by either party. Any unethical conduct by the sportsperson or the brand like doping, match fixing, etc. will also fall under breach of contract and may lead to immediate termination of the endorsement contract. This clause should also specify the consequences of termination or breach of contract, such as forfeiture of compensation or any potential legal action.
- Compliance with applicable laws and regulations
Endorsement deals must comply with the various laws and regulations that apply to advertising, marketing, and intellectual property. It should be ensured that the endorsement deal complies with all applicable laws, including but not limited to the Advertising Standards Council of India (“ASCI”) regulations, and the Consumer Protection Act, to avoid potential legal issues. In this regard, the ASCI had released the ‘Guidelines for Celebrity Advertising’ in April 2017 to regulate the content of advertisements by celebrities, which also includes sportspersons.
- Dispute resolution
This clause specifies the process for resolving any disputes that may arise between the parties, such as arbitration, mediation or through court of law. It is important to have a well-defined dispute resolution process to avoid any ambiguities vis-à-vis the resolution process in case of any legal action, in future, between the parties.
Endorsement deals in Indian sports industry can have significant legal implications for both the sportspersons and brands involved. The lack of transparency, conflict of interest, and breach of contract can lead to legal action and financial repercussions. Therefore, endorsement contracts should be carefully drafted and negotiated to avoid any legal disputes. To ensure fair and transparent practices, it is essential for all parties to comply with the relevant laws and regulations and adopt a code of conduct that includes clear terms and conditions, expectations, and responsibilities. The implementation of such measures can help build greater trust and accountability between the parties and promote fair practices that benefit both the sportsperson and the brand.