General Question

jca's avatar

When one side pulls out of a contract (for example in the case of Paula Deen's business deals), don't they still have to pay the other side and fulfill the contract?

Asked by jca (36062points) June 30th, 2013

Every day for the past week we’ve been hearing about another corporate entity that has severed their ties with Paula Deen. Walmart, Target, Ballantine Books, Smithfield Hams. I’m not using Food Network because if I’m not mistaken, they said they would not renew her contract so I don’t believe they’re a good example of what I’m talking about. For those that severed their involvement with Paula Deen, wouldn’t they still have to pay for the life of the contract?

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6 Answers

SuperMouse's avatar

I am no lawyer but wouldn’t they have some kind of a “morals clause” in the contract? I am not sure that is the right term, but I am guessing that there is some kind of clause in the contract that gets them out of paying her if she does anything that damages her reputation to the point that it would reflect negatively on their brand.

Pachy's avatar

While I don’t disagree with @SuperMouse, my guess is that they paid Deen off, at least to some extent, to avoid legal hassles and further publicity.

augustlan's avatar

Not necessarily; it depends on how the contract is written. Sometimes, contracts include terms that specify a reduced payout amount if the contract is terminated early, sometimes there are clauses that negate the payout in certain instances (like a morals clause), and sometimes there is no payout clause at all. I’m not a lawyer, and “payout clause” may not be the correct terminology.

LuckyGuy's avatar

Many contracts have clauses that allow parties to cancel for numerous reasons, fraud, performance, .... act of warfare… The lawyers stick pages of boilerplate in to cover this.

I don’t think we’ll need to worry about Paula Deen not being able to pay her resident publicist photoshopper to keep her teeth white and her smile perfect. I’m guessing she got a fair amount of cash out of this deal.
The companies that quit were likely not making as much money as expected. She was already on the hot seat for all that extra stick of butter she put in every one of her recipes.
She’ll be fine.

marinelife's avatar

It depends on the terms of the contract. If something Deen did put her in breach of the contract that would grounds for the other side to terminate immediately probably with no payment.

redheaded1's avatar

It would depend on the contract. A megacorporation that engages the services of a ‘celebrity’ always has a clause in there usually called a ‘morals’ clause, stating that if the ‘face’ of the brand becomes notorious for some sort of misconduct, they can invoke this clause and terminate the contract.

She was probably not bought out of any of these contracts.

Oh, and I am a lawyer.

She’s wealthy and doesn’t need to work any more.

I do wonder how this is going to affect both of her sons, who have their own cooking shows and careers.

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