Character clauses in the age of social media scandals – What brands need to know – Media, Telecoms, IT, Entertainment

Canada: Character clauses in the age of social media scandals – What brands need to know

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The character clause – a contractual provision requiring a party to conform to certain standards of behavior – has long been a feature of spokesperson and endorsement agreements. Yet in today’s era of cancel culture, #MeToo and influencer marketing, these provisions have become a primary focus for companies when onboarding an individual to be the face brand audience.

The behavior of those who represent a company will undoubtedly be seen 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 behavior of the brand’s partners corresponds to the image it wishes to project. If a brand representative were embroiled in a scandal or controversy, or if public opinion otherwise turned against them, this could ultimately pose a significant risk to the brand.

To protect against this risk, companies generally include morality clauses in the contracts of new brand partners. These clauses generally state that a company can terminate an agreement and also be compensated for certain damages suffered as a result of illegal or immoral actions. Naturally, these clauses are an essential tool for a brand wishing to maintain control of its public image. A strong character clause allows for a more secure brand-talent relationship, but crafting such a clause is increasingly complex given the variety of circumstances they can cover.

When drafting a character clause, a brand may wish to consider the following key questions:

  • What behavior or circumstances should trigger the clause? Historically, character clauses were often intended to operate in the event of a criminal charge, but today increasingly cover much broader situations. As many recent examples have shown, behavior does not have to be criminal to significantly damage a company’s brand. In some cases, character clauses can be tailored to the individual in question, or take into account a particular community, target audience or brand customer base.
  • Will the clause be triggered only by the actual conduct of the individual, or could it also be triggered by allegations of such conduct? Several incidents in recent history have shown that widespread public belief in harmful allegations (including sexual misconduct) has caused significant reputational damage. From a brand’s perspective, public opinion absolutely matters when it comes to protecting its reputation.
  • Will the clause be triggered solely by the actions of an individual, or could it encompass the actions of others? We previously reported a case in Ontario in which nude photographs of a hockey player were posted online by a third party. The court found that the brand represented by the athlete was not permitted to terminate the relationship, in part because the morality clause of his contract permitted such termination in response to his own actions, not those from another party.
  • How is the clause drafted? Vague terms, such as saying that a partnership can be terminated for “immoral activity” or “behaviour shocking the public conscience”, remain subject to interpretation. In order to avoid possible disputes, the wording of these clauses must be clear and unambiguous.
  • Could the clause be triggered by behavior outside the duration of the agreement? For example, what if controversial actions or statements from the past emerge while a Brand Partner is under contract, or if it happens while the individual is enjoying post-agreement benefits? These questions are particularly important in the age of social networks; in several recent high-profile instances, controversial comments posted online years ago have come back to haunt their authors. Determine whether a character 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 the funds invested be recovered once the clause is triggered? What will happen to content that is already in the market?
  • Who handles communications in the event of a scandal or controversy? The brand may wish to state that if a controversy triggers the morality clause, the brand will control (or have the right of pre-approval) over all public communications regarding the issue, including statements on social media, to the media of information, etc.

Increasingly, those who represent a brand are seen as the brand itself, and strong character clauses will help ensure that a brand’s values ​​are well represented. Communication is essential to ensure that all parties understand their obligations, as well as the common values ​​they wish to promote.

Finally, once a character clause is in effect, it is important for a brand to monitor the behavior of the individual concerned, online or offline, to help gauge public reaction and keep an eye on any media attention generated.

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The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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