Restraint of trade in artists, brand ambassador’s contracts

Continued from Tuesday April 12, 2016.

This has given birth to the twin test of reasonableness between the parties, on the one hand, and with regard to the public, on the other. The courts in this wise are less concerned with the creativity and integrity of the artists than with the relative bargaining position of the parties in such contracts, which is the primary factor in considering the fairness of the contractual process.

In all the cases in which the doctrine of restraint of trade is invoked, there seems to always be one factor common to them. The courts are usually perturbed about the restriction of an individual’s right to free trade. In determining this, the court normally focuses on two issues: whether the restrictions go further than providing adequate protection for the legitimate interests of the party in whose favour they are granted (that is the managers, publishers or record company), and whether they can be justified as being in the best interest of the party restrained (that is the artist). Where the restriction is deemed reasonable in the eyes of the law, the courts will not void the contract.

This is the common thread that runs from the Schroeder case to the George Michael case as regards the terms and bargaining processes of the respective contracts. While remuneration or other consideration might be different, the basic principles are similar. The key elements are exclusivity, duration, territory, ownership of the material and the right to terminate and assign.

Against this background, can we say that Nigerian brand ambassador contracts are within the doctrine of restraint of trade? According to the Wikipedia, the free encyclopedia,’ a brand ambassador is a person who is hired by an organization or company to represent a brand in a positive light and, by doing so, help to increase brand awareness and sales. The brandambassador is meant to embody the corporate identity of the hiring organization in appearance, demeanor, values and ethics.

Contracts or an agreement for brand ambassadorship in Nigeria come mostly in standard form. Standard form of contracts in the sense that has been sharpened by legal challenges, technological and marketing development. The standard form contracts are those contracts that reflect the longstanding industry practice.

The exclusivity clause that forbids a particular brand ambassador in the telecommunications industry from having anything to do with a rival brand ambassador is no doubt a violation of freedom of association and a partial restraint. Every case depends on its own facts and circumstances. In common law, any restraint whether partial or general is void but if the restraint is reasonable as between the parties and satisfies the public interest test then it is legal. What the court will be concerned about is whether the consideration or remuneration for the brand ambassador is fair and commensurate. And if it is fair and commensurate then such an agreement is enforceable. The key point is not whether the artist has been restrained from plying his trade or business but whether both parties in the agreement are mutually committed to each other. It becomes unfair when one of the parties, usually the artist, is bound exclusively to a party who is not similarly bound.

The P-Square musical group is brand ambassador of Globacom and one of the highest paid brand ambassadors in Nigeria. While Peter got a brand new 2015 Mercedes Benz G-Wagon, Paul was given a brand new 2015 Range Rover Vogue. The two luxury SUVs cost over N25million each, according to market prices. Besides, according to the Leadership Newspaper of 29 August 2015, the deal also attracted a huge cash payment of N140 million.

If the covenant of not “having anything to do with rival brands” was included in their contract with Globacom, we cannot say that they were thereby prevented from plying their trade. Although, it would have an element of partial restraint, the focus of the court as suggested by the judicial precedents would be whether the consideration or remuneration for the partial restraint is fair and commensurate in the eyes of the parties and in the public interest. I think the consideration for the restraint using the P Square group as example is fair and commensurate both to the parties and do not offend public policy.

Public policy demands that every person shall be at liberty to work for himself, and shall not be at liberty to deny himself or the state of his labour, skill, or talent by any agreement that he enters into. In another breath, it also requires that when a man has by skill or by any other means gotten something which he wants to sell, he should be at liberty to sell it in the most advantageous way in the market; and in order to enable him sell it advantageously in the market it is necessary that he should be able to preclude himself from entering into competition with the purchaser.

The 1974 English House of the Lords decision in Schroeder Music Publishing Company Limited V Macaulay is quite illustrative and helps to understand when an artist can be said to have been denied the right to ply his trade in the real sense. This case was the first musical contract in which the doctrine was applied. It involved a young and unknown songwriter by name Macaulay who entered into an agreement for exclusive services with a publishing company for five years. The songwriter assigned to the publisher full and universal copyrightin each of the original songs created at any time during the agreement. The publisher paid 50 pounds as a general advance against royalties and when the first 50 pounds was recouped from royalties they would advance a further 50 pounds to be recouped again from royalties. The advances were to continue throughout the initial five-year period and could be extended if the total royalties advanced equaled or exceeded 50 pounds. The publisher could terminate the agreement with just one month written notice but the songwriter could not terminate the agreement. Besides, the publisher was under no obligation to publish any of the songs and the songwriter could earn nothing if the works were not published.

Expectedly, the court voided the agreement on the ground of it being unfair and against public policy. The position of the court was that the restriction was not fair and reasonable, in that there was no obligation on the part of publisher whereas the songwriter was totally committed.

In the light of the Macaulay case, it would not be out of place to argue that the Nigerian telecommunications companies’ standard form brand ambassador contracts do not fall into the class of general, but partial, restraint. And the legal position that has evolved over time is that where the restraint is fair and reasonable in the eyes of the parties and do not offend public policy then the contract can be enforced.

Igelige is an entertainment lawyer in Oleh, Isoko South, Delta State.